Whistler International Ltd v Kawasaki Kisen Kaisha Ltd
| Jurisdiction | England & Wales |
| Judge | LORD BINGHAM OF CORNHILL,Lord Porter (at page 261) said,LORD NICHOLLS OF BIRKENHEAD,LORD HOFFMANN,LORD HOPE OF CRAIGHEAD,LORD HOBHOUSE OF WOODBOROUGH |
| Judgment Date | 07 December 2000 |
| Judgment citation (vLex) | [2000] UKHL J1207-3 |
| Date | 07 December 2000 |
| Court | House of Lords |
[2000] UKHL J1207-3
Lord Bingham of Cornhill
Lord Nicholls of Birkenhead
Lord Hope of Craighead
Lord Hobhouse of Wood-borough
HOUSE OF LORDS
My Lords,
I am in full agreement with the opinion of my noble and learned friend Lord Hobhouse of Woodborough, which I have had the opportunity to read in draft. I gratefully adopt his summary of the facts, the history of these proceedings and the submissions of the parties.
A time charterparty such as the present represents a complex commercial bargain between owner and charterer. The owner undertakes for the period of the charter to make his vessel available to serve the commercial purposes of the charterer. To this end the hull, machinery and equipment of the vessel are to be in a thoroughly efficient state, the capacity and fuel consumption of the vessel are specified and the vessel is to be ready to receive the charterer's intended cargo. The owner undertakes these obligations in consideration of the charterer's undertaking to pay for the hire of the vessel at an agreed rate.
The charterer agrees to pay hire for the vessel because he wants to make use of it. Crucial to the bargain, for him, are the terms which require the master to prosecute his voyages with the utmost despatch, which provide that the master (although appointed by the owner) shall be under the orders and directions of the charterer as regards employment and which require the charterer to furnish the master from time to time with all requisite instructions and sailing directions.
The complexity of a time charterparty derives partly from the fact that ownership and possession of the vessel, which remain in the owner, are separated from use of the vessel, which is granted to the charterer, and partly from the peculiar characteristics and hazards of carriage by sea. As one would expect, the safety and security of the vessel, her crew and her cargo are treated as matters of the highest importance. The charterers may only (under the present charter) send the vessel to safe berths, safe ports and safe anchorages, always afloat and always within Institute Warranty Limits, and the parties in this case agreed a long list of further exclusions. The owners are to remain responsible for the navigation of the vessel. The scope of this last, very important, stipulation is the main issue argued in this appeal.
The starting point in the present case is, in my opinion, the master's obligation to prosecute his voyages with the utmost despatch. Irrespective of any express orders by the charterer, that would ordinarily require him to take the route which is shortest and therefore quickest, unless there is some other route which is usual or there is some other maritime reason for not taking the shortest and quickest route. Helpful guidance on the correct approach in law was given by Lord Porter in Reardon Smith Line Limited v. Black Sea and Baltic General Insurance Company Limited [1939] A.C.562 at 584, a case concerned with deviation under a voyage charterparty:
"The law upon the matter is, I think, reasonably plain, though its application may from time to time give rise to difficulties. It is the duty of a ship, at any rate when sailing upon an ocean voyage from one port to another, to take the usual route between those two ports. If no evidence be given, that route is presumed to be the direct geographical route, but it may be modified in many cases for navigational or other reasons, and evidence may always be given to show what the usual route is, unless a specific route be prescribed by the charter party or bill of lading."
The majority arbitrators referred to evidence before them that in the period 1 March to 31 May 1994 Ocean Routes had provided advice to some 360 vessels routed from the Pacific north west of North America to northern China, Korea or Japan, all of which had sailed on a northern route save for vessels heading for destinations far to the south of Japan. From that it would seem that the great circle route, which was the shortest and quickest route, was the usual route, although the arbitrators made no express finding to that effect. There was (so far as we know) no evidence to suggest that the rhumb line route was the usual, or a usual, route, and no finding to that effect. So, in the absence of what Lord Porter called "navigational or other reasons" for not taking the shortest and quickest route, the master was contractually obliged to take it.
The majority arbitrators concluded that the master had no good reason for not taking the shortest and quickest route. The dissenting arbitrator concluded that because the master was influenced by his previous bad experience of the great circle route and by his concern for safety he was "absolutely entitled" to decide as he did. The majority, however, in paragraph 21 of their reasons,
"considered that the Disponent Owners were prima facie in breach of their obligation under Clause 8 to ensure that the Master prosecuted his voyages with the utmost despatch …."
In paragraph 24 of their reasons the majority arbitrators again referred to "the Master's breach in failing to prosecute the voyage with due despatch." With those conclusions, on the findings of the majority arbitrators, I agree. In the absence of evidence that the rhumb line route was the usual route or a usual route, and in the absence of any satisfactory navigational or other reason for taking a longer and slower route, the master's obligation of utmost despatch required him to take the shortest and quickest route. This conclusion is in my view inescapable irrespective of any express orders given by the charterers.
But the decisions at all three levels below, and the argument at all levels including the House, primarily concentrated not on the master's duty of despatch but on the legitimacy of the charterers' express instructions to the master, following advice from Ocean Routes, to take the great circle route. Relying on clauses 11 and 8, the charterers contended that these were instructions concerning the employment of the vessel which they were entitled to give and with which the master was bound to comply. The owners relied on their responsibility, under clause 26, for the navigation of the vessel and on their exemption, under clause 16, from liability for errors of navigation, as grounds for resisting the charterers' contention.
The majority arbitrators concluded that the master had no good reasons for rejecting the charterers' instructions to take the great circle route. Impliedly, therefore, they accepted that the charterers were entitled to give such instructions. They did not find that the navigation exception availed the master, since he "had decided at the outset not to follow the course recommended by the weather routing service." The dissenting arbitrator did not find that the charterers' instructions did not relate to the employment of the vessel but held that the master was entitled not to comply because he "has to have the ultimate decision and responsibility for navigation."
Oral argument before the judge no doubt led to a refinement of the issues, and his conclusion ( [1999] QB 72 at 82) was clear and unequivocal:
"In my judgment these considerations lead to the conclusion that a decision whether to proceed across the Pacific by taking the great circle route or the rhumb line route or course would also be a decision in and about the navigation of the vessel and not in and about her employment."
The merits of that decision did not matter because "it was not, in my judgment, a decision as to the employment but as to the navigation of the vessel"(p. 82). In the Court of Appeal, Potter LJ was more guarded than the judge, but held that since the master's reasons for taking the rhumb line route were based on the safety of the vessel and were not shown to be other than bona fide (despite his lack of candour concerning his reasons for taking the rhumb line route on the second disputed voyage) it was a decision as to navigation: [2000] QB 241 at 261.
The judge's decision was trenchantly criticised by the late Mr. Brian Davenport Q.C. in an article ("Rhumb Line or Great Circle? - That is a Question of Navigation" [1998] LMCLQ 502) which brings home the loss which English commercial law has suffered by his death and the cruelty of an affliction which denied him the judicial eminence he would surely have achieved. Both the judge's decision and that of the Court of Appeal were criticised as "regrettable" by Mr. Donald Davies, now the doyen of London maritime arbitrators: [1999] LMCLQ 461. In Reefer Express 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.
Clause 8 of the present charterparty, providing that the master (although appointed by the owners) shall be under the orders and directions of the charterers, gives the charterer his key right under the contract: to decide where the vessel shall go and what she shall carry, how (in short) she shall be used, always subject to the terms of the charterparty. The language used is general, and the power correspondingly wide.
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