T/ Charterer, the Disponent Owner?

Capt. K. K. Sharma/ FOSMA

Hill Harmony Case

Every mainstream time charter form will contain a term which places the Master under the
orders of the charterers as to the employment of the ship. The Master must follow these orders
within the bounds of safety of his ship, crew and cargo. In return, the owners generally receive
an indemnity (express or implied) for the consequences of complying with these orders.
However, risks of navigation will generally be owners’ risks. For charterparties incorporating a
Clause Paramount, owners will normally be exempted from the consequences of any errors of
navigation.

The line drawn between employment and navigation is a fine one. Orders to send a ship to a
particular port will be orders as to employment. Likewise, orders as to port rotation. But what
about the route the ship takes? Is routing a matter of employment or a matter of navigation?

The HILL HARMONY was time chartered down a chain of NYPE charters which contained the
usual employment clauses but no special routing clauses. The time charterers, on the advice of
Ocean Routes, ordered the ship to proceed from Vancouver to Japan by the northerly, great circle
route. The Master had experienced heavy weather on a similar voyage some months before. He
disregarded the charterers’ orders and insisted on taking the longer, southerly rhumb line route.
The charterers refused to pay for the extra time taken and the bunkers consumed. The disponent
owners claimed these sums in London arbitration.

The dispute focused on the employment provisions of the charter. The charterers argued that the
Master’s decision was a breach of their orders as to the employment of the ship; or, alternatively,
a breach of the obligation to proceed with utmost dispatch. The tribunal agreed. The arbitrators
held that the routing instructions were “employment” orders which the Master was bound to
follow unless he could justify his refusal to do so. They further found that his refusal, based on
his experience on the particular voyage some months before, was unjustified.

The owners appealed. Both the High Court and Court of Appeal found in the owners’ favour.
The High Court ruled that routing was a decision as to navigation. Once that was established, any
route taken by the Master, whether justified or not, would suffice. The Court of Appeal largely
agreed and held that, in absence of any special provisions, the Master could take any reasonable
route.

The case was finally referred to the House of Lords. The highest English appeal court restored
the decision of the arbitration tribunal and found in favor of the charterers.

The House of Lords ruled that an order as to routing is an employment order. Time charterers are
therefore entitled to give routing orders to the Master which, unless they compromise the safety
of the ship, must be followed. In addition, it was held that the Master must follow the shortest
and quickest route unless there are navigational reasons for not doing so.
Navigation is still the Master’s responsibility. He is at liberty to change course for safety reasons.
He can refuse to enter a port he considers to be unsafe and can, similarly, leave port if it becomes
unsafe. The HILL HARMONY decision does not alter these principles. Neither does it give the
time charterers carte blanche to order the ship to take any route, however unsafe. The time
charterers have the right to use the ship in a commercially advantageous way and can determine
the route the ship takes, as a matter of employment. However they cannot place the ship, her
cargo and crew in danger.

The circumstances in which a Master disagrees with the routing of an entire voyage will
probably be rare. When a Master does disagree, he must have a sound reason linked to safety
which justifies a different route. Owners who cannot justify their Master’s decision will bear the
risk of that decision. In the words of the leading judgements:

“The choice of ocean route was, in the absence of some overriding factor, a matter of the
employment of the vessel, her scheduling, her trading, so as to exploit her earning capacity…..”

“So, in the absence of….'navigational or other reasons' for not taking the shortest and quickest
route, the master was contractually obliged to take it……

…But, subject to safety considerations and the specific terms of the charter, charterers may not
only order the vessel to sail from A to B, but may also direct the route to be followed between
the two.”

COGSA Assignment for Ph 2 Capt. K. K. Sharma/ FOSMA

Q1 Complete the following sentences with the words in brackets: (EXPENSES, DEMISE, APPOINTS, BARRATRY,
VOYAGE CHARTER, TRAMP, EXEMPTION, SALVAGE, LIABILITY, DISCHARGES, DEVIATION,
CHARTERER, VESSEL, SHIPOWNER, DEMURRAGE, DESPATCH MONEY, PAID, OWNER, REPAIR)

1. Under a or Bareboat Charter party the is responsible for providing

2. If a ship loads and/or in less than the prescribed time, the Owners pay a
_______________as a reward for the time saved.

3. If, on the other hand, the prescribed time is exceeded, then ___ must be paid at an
agreed rate to the as compensation for the delay of the ship.

4. Charterer’s ceases after the cargo has been loaded and when the freight,
dead freight or demurrage has been . (Cesser Clause ) (Voyage Charterparty)
(at the instance of Charterer)
 5. In the the shipowner agrees to carry cargo between specified ports at a
prearranged freight.

6. The majority of cargo shipments are made on a voyage charter basis.

7. The and Salvage Clause permits the vessel to put into a port of refuge in
order to save life and property and also for the purpose of .

8. __ from liability clause includes the occurrences where the S’Owner claim exemption
and includes and willful wrongdoing of the Master without noticing the Owners.

Q.2 Name the following terms

1. The money paid by Owners to the Charterer for time saved in the loading and disch.

2. The number of days or hours allowed by the Charterer for loading or discharge.

3. A clause governing the nature and time of the liability of the Charterer for loading.

4. The right of the Ship-owner to hold the cargo to secure the payment of the freight or hire.

5. Rate payable by the Charterer if the agreed time for loading is exceeded, as compensation for
delay.

6. Claim of the Owners releasing themselves from responsibility in case of barratry, capture or
seizure, and perils of the sea.

7. Clause giving or refusing permission for sub-chartering the ship.

Q.3 What precautions would you observe before signing a B/L?