Deviation : Justified or allowed and implications for the P&I cover - Slow steaming


Published: 12 October 2011

A vessel may divert from a contracted voyage with cargo on board for a number of reasons. A deviation may, however, have serious consequences both under the applicable contract (both the C/P and bill of lading) and as well as for the P&I cover.

The contract may allow deviation but that requires that an appropriate deviation/liberty clause is included in the C/P (and in the B/L) and therefore deviation is relevant to consider both pre-fixture (what liberty clause to include in terms) and post-fixture (what the vessel actually does).

The hard fact is this: in the absence of express stipulations in the contrary, the owner of a vessel implicitly undertakes to proceed in that ship by a usual and reasonable route without unjustifiable departure from that route and without unreasonable delay. This is what both a charterer and a bill of lading holder is entitled to expect.

A deviation may therefore occur because of a delay in fulfilling the very duty to proceed (with due or utmost dispatch and/or along the normal and direct route). In the same way, a stop along the route (or simply slowing down) may therefore also constitute a deviation. This is important to keep in mind these days where many owners, for cost saving, environmental and other reasons, wish to reduce speed (slow steaming). Charterers may have a similar interest in order to save costs. Even where the owners and charterers have an identical interest in slow steaming, the bill of lading holders must be taken into account as well.

A deviation may be justified but if the deviation is unjustified or unreasonable it can have serious consequences both under the C/P and the Bs/L but also for the P&I cover. A key guiding principle would be to consider how great is the commercial advantage or convenience to the carrier compared to the commercial disadvantage or risk to other interests (such as charterers/ cargo interests)

In common law, deviation is justified for saving life at sea and the Hague Visby Rules extended this somewhat to allow deviations to save life or property at sea.

A vessel owners may have the need for a good many other forms of deviation and some deviations are therefore expressly allowed in the C/P or B/L via a liberty clause.

Some deviations, at least, are almost certain to be considered unjustified:

  • A vessel calling at a port or place for the purposes of major repairs, dry-docking or major surveys which are not necessary for the contracted voyage
  • A vessel slow steams or stops short of the contracted place of discharge in order to exercise a lien on cargo and the contract of carriage does not contain an express liberty clause permitting it to do so
  • A vessel departs either geographically or otherwise from the contracted voyage such that there is a greater advantage to Owners and a correspondingly greater disadvantage or risk to others
  • Slow steaming, eco-steaming etc. in order to conserve fuel (where the contract of carriage does not contain an express liberty clause permitting it to do so)

If the ship makes an unreasonable/unjustified deviation, the ability to rely on exclusions, exceptions and limitations of liability (as set out in the Hague Visby Rules etc.) may be lost.

A deviation can therefore incur significant liabilities both under the C/P and the Bs/L.

Many C/Ps include certain liberty clauses but they tend to be limited in scope. Some liberty clauses (such as GENCON) allow bunkering but others expressly exclude bunkering from the liberty to deviate (such as Shellvoy6).

Liberty clauses should be treated with caution. Liberty clauses are usually held to be construed and read in such a way that any ambiguity will be construed against the party seeking to avail himself of the clause i.e. the owners. Even a wide liberty clause has been held to be a liberty only to proceed and stay at ports which are in the course of the voyage in a business sense (Glynn v. Margetson [1893] AC 351).

BIMCO have in March 2010 published their updated Liberty and Deviation Clause. This allows for a number of deviations for the purpose of taking on bunkers, spares, stores and supplies, effect crew changes, landing stowaways etc., but the use of this clause does not necessarily mean that all deviations are necessarily reasonable deviations.

The BIMCO deviation clause prudently suggests that this clause should also be incorporated in the Bs/L issued under the C/P. It is important to note that when a vessel is making a deviation, its owner is exposed not just under the C/P but also under the Bs/L.

A B/L holder has an equal, valid reason to expect the cargo to be delivered in the discharge port without unreasonable delay or undue deviation and if the owner vis-à-vis the B/L holder wishes to rely on the deviation/liberty clause then such clause must be included - and included clearly - in the B/L itself.

Ultimately, if this should be done in order to leave as little doubt as possible, a liberty clause should therefore be included expressly and clearly on a par with what is usually done with regard to choice of law and jurisdiction clauses. The incorporation of a liberty clause in the B/L could therefore e.g. stipulate that:

“All terms and conditions of the C/P dated [     ] including the choice of law and jurisdiction and deviation/liberty clause are hereby incorporated.”

It is important to be aware that liability caused by a deviation is excluded from the P&I cover. The Skuld Rule 5.2.11 stipulates that “deviation or departure from the contractually agreed voyage or adventure which deprives the member of the right to rely on defences or rights of limitation which would otherwise be available”.

The Club can offer additional cover for any geographical (or other contractual) deviation but this requires notice to the Club, and it is important to ensure that notification to the Club is made before the deviation takes place.

Recently, the concept of slow steaming (or economic speed etc.) has been very much talked about given the significant savings potential that slow steaming can have for owners. Slow steaming is in fact (in a legal context) a deviation.

The same considerations therefore apply and an owner who wishes to slow steam as a measure to obtain fuel savings, preserve resources etc. will therefore have to make the very same considerations as for any other deviation.

That means that an owner who wishes to slow steam his vessel should make sure that both charterers and bill of lading holders are made aware of this. Consequently, a slow steaming clause should incorporated in to the C/P and - to make matters as clear as possible - the incorporation of the C/P into the bill of lading should make express reference to the slow steaming clause as well - in other words : treat the slow steaming clause on a par with a law and arbitration clause which are expressly mentioned in the incorporation wording.

The incorporation clause in the bill of lading should ideally therefore read:

“All terms and conditions of the C/P dated [     ] including the choice of law and jurisdiction and deviation/liberty clause [and slow steaming clause] are hereby incorporated.”

This will assist to notify Bill of Lading holders of the slow steaming clause and therefore adjust what expectations they are entitled to rely on in terms of time of arrival. The Owners would clearly be able to rely on this and reject any claim which may otherwise be raised by cargo interests for what they would hold to be late arrival.

The owners’ exposure vis-a-vis bill of lading holders should be kept in mind - also where a request from a time charterer (who of course have the cost of bunkering the vessel) for slow steaming is making its way up a chain of charter parties. Under a sub-charter party , the sub-time charterers may have a right to request slow steaming and request their disponent owners accordingly. The head charter party may not have a similar clause and head owners would be well within their rights to deny the request given their exposure to cargo interests.