This Case Study is by Master Class 1 students at W.A. Maritime Training Centre.

The Parties 

Whistler International, the disponent owners of the Hill Harmony 
Kawasaki Kisen Kaisha (‘KKK’), the time-charterers of the Hill Harmony

SITUATION:

The HILL HARMONY was time chartered down a chain of NYPE charters which contained the usual employment clauses but no special routing clauses. The time charterers, on the advice of Ocean Routes, ordered the ship to proceed from Vancouver to Japan by the northerly, great circle route. The Master had experienced heavy weather on a similar voyage some months before. He disregarded the charterers’ orders and insisted on taking the longer, southerly rhumb line route. The charterers refused to pay for the extra time taken and the bunkers consumed. The disponent owners claimed these sums in London arbitration.

Why is it interesting :

The line drawn between employment and navigation is a fine one. Orders to send a ship to a particular port will be orders as to employment. Likewise, orders as to port rotation. But what about the route the ship takes? Is routing also a matter of employment or a matter of navigation ?

What  Happened:

The Master had experienced heavy weather on a similar voyage some months before. He disregarded the charterers’ orders and insisted on taking the longer, southerly rhumb line route. The charterers refused to pay for the extra time taken and the bunkers consumed. The disponent owners claimed these sums in London arbitration.

What is the Complaint:

There were two trans-Pacific voyages from Vancouver to ports in Japan. Time charterers wanted the vessel to follow the shorter northerly ‘Great Circle Route’, as recommended by Ocean Routes, but the master opted for the more southerly ‘Rhumb Line Route’. Time charterers claimed that owners were in breach of time charter by disregarding their voyage routing instructions, which had resulted in an increase of time taken for the voyage, by about ten days, with an over consumption of bunkers by about 200 tonnes and loss to the charterers was in the region of USD90,000. Time charterers claimed that the Master had failed to prosecute the voyages with the utmost despatch and/or had failed to follow the orders and directions of the charterers as regards the employment of the vessel pursuant to Clause 8 of the charter-party. Owners contended that the orders and choice of route did not fall within the ambit of employment of the vessel but went to navigation and all matters of navigation were within the sole province of the master and in the event there was any fault in respect of navigation, owners’ liability was excluded under Article IV Rule 2(a) of the Hague and Hague-Visby Rules.

Article IV:

2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:
(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.

ISSUE

Legal Position:

At the arbitration, a majority of the panel had found for the charterers. They found that the master’s decision to sail by the southerly route in preference to the Great Circle route was unjustifiable. Their decision was based in part on un-contradicted evidence from Ocean Routes that all ships advised by them during the period March to May 1994 crossing from the Pacific north west to northern China, Korea or Japan had followed the Great Circle route. The owners were in breach therefore of their obligation to prosecute the voyages with the utmost despatch and to follow the charterers orders regarding the employment of the ship. The defence of ‘error in navigation’ under Article IV Rule 2(a) of the Hague Rules was not applicable, since the planning of the voyage – as opposed to the way in which it was carried out – was not a matter of navigation.

Stances Of The Party:                     

The charterers claimed that:

1.    The master had failed to prosecute the voyages with the utmost despatch, contrary to clause 8 of the charter-party

2.    The master had failed to comply with their instruction to sail by the Great Circle route, contrary to clauses 8 and 11 of the charter-party.

The owners replied that: 
  

1   the charterers’ orders and choice of route did not relate to the employment’of the ship but to its ‘navigation; 
  

2.    all matters of navigation were for the master to decide, and 
  

3.    if the master were at fault, then owners’ liability was excluded under Article IV Rule 2(a) of the Hague Rules incorporated in the charter-party

Decision of court:

1.    In the High Court, the judge held that the dispute related to the ship’s navigation and not to her employment. The order to sail by the Great Circle route was not one that the charterers were entitled to give and the decision which route to follow was for the master alone. He found accordingly for the owners.

2.    The Court of Appeal upheld this decision and also found for the owners. The ocean route to be followed was a matter of navigation for the master to determine. Provided that he acted in good faith, it did not matter whether he acted reasonably, since the owners would be protected by the exception of ‘error in navigation’ under Article IV Rule 2(a) of the Hague Rules.

The decision of the House of Lords

The Result : The House of Lords found for the charterers and therefore overruled the decisions the decisions in the High Court and the Court of Appeal and restored the decision of the arbitrators


The House of Lords ruled that an order as to routing is an employment order. Time charterers are therefore entitled to give routing orders to the Master which, unless they compromise the safety of the ship, must be followed. In addition, it was held that the Master must follow the shortest and quickest route unless there are navigational reasons for not doing so.

Navigation is still the Master’s responsibility. He is at liberty to change course for safety reasons. He can refuse to enter a port he considers to be unsafe and can, similarly, leave port if it becomes unsafe. The HILL HARMONY decision does not alter these principles. Neither does it give the time charterers carte blanche to order the ship to take any route, however unsafe. The time charterers have the right to use the ship in a commercially advantageous way and can determine the route the ship takes, as a matter of employment. However they cannot place the ship, her cargo and crew in danger.

The circumstances in which a Master disagrees with the routing of an entire voyage will probably be rare. When a Master does disagree, he must have a sound reason linked to safety which justifies a different route. Owners who cannot justify their Master’s decision will bear the risk of that decision. In the words of the leading judgements:

“The choice of ocean route was, in the absence of some overriding factor, a matter of the employment of the vessel, her scheduling, her trading, so as to exploit her earning capacity…..” (Lord Hobhouse)

“So, in the absence of….'navigational or other reasons' for not taking the shortest and quickest route, the master was contractually obliged to take it………But, subject to safety considerations and the specific terms of the charter, charterers may not only order the vessel to sail from A to B, but may also direct the route to be followed between the two.” (Lord Bingham)

Similar Cases and situation :

Suzuki & Co. Ltd. v. J. Benyon & Co. Ltd (1926) 42 TLR 269  -
The time-charterers in Suzuki and Co. Limited v. J. Beynon and Co. Limited (1926) 42 TLR 269 complained that the master had not prosecuted a voyage with the despatch required by clause 9 of the charterparty, apparently through insufficient consumption of coal.

Larrinaga SS Co. v. The King [1945] AC 246

The facts of Larrinaga Steamship Company v. The King [1945] AC 246 were unusual. The vessel, discharging at St. Nazaire, was ordered by charterers to return to Cardiff. Despite severely deteriorating weather conditions a Sea Transport Officer instructed the vessel to sail
on completion of discharge to Quiberon Bay to join a convoy bound for the Bristol Channel. The master protested but complied. The vessel grounded and suffered damage. The owners claimed against the Crown as charterers, contending that the damage had resulted from the charterers' order to return to Cardiff.

ReeferExpress Lines Pty Ltd v. Cool Carriers AB

24 January 1996) New York arbitrators considered a charterparty containing clauses similar to clauses 8 and 11 of the present charter, it being accepted that the master was the final authority with respect of matters of navigation and safety. On facts indistinguishable from the present, save that the master had somewhat better reasons for refusing to comply with the charterers' instructions to take the great circle route from Seattle to northern China, the arbitrators unanimously held that the master had breached his duty under the charterparty by not following the charterers' directions.

Lesson to be learnt:

Where time-charterers exercise their right to order the ship to follow a given course, owners should require the master to obey that order, unless they can discharge the burden of showing that a different course should have been followed for reasons such as the safety of the ship.