#17367 - Deviation - Shipping and International Trade

DEVIATION

Summary

Deviation

What is deviation, and when is it permitted?

• Deviation -> Deliberate departure of the carrier from the ordinary/customary route

  • If it’s not deliberate, then you’ve just gotten lost

  • NOTE: negligent deviation -> excepted peril under H-V rules

• When is it permitted at common law?

  • Where necessary to save life, or avoid damage to ship or cargo

• Does it matter that deviation is necessary due to initial unseaworthiness?

  • NO (Kish v Taylor)

  • Thus, even if the reason for the deviation is for a prior breach by the carrier, the deviation is still justified in those circumstances

• Three reasons for a duty not to deviate:

  • Davis v Garrett: (1) to prevent delay; (2) because the risks associated with usual route were the only things the freighter could take into account when entering into a contract; and (3) because the effect of deviation by the carrier would be to avoid a freighter’s policy insuring the goods for the declared voyage.

What is the effect of deviation?

• Clearly a breach of condition

• Clash between Thorley and Hain

  • In Thorley -> upon deviation, the contract is displaced automatically, without reference to the wishes of the innocent party (condition precedent analysis)

    • Exclusion clauses are displaced from the start of the voyage

  • In Hain, Lord Atkin makes the point that it’s a repudiatory breach that entitles the innocent party to terminate the contract (repudiatory breach analysis)

    • i.e. The Hain analysis leaves it up to the choice of the innocent party

    • Exclusion clauses are displaced from the moment of deviation

• Two difficulties with Thorley and Hain

  • (a) In Hain, the termination has retrospective effect

    • This departs from the modern approach to termination

    • Usually the effects of termination are prospective not retrospective

    • That’s one difficulty with reconciling Hain with a modern approach to termination

      • Modern approach means they would only be entitled to terminate when they have knowledge, and most of the time they will only know upon arrival, so that they will still have to pay under the contract of carriage -> termination only prospective

      • Not many cases dealing with this

  • (b) ANOTHER difficulty: Both cases also seem to assume that the effect of termination is to wipe out the effect of exclusion clauses

    • But usually termination just wipes out primary obligations but not necessarily affecting any exclusion/limitation clauses

• Effects of deviation

  • 1) Carrier cannot rely on any exemption clauses

    • Why does this happen?

      • In Thorley -> upon deviation, the contract is displaced automatically

      • In Hain -> the innocent party can opt to retrospectively terminate

    • For e.g. it would exclude the H-V excepted perils

    • On a modern view, you should look at the construction of the contract and parties intentions in deciding whether the exclusion and limitation clauses should still apply in the event of deviation

    • It is still an open question whether the time-bar under HV rules applies in cases of deviation

      • On a strict Thorley view, we would say that all exclusion clauses cannot be relied on

      • But on a modern construction approach, the time-bar could survive

        • Could argue that while deviation may increase the risk to the goods, it does not make it any more difficult to bring a claim within 12 months!

        • Thus, cannot have been the parties’ intentions to exclude the time-bar upon deviation

        • Could argue that the Courts are likely to adopt the modern approach once a suitable case comes before them -> as signalled by Antares

  • 2) Freight

    • Under traditional view, owner loses the right to freight from the point of deviation

    • They may still be entitled for payment at an objective market rate for the service provided, assuming that they do get the cargo to the destination

      • It is an open question whether the shipper/indorsee is still liable to pay remuneration for carriage if he chooses to claim his goods (Hain Steamship)

    • Under a modern approach, this would all depend on the timing

      • If you terminate before the obligation to pay freight arises, you don’t have to pay

      • But if you find out too late, and terminate after the obligation arises, you still have to pay

    • DN: I think when a suitable case comes along, they will ditch the old cases and take the modern approach, similarly to the deck stowage cases

• H-V Rules allow (1) deviation to save life or property at sea, and (2) reasonable deviation

  • DN: deviating to pick up extra cargo is clearly not reasonable

Deck Stowage

Authorised Deck Stowage

• These goods will not be covered under the H-V rules, if (1) the CoC states that they will be carried on deck and (2) they are carried on deck (Art I(c)), and (3) if the H-V rules apply automatically, and not by express provision

