By a voyage charterparty the owner agreed to let a vessel to the charterer for the carriage of fuel oil. The charterparty incorporated the US Carriage of Goods by Sea Act 1936, section 2 of which was materially in the same terms of article II of the Hague Rules. After discharging her first cargo at Singapore, the vessel was ordered by the charterer to proceed to Singapore Eastern outer part limits (“EOPL”) area and wait pending further instructions for discharge. The location where the vessel anchored, although within range of ordinary practice for Singapore EOPL, was in Indonesian territorial waters and anchoring there was in breach of Indonesian law. In arbitration proceedings brought by the owner as a result of the vessel’s detention by the Indonesian authorities, the charterer raised a counterclaim for breach of the charterparty on the ground that by anchoring in Indonesian waters the master had failed to comply with its legitimate employment order. The tribunal held that the gist of the charterer’s order had been to wait in the Singapore EOPL wherever it was safe to do so using good navigation and seamanship. The tribunal, without making any express finding of breach, held that a prudent master would not have anchored in Indonesian territorial waters and exposed the vessel to the risk of detention, therefore the master’s decision could not be characterised as good navigation and seamanship. The tribunal went on to hold that the owner could rely on a provision in the 1936 US Act, which was to the same effect as article IV, rule 2(a) of the Hague Rules, which exempted an owner’s liability for loss caused by the neglect or default of the master in the navigation or management of the ship. The charterer appealed, contending that the negligent navigation defence was not available to an owner who had failed to comply with a charterer’s employment orders. The owner resisted the appeal on the grounds that the tribunal had not found that the charterer’s order to wait at Singapore EOPL prohibited anchoring in Indonesian waters, or alternatively the tribunal had been correct to find that negligent navigation defence applied.
On the charterer’s appeal—
Held, appeal dismissed. (1) On a fair reading of the award, the tribunal had found that the true meaning of the charterer’s order had precluded waiting in Indonesian waters. Moreover, in finding that the exception applied to exempt the owner from liability, the tribunal must have found that the relevant liability had arisen from the failure to follow the charterer’s order. It therefore followed that there had been a failure by the vessel to follow the charterer’s order (paras 38–39).
But (2) where there had been a failure to follow an employment order it was not the case that the exception in respect of fault in the navigation of the vessel was not available, although the choice not to comply could not, without more, be described as negligent navigation. In the present case it was clear that the tribunal regarded the master as having acted negligently in the navigation of the vessel. It was the failure to exhibit good navigation and seamanship which caused him to fail to comply with the charterer’s order. Accordingly, it had been correct to hold that the owner was entitled to rely on the negligent navigation defence (paras 61–62, 66, 72–73, 75, 77).
John Russell KC and Joseph Gourgey (instructed by Squire Patton Boggs) for the charterer.
Timothy Hill KC and Socrates Papadopoulos (instructed by Stann Law Ltd) for the owner.