Whistler International Limited v. Kawasaki Kisen Kaisha Limited

The House of Lords allowed the charterers' appeal. The court held that under a time charter the charterers may give orders as to the route between two ports because choice of ocean route, absent overriding navigational or safety reasons, is part of the vessel's employment and of the charterers' commercial right to exploit the vessel's earning capacity. The master's duty to prosecute voyages with the utmost despatch ordinarily requires taking the shortest and quickest route unless there is a usual alternative or sound navigational reason not to do so. The navigation exception (Article IV rule 2(a) of the amended Hague Rules and like contractual exemptions) does not cover a master's deliberate choice of a longer route made in breach of the owner's contractual obligations where the owner fails to prove a navigational justification.

This was an appeal from a reasoned arbitral award under a New York Produce Exchange form time charter (amended) and from subsequent judgments in the Commercial Court (Clarke J) and the Court of Appeal. The dispute concerned two laden voyages from Vancouver to Japan in 1994 on which the master followed a longer southerly rhumb-line route rather than the shorter great-circle route recommended to the charterers by a weather routing service (Ocean Routes). The charterers instructed the master to take the shorter great-circle route; the master refused. The arbitrators by majority found for the charterers, concluding the master had no satisfactory navigational reason for refusing the orders and that the owners had breached their obligations under the charter (notably clause 8: master's duty to prosecute voyages with the utmost despatch, and clause 11: charterers to furnish sailing instructions). The owners succeeded in the Commercial Court ([1999] QB 72) and in the Court of Appeal ([2000] QB 241) on the ground that the choice of route was a matter of navigation for which the master (and thus the owners under the navigation exception) remained responsible.

The House of Lords framed the issues as (i) whether the choice of ocean route between given ports is a matter of employment (within the charterers' authority) or of navigation (within the master's province), and (ii) whether the navigation exception protected the owners on the facts. The majority in the House concluded that the choice of route is, in the absence of overriding safety or customary navigational reasons, part of the vessel's employment and scheduling and so falls within the charterers' power to order. The master's overriding responsibility for safety remained, so a master may refuse orders that would expose the ship to unacceptable risk. On the facts the arbitrators' findings that the master had no good navigational reason and that the owners failed to prove the navigation defence were open to them. Accordingly the award in favour of the charterers was upheld and the judicial decisions below were set aside.

Relief sought: enforcement of the arbitrators' award and a declaration of liability for extra time and bunker costs associated with the longer route. Issues decided: scope of 'employment' v 'navigation' in a time charter; application of the 'utmost despatch' obligation; scope and proof of the navigation exception (Article IV r.2(a) amended Hague Rules). Reasoning: commercial character of time charters means scheduling and route choice are part of employment; absent evidence that another route was usual or that there were navigational or safety reasons, the master ought to take the shortest route; the navigation exception does not shield an unjustified deliberate choice by the master and the owner bears the burden of proof.

Appeal allowed. The House held that choice of ocean route between given ports is ordinarily a matter of the charterers' right to determine the employment and scheduling of the vessel and that, on the arbitrators' findings, the master had no reasonable navigational justification for taking the longer routes; therefore the navigation exception did not avail the owners and the award in favour of the charterers should be upheld.

Arbitral award (majority for charterers) -> Commercial Court (Clarke J) set aside award, [1999] QB 72 -> Court of Appeal dismissed charterers' appeal, [2000] QB 241 -> House of Lords allowed charterers' appeal, [2000] UKHL 62.