• Art I(c) doesn’t apply if contract of carriage expressly incorporates the H-V rules

  • So Art I(c) only excludes the H-V rules if the H-V rules originally apply automatically by force of law

• NOTE: the CoC must state that the goods will be carried on deck, not merely that they can be carried on deck

• If the HV rules don’t apply, then apply the common law rules from Volcafe

Unauthorised Deck Stowage

• Deck stowage is not treated as a special case, subject to ordinary principles of contract (Antares)

  • i.e. it is a question of construction whether exemption clauses apply, doctrine of fundamental breach does not apply

  • “The sole question therefore is whether, on its true construction, art. III, r. 6 applies. It is clear that it does”

• Thus, time-bar still applies despite unauthorised deck stowage (Antares)

• Art IV R5 HVR (package limitation rule) also applies (Kapitan Petko Voivoda)

  • This case concerned the Hague rules -> although likely to apply to H-V rules as well

• In cases of unauthorised deck stowage, you can sue BOTH under (1) Art III R2 and (2) breach of separate contractual term (assuming there is a contractual term that prohibits deck stowage)

  • The benefit of the latter is that you can avoid the excepted perils! Although the time bar and package limitations still apply

Kish v. Taylor [1912] A.C. 604

Facts

• Charterers failed to load a full cargo as required by the charterparty

• The master, to minimize the loss, procured a cargo from other sources and overloaded the deck to such an extent as to render the ship unseaworthy.

  • In consequence of her unseaworthiness the ship was obliged to deviate from her course in order to put into a port of refuge for repairs, and, after repairing, she completed the voyage in safety.

• Shipowners brought a claim under the charterparty to a lien on the cargo for dead freight

  • The charterparty provided that the master or owners were to have an absolute lien upon the cargo for all freight, dead freight, demurrage, or average.

• NOTE: shipowners did not seem to be trying to take advantage of their own wrong, but merely to claim the lien they would originally have been due if not for them overloading the ship and deviating

  • Charterers argued that the deviation constituted a new voyage, and therefore the B/L, charterparty, or both, were void ab initio

Held (Lord Atkinson, with whom the rest of the HL agreed)

• 1) Counsel for the cargo-owners made two arguments

  • (a) First, they contend that, as every shipowner is held to warrant the seaworthiness of his ship, the breach of that warranty puts an end to the contract of affreightment contained in the bill of lading, which becomes, they say, void ab initio, and consequently that, though the goods in specie have been duly carried to their destination undamaged, the indorsees of the bill of lading are only obliged to pay the shipowners for their service such sum as they may be entitled to as common carriers by sea instead of the remuneration stipulated for in the bill of lading.”

  • (b) Second, they contend that the deviation to the port of Halifax was unjustifiable in this respect, that however necessary it may have been in order to save the ship and cargo and the lives of her crew owing to the perilous condition to which the vessel was in fact reduced, yet, as that condition was in part due to the act of the master in overloading her with deck cargo to such an extent as to make her unseaworthy, the deviation must be treated as a deviation made without any necessity whatever, a gratuitous alteration of the voyage rendering the contract of affreightment contained in the bill of lading void ab initio

• 2) Lord Atkinson rejected the first submission

  • “No authorities were cited in support of this proposition. I think it is in conflict with the principles of English law.”

  • “Having regard, therefore, to the authorities I have cited and the absence of all authority to support the respondents' contention on their first point, it is, I think, unsound and unsustainable according to the law of this country.”

• 3) With regards to the second submission, it is the prima facie duty of the master of a ship to deviate and seek a place of safety, if it is reasonably necessary to save his ship and the lives of his crew

  • “On the second point it is not disputed that it is prima facie not only the right but the duty of the master of a ship to deviate from the course of his voyage and seek a harbour or place of safety, if that be reasonably necessary in order to save his ship and the lives of his crew from the perils which beset them”

• 4) The question under dispute: if deviation became necessary because of a master’s own culpable act or breach, did that avoid the contract of carriage

  • “Is it the presence of the peril and not its cause which determines the character...