Engine Defects and Weather Factors in Loss Calculation

The incorporation of the weather factor into performance assessments has been mentioned in both SMA awards and London Arbitration decisions dating back nearly five decades. The underlying rationale was that if weather and currents are excluded as a contributing factor, any remaining deficiency in performance must be attributable to vessel-related issues.

In practice, its application remains a subject of debate. Critics often argue that the weather factor introduces a level of imprecision that undermines the reliability of the analysis. Conversely, proponents maintain that the law does not demand absolute precision in loss calculations ( the burden is on balance) and that such imprecision should not preclude the methodology’s use. Even the Didymi is not perfect; it is based on assumptions to derive an approximate loss calculation.

Arbitration decision

Charterers deducted an amount from hire for alleged speed deficiency because the Vessel was unable to make her Charter Party speed of about 13 knots in good weather. Charterers attributed the speed deficiency to the fact that the turbocharger for the main engine was damaged and had to be cemented and certain exhaust valves had to be repaired. Charterers furthermore pointed to engine manufacturer's specialist's recommendation that under such impaired circumstances the engine be operated at something less than 88.4 RPM as opposed to 100 RPM intended by the Chief Engineer.

Owners alleged the speed deficiency claim was excessive and that Charterers' claim ought to have taken into account a “weather factor” of 0.8 knots in addition to the “ “current factor” of 0.4 knots set forth in Charterers' calculations compiled by a weather routing service. This would then show 83.24 hours of lost time due to slow speed.  Owners also maintained that the entire claim for speed deficiency was more than offset by the actual fuel savings Charterers enjoyed under the Charter Party representation. Therefore, it should be denied.

The panel held that the 88.4 RPM restriction imposed by the Engineers for the Vessel's main engine operation during the voyage under review most definitely constituted a “ “defect or breakdown to machinery”, within the meaning and scope of Clause 15. Therefore, Disponent Owners were responsible for damages arising out of this deficiency, which included the time lost by reason of the speed deficiency and the equivalent fuel consumed during this period. The Panel furthermore found that Clause 15 authorises Charterers to “deduct from hire”, both the time lost and the cost of any extra fuel consumed in consequence of such deficiency when such results are known to Charterers from factual data that has emanated from the Vessel or her Owners or from some other reliable sources.

The Panel also allowed the extra fuel consumption and rejected the Owners’ petition that they be given credit for alleged fuel savings over the entire voyage for the simple reason that the N.Y.P.E. Form of Charter Party did not provide for a fuel consumption bonus to effect the Vessel's speed default.

[Note: the above are observations and not the Author's opinion]

#underperformance #engine #clause15