Section 8 Deviation
As appears in the first part of this section, the basic principle is that liability arising from a deviation is not covered. Liability only follows from unlawful or unjustified deviations. Consequently, the exclusion under this section is for the consequences of unjustified deviations.
The reason for the exclusion is that most deviations are the result of operational decisions taken within the Member’s organisation. They are non-mutual risks which should either be borne by the Member himself or be insured separately.
4.8.2 What is a deviation?
In some jurisdictions it has been held that a consequence of an unjustified deviation is that the carrier loses the right to limit or exclude liability for cargo claims arising in respect of the deviation (see comments under 2.11) including in particular loss of the right to rely on the immunity and liability exceptions afforded to the carrier by the Hague and Hague-Visby Rules (see comments under 4.1.8). Those Rules, however, do not contain a definition of what amounts to a deviation. Instead, they describe some situations which do not constitute an unjustified deviation. Hague and Hague-Visby Rules Article IV rule 4 reads:
“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 this convention or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom.”
As under the Hague and Hague-Visby Rules, the carrier has a general obligation to care for the cargo; deviations for the purpose of saving the ship or cargo are considered justified.
Deviations to search for a crew member or other persons lost overboard are also regarded as justified. The costs may be compensated under Rule 3 Section 1, 5 or 7 as appropriate or under Rule 8 Section 2.
It follows indirectly from Hague and Hague-Visby Rules Article IV rule 2 (j) that the carrier may deviate to another port if the contractual port of destination is strike bound.
The U.S. Carriage of Goods by Sea Act of 1936 as amended (“COGSA”) contains the following addition to Hague Rules Article IV rule 4:
“Provided, however, that if the deviation is for the purpose of landing or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable.”
The conclusion to be drawn is that the international conventions on cargo liability provide limited guidance, and that domestic legislation on the subject may vary. It leaves the answer to be given by leading cases adjudged by domestic courts. This means that the view will vary from country to country regarding what constitutes an unjustified deviation.
In general, it can be said that a deviation is a departure from the contractually agreed voyage or venture.
A departure from the contractually agreed venture means that a deviation is not limited to geographical departures from the contractual destinations. Other departures from the contractually agreed performance of the transport may constitute a deviation. Unauthorised carriage of cargo on deck, drydocking with cargo on board, unexpected and unauthorised transhipments, use of substitute vessels or conveyances and storage in lighters or warehouses may all be regarded as unjustified deviations on the basis that they all potentially increase the risks anticipated.
4.8.3 Geographical deviations
184.108.40.206 Route should be customary and suitable
The ship should follow a route that is customary and suitable from a navigational point of view for the due performance of the contractual carriage.
220.127.116.11 Deviation in error
If a deviation from the proper route is made in error, it may qualify as an error in navigation, the consequences for which the carrier is excepted from liability under the Hague and Hague-Visby Rules Article 4 rule 2 (a). See comments under 18.104.22.168.
22.214.171.124 Deviation for accepted/justified purposes
As mentioned earlier, the carrier may deviate to save the ship and its cargo, and to save or attempt to save life and property at sea. He may change course and stand by in answer to a call of distress. Diversions to avoid strike bound ports may not be regarded as unjustified deviations. A diversion must be in compliance with the carrier’s general duty to care for the cargo not to call at a port where there has been an earthquake or other hindrances of a force majeure nature.
126.96.36.199 Deviations from contracted destinations
A contract of carriage specifies the destination for goods or passengers carried. The destination can be a specified port. It can also be a number of optional ports or an area, the final destination to be nominated subsequently.
The carrier is obliged to call at the ports as described in the contract of carriage and to proceed there on a route which is customary and suitable from a navigational point of view and reasonable for the ship and the service provided or as agreed by the cargo owner.
A departure from the proper route may constitute an unjustified deviation, especially if undertaken by the carrier to save time and money. Practical examples of such situations are when the ship calls at a port to disembark a stowaway (see comments under 188.8.131.52) or to pick up crew members, the presence of whom is not required to render the ship seaworthy (see comments under 3.11.3).
A scheduled liner service may allow the carrier greater freedom in respect of the ports to be called at as well as the order in which to call at them.
184.108.40.206 Liberty clauses
A contract of carriage may contain a clause which allows the carrier the right to depart from the usual route, mode of shipment and/or stowage location. Such clauses are called liberty clauses. The terms of a liberty clause should be expected to be applied restrictively when tested in court. They do not give the carrier the right to route the ship to suit his own needs at the risk of the cargo owner.
