Thursday, May 23, 2024

Ship deviation- shorter vs longer route

The vessel followed the longer route, and the master’s decision was not justifiable on the evidence. Owners were liable for the added costs and time due to deviation. Some observations on the adopted deviation methodologies were included, mainly due to CII rating scheme.

The Background

The vessel was chartered on an amended NYPE 1946 form for five voyages, three southbound and two northbound. During some voyages, the charterers contended that the ship took a longer route than the customary shorter route, deducting hire and fuel costs. However, the owners asserted that the Master’s route choice was justified during the hurricane season for the safety of the crew, vessel and cargo. As a result, the dispute was referred to arbitration under the HMAA Rules, and the sole arbitrator found for the charterers.

The arbitral tribunal

  1. The charterers bear the burden of proving deviation. In this case, deviation existed as the vessel did not follow the shorter route ( i.e. the northern route). Under clause 8, owners have a duty to proceed with the “utmost despatch”, and by following a longer route, the charterers have established a prima facie case of deviation. The burden is now shifted on the owners to prove the deviation was reasonable.
  2. The speed and consumption clause stated, “it is agreed that Ocean Routes, Inc.’s report shall be final”. However, this did not make the weather routing the final decision-maker as the dispute was unrelated to this clause. [Comment: the tribunal was not addressing this point as it found it unrelated to the claim and should not be implied that if the issue falls within the clause, a different decision would be reached- see here: ].
  3. Owners alleged that the deviation was reasonable as the voyages occurred during the hurricane season. Still, no weather warnings were issued that time. Additionally, the Owners failed to submit evidence to prove that the weather was severe or bad to support their contention that the choice of route was a necessary precaution for safety reasons. Finally, the voyages were short, and the Master would have sufficient advance notice of bad weather (if any). Thus, the tribunal found the owners’ argument unpersuasive.
  4. Owners relied on clause 11 to support the proposition that the charterers have a duty to provide explicit voyage instructions, advising the Master which route to take. However, the tribunal rejected this proposition as the clause 11 relates to general instructions and matters of navigation fall on the owners under clause 26.
  5. Owners raised a waiver/ estoppel argument to support that since the charterers never objected to the masters’ choice upon receiving the masters’ daily reports in advance, charterers have waived their right to claim deviation. Again, the tribunal rejected this argument.

General comments

There are various adopted methodologies in the market to calculate loss due to deviation. In a previous case, owners and charterers appointed their weather routing company to issue a post-performance analysis and a deviation report. The x report showed that there is time loss due to deviation even if the ship follows a shorter than the proposed route since by applying weather models, the X company’s report showed that the actual route was not the quickest, hence the time loss. Therefore, the issue turned on the applied weather factors to produce the results and whether this methodology was warranted. Of importance, some weather routing companies adopting this methodology include a note in their reports that they would not be able to support any inquiries about this methodology. By default, this causes a point of argument.

On the other hand, Y company expressed the view that it is illogical to produce any deviation claim when the actual route was shorter than the direct route. In particular, their methodology was as follows: one compares the distances (actual vs proposed route), and there is deviation only when the actual route is longer than the proposed route (for example, as happened in this case).

The obligation to proceed with utmost despatch means taking the shortest and quickest
route to the destination port. The shortest route is not always the quickest route. “Utmost despatch” relates to distance and time -not just distance that some WRC erroneously apply- as illustrated by London Arbitration 10/05 and the Hill Harmony (HL). However, the time aspect is still not yet based on a proper methodology and remains a troublesome issue. Notably, a third routing co. will be appointed when there is some basis to support the masters’ decision to proceed on another route(see London Arbitration 15/05) and (likely) calculate different time losses by applying a different methodology(for example, based on weather factors), thus assisting a party in negotiating the claim. Here, the masters’ reasons for disobeying the charterers’ orders were unconvincing, which was fatal to the owners’ case.

This and many other examples of deviation claims illustrate the complexity of calculating loss due to deviation, and their results can be quickly challenged in some cases.

Another practical example with six different methodologies discussed in my published article:

Therefore, will the varied methodologies adopted so far require changes in view of the CII scheme?

Note: This is only a summary of the full award(issued in 1999) published in JUS MUNDI ( Most of these awards come into the public domain through enforcement under the NYC 1958.

Picture: prepared in Netpas:

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