Deviation for Crew Change- Who Pays for Additional Delay?

London Arbitration 11/22

What happens if parties agree that the chartered vessel (time or trip charter) would deviate to perform a specific task (e.g. crew change) but after the agreed task is completed further delay arises as a result of other factors (e.g. bad weather) and consequently additional time is lost? Is this a risk that shipowner assumes or is it simply an operational hazard that charterer in a time/trip charter is normally expected to bear?

This was the main issue that the tribunal was asked to address in London Arbitration 11/22 (a proceeding brought under LMAA Small Claims Procedure). The vessel was chartered under an amended NYPE 93 form for a trip from a sole load port in the Sea of Japan to a discharge port in the South China Sea carrying a cargo of steel billets and with an estimated duration of 25 to 30 days. The parties agreed in the charter that the vessel would have had a crew change at Hongai (Vietnam) and the deviation time and bunker costs to be at owners’ account. After the crew change had taken place on departing Hongai the vessel encountered bad weather in the South China Sea and her speed was reduced. The charterers made a deduction of 1.05 day from hire for the delay caused by bad weather following departure from Hongai. The owners argued that the charterers’ deduction was unlawful and breach of charterparty.   

In effect, this is a dispute concerning the application of “causation principles” in the context of a term in a charterparty. There can be no doubt that any time lost during the process of deviating to Hongai for crew exchange is on the owners’ account. However, does the owner remain responsible for any delay that occurs after the crew change had been completed on the premise that further delay would not have happened had the vessel not deviated to Hongai in the first instance?

There is little doubt that the deviation was a “but for” cause of the further delay arising due to bad weather after leaving Hongai but is this adequate to make owners’ liable? The tribunal thought “not”! And rightly so! Imagine that a taxi driver is involved in an accident after dropping a customer at a cottage in a remote location. Will it be possible for the driver to revert to the customer seeking compensation for the loss asserting that s/he would not have ben at that location if the customer had not engaged his/her services in the first place. Naturally not! One might say this is a different situation here as the charterer and owner are still in a contractual relationship. That is true but to make one party liable for consequential losses emerging in a contract, it is necessary that the term in question adopts a broad “causation trigger” to that effect. The clause in question here did not, but merely stated that “the deviation time/bunker/costs to be at Owners’ time/account”. In a similar context (indemnity for charterer’s orders) , the Supreme Court in The Kos [2012) UKSC 17, [2012] 2 Lloyd’s Rep 292 making a distinction between “effective causes” and “but for” causes ruled that in the absence of contrary wording in the relevant clause only losses emerging from an effective cause of the loss are recoverable. Here it can plausibly be argued that the relevant clause (enabling deviation for crew change) did not introduce a broad causation trigger and the loss arising due to bad weather was a “but for” cause and not an effective one.                         

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Professor Barış Soyer

Professor Soyer was appointed a lecturer at the School of Law, Swansea University in 2001 and was promoted to readership in 2006 and professorship in 2009. He was appointed Director of the Institute of Shipping and Trade Law at the School of Law, Swansea in October 2010. He was previously a lecturer at the University of Exeter. His postgraduate education was in the University of Southampton from where he obtained his Ph.D degree in 2000. Whilst at Southampton he was also a part-time lecturer and tutor. His principal research interest is in the field of insurance, particularly marine insurance, but his interests extend broadly throughout maritime law and contract law. He is the author of Warranties in Marine Insurance published by Cavendish Publishing (2001), and an impressive list of articles published in elite Journals such as Lloyd’s Maritime and Commercial Law Quarterly, Berkley Journal of International Law, Journal of Contract Law and Journal of Business Law. His first book was the joint winner of the Cavendish Book Prize 2001 and was awarded the British Insurance Law Association Charitable Trust Book Prize in 2002, for the best contribution to insurance literature. A new edition of this book was published in 2006. In 2008, he edited a collection of essays published by Informa evaluating the Law Commissions' Reform Proposals in Insurance Law: Reforming Commercial and Marine Insurance Law. This book has been cited on numerous occasions in the Consultation Reports published by English and Scottish Law Commissions and also by the Irish Law Reform Commission and has been instrumental in shaping the nature of law reform. In recent years, he edited several books in partnership with Professor Tettenborn: Pollution at Sea: Law and Liability, published by Informa in 2012; Carriage of Goods by Sea, Land and Air, published by Informa in 2013 and Offshore Contracts and Liabilities, published by Informa Law from Routledge in 2014. His most recent monograph, Marine Insurance Fraud, was published in 2014 by Informa Law from Routledge. His teaching experience extends to the under- and postgraduate levels, including postgraduate teaching of Carriage of Goods by Sea, Transnational Commercial Law, Marine Insurance, Admiralty Law and Oil and Gas Law. He is one of the editors of the Journal of International Maritime Law and is also on the editorial board of Shipping and Trade Law and Baltic Maritime Law Quarterly. He currently teaches Admiralty Law, Oil and Gas Law and Marine Insurance on the LLM programme and also is the Head of the Department of Postgraduate Legal Studies at Swansea.

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