Contracts of carriage should contain a proper liberty clause. The absence of such a clause may render the contractual terms unusually burdensome in the sense of Rule 10 Section 2 which may, in turn, reduce or exclude any compensation from the Club.
A transhipment not anticipated by the contract of carriage may also be regarded as an unjustified deviation in certain jurisdictions. In the U.S.A a bill of lading clause granting the carrier the right to tranship at his convenience may not even be upheld in court.
A contract of carriage should contain a suitable transhipment clause, in the absence of which the contractual terms may be regarded as unusually burdensome in the sense of Rule 10 Section 2.
In some jurisdictions and in certain circumstances, lighterage of cargo during the carriage may be considered an unjustified deviation.
220.127.116.11 Deviations caused by unseaworthiness
The ship may have to deviate in order to replenish an insufficient supply of bunkers or to effect repairs of defects to hull or machinery which materialise during the voyage. Although the deviation may be justified for safety reasons, the proximate cause of the deviation may still have arisen from the carrier’s breach of his obligation under the Hague or Hague-Visby Rules to exercise due diligence with regard to the seaworthiness of the ship before and at the beginning of the voyage (see the comments under 4.1.5). In that case, liability for breach of the seaworthiness obligations (as distinct from liability for wrongful deviation) means that the carrier can still prevail upon the benefits of the exemption and limitation clauses (including time limits for suit) conferred by the Hague or Hague-Visby Rules.
However, a departure from the proper route to bunker, simply because bunker prices are favourable in that particular port, may well be considered an unjustified deviation (and unrelated to the carrier’s seaworthiness obligations) undertaken solely for the commercial benefit of the carrier. That can in some jurisdictions result in the loss of the right to rely on the limits and exclusions contained in the Hague and Hague-Visby Rules unless the freight contract contains a P&I Bunkering Deviation Clause, which specifically permits such deviations.
In short, the position may be complicated and the answer as to whether or not a specific deviation is justified, is not straightforward.
A contract of carriage should contain a suitable war risks clause. In the absence of such a clause, the contract may be considered to be on such unusually burdensome terms as described in Rule 10 Section 2 that it may cause the Club to refuse compensation.
The purpose of a war risks clause is to ensure the carrier has the right to depart from the usual route to avoid a war zone without running the risk of committing an unjustified deviation.
For more comments on the cover for war risks see Rule 11 Section 5.
4.8.4 Deviations other than geographical
18.104.22.168 Unauthorised deck shipments
Unless the contract of carriage calls for stowage on deck, it is considered as a contract for under deck stowage. Deck stowage, in breach of such an implied undertaking, will be considered an unjustified deviation.
For more comments on liability for unauthorised deck stowage and the extent of cover, see 22.214.171.124.3.
A serious delay in the performance of the contract of carriage may also be considered a deviation.
In many situations, the carrier would still be able to invoke the exclusions provided for by the Hague and Hague-Visby Rules as a defence. For example, where the delay has been caused by heavy weather or by a latent machinery defect.
Sometimes cargo is not discharged at its destination because it was overstowed by other cargo and, therefore, inaccessible. The carriage to a port beyond its destination and the delay caused by the reshipment may not necessarily amount to a deviation. If, on the basis of facts presented, the carrier is found to be in breach of his obligation to stow the cargo properly under Hague Rule Article III rule 2, he would still be liable, but entitled to rely on traditional limitations of liability and time.
For delay to constitute a deviation, the duration of the delay must be considerable compared with the normal time to fulfil the contract of carriage. Even on a liner service in the absence of a specific time for delivery of the cargo there can be considerable delay before it constitutes a deviation (although the delay itself may constitute a breach of the obligation to proceed with due despatch).
For more comments on liability and on the cover for delay, see under Rule 5.
126.96.36.199 Drydocking with cargo on board
To drydock the ship with cargo on board may be considered as exposing the cargo to risks not contemplated in the contract of carriage.
As regards cover for this risk, see the comments under 188.8.131.52.
184.108.40.206 Other non-geographical deviations
Other situations may arise where a departure from the venture as evidenced and contemplated by the contract of carriage is regarded as an unjustified deviation.
A court will probably try to establish in whose interest a deviation was undertaken. If the answer is that it was the carrier who profited from the deviation exposing the cargo to additional risks outside the bounds of what could reasonably be expected for carriage by sea, the situation might be considered to amount to an unjustified deviation in the absence of an appropriate contractual liberty.
4.8.5 Effect of an unjustified deviation
An unjustified deviation is in some jurisdictions regarded as a breach which takes the carrier outside the scope of the contract of carriage. If the cargo owner does not waive the breach, there is in some jurisdictions case law or legal doctrine under which the carrier will lose the exclusions and limitations of liability which would otherwise apply under the contract of carriage.
