Legal test for “usual and customary route”

In the context of a demurrage claim in Alianca Navegacao E Logistica Ltda v. Ameropa SA (Santa Isabella) [2019] EWHC 3152 (Comm), the Court, among other things, had to consider whether the route taken by the vessel amounted to a breach of the charterparty. While the Court ultimately found against the Owners (albeit on a different point), its judgement helpfully clarifies the legal test for determining a vessel’s “usual and customary route”.

The court clarified contractual routing questions

The facts of this case are that the charterer had timechartered the vessel from the disponent owners to carry a cargo of corn from Topolopambo, Mexico to Durban and Richards Bay, South Africa. About 44,000 tonnes of Mexican white maize in bulk was loaded at Topolopambo in apparent good order and condition.

However, upon the vessel’s arrival in South Africa, the cargo was found to be damaged and infested, resulting in delays. The owner claimed demurrage from the charterer. The charterer disputed liability on the grounds that the delays arose as a result of the owner’s breach of the charterparty, one such breach being that the cargo damage and resulting delay was caused by the vessel taking the Cape Horn, rather than Panama Canal, route from Topolopambo to Durban.

The owner submitted in response that the Cape Horn route was a usual and contractually permitted route to Durban. The charterer also asserted that the owner had failed to comply with their obligations under Article III Rule 2 of the Hague-Visby Rules and had failed to ventilate in accordance with a sound system.
 

Commercial Court Decision

The Court found that the Cape Horn route taken by the vessel was a contractual route as in the absence of a contractual stipulation of the route, the owner was required to take a route that is both “usual” and “reasonable”.

The “usual” route is presumed to be the direct geographical route. However, evidence may show that the “usual” route is not the direct geographic route and may in fact be a significantly longer route. It is also the case that the “usual” route might change over time; there can be more than one “usual” route between two ports and considerations which determine which route is the “usual” route include navigational or commercial reasons. When seeking to establish a “usual” route, it is not necessary for an owner to prove a custom i.e. that the route was uniform and universal in a trade. To the contrary, a “usual” route can be established even if the evidence emanates from a single shipping line seeking to establish what the “usual” route is and may be inferred from charterer’s lack of objection to the same.

Turning to what is a “reasonable” route, the Court rejected the charterer’s submission that if a vessel takes the direct sea track, i.e. the shortest geographical route, then it has taken a contractual route; but if a vessel diverges in any respect from the sea track, then a full range of considerations, including the way in which the cargo is best protected, apply when deciding whether the route taken is a usual and reasonable route. This was rejected for the following reasons:

1. Such a distinction would seem arbitrary in principle;
2. The consequences to a carrier of being found to have deviated are severe. For such consequences to ensue where a vessel has taken a standard, commonly used route between two ports, as a consequence of the particular nature of the cargo, would be a marked departure from the generally accepted position;
3. To avoid such consequences, an owner would have to comply with a highly uncertain standard. It is also unclear what test an owner is to apply when weighing up the costs/duration of alternative routes with their possible effects on particular cargoes; and
4. Although the carrier has the duty to care for the cargo in terms of the on- board operations of the vessel, e.g. ventilation, to extend that duty to routing decisions may well strike the wrong balance between the charterer and the carrier.

Further, the charterer’s submission, and the consequences of such submission, was not supported by the authorities which:

1. Indicates that if an owner takes a longer route than the direct sea track, then in order for it to be contractual (putting to one side any liberty clauses) it must be both usual and reasonable bearing in mind the interests of all involved; and
2. Tends to support the view that cargo considerations may be relevant in the elementary sense that a much longer voyage is likely to be detrimental to a perishable cargo.

On the evidence before the Court, the route taken by the vessel, i.e. via Cape Horn, was a usual and reasonable route for the purposes of identifying the contractual route and thus did not amount to a deviation. The Court, however, went on to find that the owner had failed to properly and carefully ventilate the cargo in accordance with a sound system in accordance with their obligations under Article III Rule 2 of the Hague-Visby Rules. The owner’s breach in this regard had resulted in the cargo damage which had, in turn, caused the delays that led to the demurrage claim. The charterer was not, therefore, liable for the demurrage.

This case provides clarification in terms of routing, namely as to what will be a contractual route in the absence of a specific contractual provision. It also makes clear that, in the voyage charter context, if a charterer wishes an owner to proceed on a particular route, they should ensure that this is included in the charterparty.

This article was written by Antonia Jackson, a partner at Ince specialising in maritime, commercial disputes and insurance, and co-authored by trainee solicitor Ben Orchard.