Sun, Oct

Deviation and bills of lading


Deviation and bills of lading. Under a contract of carriage if a party intentionally moves away from the agreed method of performance of the contract such departure is known as a "deviation". Hence, in the United States, a serious breach of contract is called a "deviation". However, this word is generally used for a ‘departure from’ and ‘return to’ a customary, geographical route during a sea passage. This departure is considered to be "geographical deviation" and the use of "deviation" in the context of a general breach of contract may be confusing. In the U.S., a serious breach of the contract may also be termed "quasi-deviation". In Continental countries, a, serious breach is called a "rupture of the contract".

A deviation can result in the carrier's losing the benefits he may have enjoyed - under a contract of carriage. In the common law, a common Garner was not permitted to deviate except to save life or to protect the vessel, cargo and persons on board from danger. This was more related to "geographical deviation". Express terms in the contract of carriage or evidence of the contract of carriage now permit a wider discretion to the carrier to leave an agreed or usual route and return to it. Indeed, the Hague-Visby Rules/Hague Rules state, in Art. IV, r. 2(1) that "Neither the carrier nor the ship shall be responsible far loss or damage arising or resulting from . . . saving or attempting to save life or property at sea". Article IV, r. 4 also provides that:

"Any deviation in saving or attempting to save life or property at sea or any reasonable deviation shall not be deemed to be an infringement or breach of these Rules or of the contract of carriage, and the Garner shall not be liable for any loss or damage resulting there from."

The emphasis on the word "reasonable" is significant. Such a deviation would not cause any reasonably minded cargo owner or shipowner to raise any objection. An unreasonable deviation would be in breach of the Rules and the carrier would lose the exceptions from liability in Art. IV, r. 2 (1) . In the Hamburg Rules, Art. 5, r. 6 provides somewhat more restrictively, that: "The carrier is not liable, except in general average, where loss, damage or delay in delivery results from measures to save life or from reasonable measures to save property at sea."

Deviation under United States law or "quasi-deviation", as it is sometimes called; tends to be much wider and goes well beyond the concept of "geographic deviation". Generally short-delivery, overcarriage and unauthorised deck carriage are traditionally considered to be quasi-deviations. However, cargo interests in the United States have attempted with general lack of success-to broaden the concepts of "deviation" there.

Fox example, In Parmass International-v. Sealand Service, 1985, the cargo interest brought an action against the carrier, claiming for damages for delay in delivery because of unreasonable deviation by not carrying the cargo of containers directly from Houston to Piraeus. The cargo was actually carried from Houston to Rotterdam and then on feeder vessels via other ports to the destination. The cargo interest failed in his claim for two reasons: there was no deviation from the contract of carriage and; even if there was, it was reasonable because of the established and well-advertised use of feeders by the carrier. Indeed, the carrier's bill o lading permitted transhipment and forwarding by feeder vessels. Because the deviation was not "unreasonable" the carrier did not lose the benefits under the U.S. Carriage of Goods by Sea Act 1936, which generally implements the Hague Rules.

In The Strathewe, 1986, the vessel shipped cargo from Dubai to Houston. After the vessel departed from the loading port, the British Government requisitioned her for service during the war that the United Kingdom was pursuing with Argentina over the Falkland Islands. The vessel had to discharge the cargo at Malta and proceed to the U.K. The shipowners intended to reload the cargo on to another vessel for carriage to Houston. However, owing to the carrier's negligence, only 16 of the original 18 packages of goods were reloaded and delivered to the receivers: The receivers- claimed their full loss from the carriers Originally, a United States court held that the deviation was "unreasonable" and the usual US$500 per package would not apply. The carrier would have to bear the liability for the full claimed amount. On appeal to the U.S. Court of Appeals, it was held that the carrier's negligence at Malta was not an "unreasonable deviation". Moreover, the action of the carrier was reasonable in the light of the prevailing circumstances. The court refused to extend the concept of "deviation" to negligence in the handling and care of cargo. The carrier did not lose the benefit of the US$500 package limitation under the Carriage of Goods by Sea Act 1936. '

In The Ogden Fraser, 1987, the United States court had to decide whether a carrier lost the benefit of the one year limitation period under the U.S. Act. The vessel did deviate unreasonably on a voyage from New Orleans to Bombay. Some consignees brought successful actions against the carrier within the limitation period. Other consignees brought their actions after the limitation period. The court held that the unreasonable deviation resulted in the earner's losing the benefits under the U.S. Carriage of Goods by Sea Act 1936, including the time-bar.