In such circumstances, the carrier may not be able to limit liability, either globally (see comments under 2.11) or per package (see comments under 220.127.116.11). In some jurisdictions the carrier may also be unable to claim the benefit of the one year time bar under the Hague or Hague-Visby Rules or any similar privilege.
In addition, the carrier would not, in those cases, be able to rely on any of the excepted perils listed in the Hague and Hague-Visby Rules Article IV rule 2 (a) – (q). See comments under 4.1.8. The effect is that the carrier is subject to strict liability for the loss (see comments under 18.104.22.168). In the U.S.A. it is sometimes said that the carrier effectively then becomes the insurer of the goods.
It is also possible that a deviation may result in the carrier being held liable for indirect consequential damages such as loss of production and markets. See comments under 2.7.
4.8.6 Extent of insurance cover
22.214.171.124 Cover excluded
The first part of the section states that there is no cover for liabilities, costs or expenses arising from a deviation whether geographical or otherwise.
The exclusion of cover under this section for the consequences of unjustified deviations also applies to unrecoverable general average contributions. See comments under 126.96.36.199.
As previously mentioned, a deviation in the sense of this section means an unjustified deviation. A justified deviation may, however, still result in costs or expenses. There is cover under several Rules for costs or expenses caused by justified deviations. See, for instance, Rule 3 Sections 9 and 11.
188.8.131.52 Cover provided
According to the second part of the section, the Club may cover liabilities arising from an unjustified deviation on terms to be agreed. On the information presented by the Member, the Club will try to decide the degree and extent of the potential deviation under applicable national law. The result may be that the scope and extent of the deviation is not considered to be of sufficient magnitude to violate the concept of mutuality. If so, it may be agreed that cover continues unprejudiced, subject in some cases to an additional premium and special regulations or restrictions the Club may care to impose under Rule 10 Section 3 as a condition for cover. The key guiding principle, for cover to continue, is that the commercial benefit for the Member undertaking the deviation must be proportionate and relative to the commercial disadvantage or risk to the other parties to the venture. Each situation will be assessed on its own merits. By way of illustration, the following are examples, as set out in the Group Pooling Agreement, of situations where there appear to be mitigating factors which might be expected to be treated as falling within the usual scope of Club P&I Insurance:
(a) A Member operating a liner service between Europe and the USA with advertised ports of call as New York, Philadelphia and New Orleans, where the bills of lading contain a typical liberty clause found in liner services, discharges cargo to be contractually delivered at Philadelphia at another customary port or place and forwards it to Philadelphia by any other customary means.
(b) Minor departures from the geographical route of the vessel’s contracted voyage(s) relating to bunkering in whole or in part for the voyage to be performed.
(c) Minor departures from the geographical route of the vessel’s contracted voyage(s) such as those relating to crew changes, taking on spares, stores or supplies, minor repairs, minor surveys, bunkering, taking on or disembarking supernumeraries or other personnel for operational reasons, landing of stowaways, ballast water exchange or slowing down for any of these reasons provided that approval in any such case will not be inconsistent with the key guiding principle described above.
(d) A vessel calls at the nearest available port or place or other customary port or place on the vessel’s contracted voyage to carry out repairs necessary for the safe completion of a cargo voyage whether or not the repairs arise in respect of a general average event.
(e) The vessel calls at any port or place off the customary route or departs from the customary route to save life or property or to protect the environment or to land persons saved at sea or to embark or disembark security personnel or otherwise avoid or reduce the risk of piracy on the contracted voyage.
(f) A vessel slow/economically steams if the contract of carriage incorporates an appropriate liberty clause or it is customary to do so at the time the voyage is undertaken and in the particular trade or on the particular voyage route or if there is congestion at the contracted destination provided that approval in any such case will not be inconsistent with the key guiding principle described above.
(g) The situation appears to be covered by an appropriately drafted liberty clause contained in or incorporated into the bill of lading or applicable contract of carriage.
(h) The situation appears to be within a custom of the trade.
For unmitigated types of deviation outside the scope and intention of the key guiding principle there is no cover under these Rules. The Club may assist the Member in arranging special insurance cover on terms and at a premium offered by the market underwriters. The following are examples, again taken from the Group Pooling Agreement, of situations that might be expected to be treated as falling outside the usual scope of Club P&I Insurance:
(a) A vessel calls at a port or place for the purposes of major repairs, dry docking, or major surveys which are not necessary for the contracted voyage.
(b) A vessel slow/economically 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.
