Geographical Deviation And The Hague/Hague-Visby Rules

In international sea carriage, deviation from the usual geographic route has traditionally deprived the carrier of the rights and defences (including time bar) available under the Hague and Hague-Visby Rules.

This had been questioned in light of the abolition of the "fundamental breach" rule by the House of Lords in 1980. However, the recent case of Dera Commercial Estate v Derya Inc [2018] EWHC 1673 (Comm) ("Dera v Derya") has confirmed that the principle remains valid.

Cargo interests do, however, have to choose when they become aware of the deviation, whether to affirm the contract (in which case all the rights and defences remain in force) or whether to terminate it; and they would be well advised to bear these consequences in mind when making that decision.

Facts of the dispute

The claimant cargo interests, Dera Commercial Estate ("DCE"), purchased 18,000mt of maize from Rika Global Impex Ltd. Rika voyage chartered the Vessel from the Shipowners to carry the cargo from India to Jordan. Bills of lading were issued on the standard CONGEN form which incorporated the terms of the voyage charterparty, including the (English) law and (London) arbitration clause.

The Vessel arrived in Aqaba in August 2011 but the Jordanian customs rejected the cargo, citing "broken percentage foreign matters, impurities, damaged kernels ... and apparent fungus". The cargo remained on board the Vessel at Aqaba.

In September 2011, DCE issued proceedings against the Shipowners in Jordan seeking damages of approximately USD 8 million in respect of the damage to the cargo. The Shipowners' P&I Club appointed an arbitrator in London on behalf of the Shipowners. They also applied to the English Court for an anti-suit injunction to restrain DCE from taking any further steps in the Jordanian proceedings, which were in breach of the arbitration agreement. DCE agreed to appoint an arbitrator in October 2011, and the Jordanian proceedings were struck out.

Efforts to persuade the Jordanian customs to reverse their decision failed and, on 8 November 2011, the Vessel sailed to Turkey without the permission of DCE or the Jordanian authorities. The cargo was discharged in Turkey in March 2012 and sold by way of a judicial sale ordered by the Turkish court. The proceeds of the sale were transferred to the Shipowners in early 2013 pursuant to two enforcement orders of the Turkish Court.

Proceedings in London

DCE's cargo claim had been commenced within the one year time limit...

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