In a case before the English courts, The Antares, 1987, it was claimed by cargo interests that the carriers were not entitled to rely upon the time-bar in Art. III, r. 6 of the Hague-Visby Rules because, by loading "the goods" on deck they were in fundamental breach of the contract of carriage The English Court of Appeal held that the old English doctrine of "fundamental breach" no longer exists because of House of Lords decisions in 1967 and 1980. In the 1967 case, Suisse Atlantique v. Rotterdamsche Kolen, it had been suggested that the "deviation cases" should be treated in the same manner as for any breach of contract. In the 1980 case, Photo Production v. Securicor, the same judge said that the deviation cases had special rules derived from commercial and historical reasons. This implies that the "deviation cases" may be treated outside the general law governing contracts. In the Court of Appeal in The Antares, 1987, the judge was of the opinion that the "deviation cases" should still be treated under the law of contract generally, but he was faced with a case of unauthorised deck carriage. He decided that on the true construction of Art. III, r. 6, the time limitation did apply. The Rule provides that the carrier shall in any event be discharged from all liability whatsoever unless suit is brought within one year. The use of the word "whatsoever" makes it clear that the time limit may apply even when the carrier has committed an unreasonable deviation.

Thus there seems to be a different approach to the effect of unreasonable deviation by United States courts and courts in the United Kingdom. However, this difference is only apparent when it is realised that the United States courts apply the Carriage of Goods by Sea Act 1936 which implements the older Hague Rules in which the word "whatsoever" was omitted. The Antares concerned the application of the more recent Hague-Visby Rules.

The courts in the United States are more restrictive on extending the concept of "deviation" or "quasideviation" and its effects on the time limit in the Hague Rules. For example, in Insurance Company of North America v. S.S. Oceanis, 1988, the vessel loaded cargo which was damaged before shipment. The mate's receipts were claused accordingly but the clauses were not transferred to the bills of lading. The cargo interests brought their action almost three years after delivery. They argued that the failure of the carriers to clause the bills of lading was an "unreasonable deviation" and therefore the carriers could not benefit from the one-year time limitation. The court decided that "unreasonable deviation" would not be extended to documentary discrepancies.

Not every change in the usual and customary geographical route between loading and discharging ports is a "deviation". In The Al Taha, 1990, the vessel loaded cargo in the United States for Turkey. The bill of lading was subject to the U.S. Carriage of Goods by Sea Act 1936 (implementing the Hague Rules) of which section 4{4) is similar to Art. IV, r. 4 of the Hague-Visby Rules which provide for reasonable deviation with the addition of the words: "Provided, however, that if the deviation is for the purpose of loading or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable."

At the loading port, Portsmouth, a damaged part of the vessel's fittings was sent to a neighbouring port, Boston, for repairs. After completion of loading the vessel sailed to Boston where the repaired fitting was replaced and the vessel took on bunkers in the inner harbour. The original intention had been to return the damaged part to Portsmouth and then to proceed to Boston to bunker in the outer harbour. After bunkering, the vessel was un-berthed but negligence of the pilot caused her to go aground. However, the vessel proceeded to sea but returned to Boston as a "port of refuge" for repairs. Under the York-Antwerp Rules, expenses at a "port of refuge" are allowed as "general average" expenses.

The average adjustment indicated that the cargo interest's contribution was to be US$883,000. They refused to pay, claiming that the vessel had deviated to -Boston unreasonably. However, a shipowner is normally entitled to be guided in his choice of bunkering ports by cheapness and convenience. His decision must be reasonable and "usual". The judge in the English court held that the decision to bunker in the inner harbour would not have been a deviation at all had the shipowners not have conceded that the small detour was a "reasonable" deviation. The arrangements for the damaged part to be taken to Boston and for the vessel to proceed there to replace it and also to bunker were made before the voyage began. Normally deviation occurs during a voyage. In this case, the judge said:

"... a `reasonable deviation' within Article N, r. 4 can be a deviation planned before the voyage begins or the bills of lading are signed. In practice such a planned deviation is likely to be reasonable only where the deviation is planned in order to perform the contractual adventure ... In such a case Art. IV, r. 4 will apply provided that the deviation planned constitutes a reasonable manner of performing the contractual adventure . . . . It was reasonable to plan to deviate to collect the boom en route rather than to wait for the weather conditions to permit delivery at Portsmouth . . ."

Therefore a deviation planned before a voyage can be reasonable. The shipowners were entitled to recover the cargo interests' contribution of general average contributions.