(c) Subject to (f) above a vessel on a voyage charter slow/economically steams in order to conserve fuel and the contract of carriage does not contain an express liberty clause permitting it to do so.
(d) A vessel departs either geographically or otherwise from the contracted voyage or through or combined transport such that approval in any such case would be inconsistent with the key guiding principal described above.
(e) At the time the decision is made to depart geographically or otherwise from the contractual voyage there exists an unreasonable increase in the risk of loss of or damage to the cargo as a result of such departure: for instance if the cargo is perishable.
(f) A liner owner has a direct service from Hong Kong to Europe; he gives a bill of lading for cargo from Korea intending to tranship onto his own liner at Hong Kong but gives no indication on the face of the bill, which names his Hong Kong liner as the carrying ship, that in fact the cargo will be carried from Korea to Hong Kong by feeder service.
(g) A liner owner loads cargo despite a prior decision that after loading he will enter dry-dock to carry out repairs or survey work.
For a number of specified types of deviation, the Club has arranged Deviation Insurance cover available to Members. See comments under 184.108.40.206.
An application for cover under that Deviation Insurance should be made preferably before the deviation is undertaken. That will enable the Club to assist the Member in reducing the liability exposure of any deviation planned.
If the Member is not aware of the deviation until after it has already been made, an application for cover should be made immediately upon receiving information that it has occurred.
Members are advised to contact the Club for advice where they believe that a deviation will occur or where they are in doubt as to whether a particular course of action will or will not constitute a deviation.
220.127.116.11 Specific deviation insurance
The Rule is strict in excluding cover for liability arising out of unjustified deviation. The Club can provide specific deviation insurance for Club Members. Members should apply for cover under the Deviation Insurance prior to a deviation being undertaken, see comments under 18.104.22.168.
The Deviation Insurance provides cover for isolated situations, for urgent deviations which arise. No systematic, intentional and/or regular breaches of contract may be covered.
There is no cover under these Rules for any overspill beyond the terms of the Deviation Insurance.
Compensation is not paid for the loss of hire due to the vessel being placed off-hire for time lost due to a deviation.
The cover for deviation risks is sometimes referred to as SOL (Ship Owner’s Liability) cover.
4.8.7 How to avoid the risks associated with deviation
22.214.171.124 Increased awareness regarding cargo operations
As described under 4.8.5, an unjustified deviation has the potential to make the carrier liable for the direct and indirect consequences of the deviation without exceptions and exclusions. Such serious risks should be avoided or minimised.
Often, deviations are the result of operational decisions taken by the Member or his servants. Movements of cargo are often redirected with the aim of cutting costs without the significance of the deviation being appreciated. Members ought to be aware of the exposure to increased liabilities connected with deviations.
Cargo planning staff should be made aware of the risks assumed when deviating from the carriage contracted for and have sufficient knowledge of specific local legal peculiarities involved such as the danger of transhipment of cargo in the U.S.A. and the approach taken by the Belgian courts to the carriage of containers on deck when this has not been declared expressly on the bill of lading.
126.96.36.199 Suitable freight contracts
Deviation risk avoidance starts with the preparation of the freight contract. If there is a possibility of a transhipment in-transit, it should be reflected in the contract of carriage. The contract should contain suitable protective and liberty clauses.
188.8.131.52 Increased awareness regarding ship operations
Not only Masters and officers but also those in the Member’s office who operate and route the ships should be reminded of the importance of following customary, suitable, agreed and advertised routes to avoid geographical deviations.
184.108.40.206 Information needed in defence against deviation claims
In cases of geographical deviation, the Club needs documentation reflecting the contents of the contract of carriage agreed between the parties. It should be remembered that the bill of lading and charterparty may only constitute evidence of the agreed terms. Other supporting evidence might be correspondence between the parties preceding the final booking, the booking note, information on customary routes taken in the past and notices and advertisements on destinations and itineraries before the voyage.
The reason for any change of route must be documented. If it was to avoid adverse weather conditions, log extracts and weather maps should be produced. Distress calls or other reasons for diversion to save life or property should be entered in the deck log, which should give a full account of the events and duration of the diversion, including time and position when the diversion began and ended.
Such information is required if the Member wishes to recover his loss from the Owner of the ship which was assisted and which necessitated the diversion. See the comments under Rule 3 Section 9, in particular 3.9.3.
As regards claims for deviation caused by delay, a successful defence depends on the reason for the delay, which must be substantiated by documentation, log extracts etc.
Defence against claims for unauthorised deviation resulting from on deck carriage requires proof as to what was agreed at the time of booking. Reports and log extracts should be produced to evidence whether or not the loss claimed was the result of carriage on deck.