Charterers deducted 3.42 days for an alleged underperformance claim and submitted a report from their appointed WRC to support the claim.
1. Lack of Defence Submissions
The Charterers deducted 3.42 days for an alleged underperformance claim and submitted a report from their appointed Weather Routing Company (WRC) to support their position. However, the Charterers’ solicitors ceased representation during proceedings, and no Defence Submissions were served. After two procedural orders, the tribunal issued a final and peremptory order, which the Charterers failed to comply with. Consequently, the Owners requested the tribunal to proceed to an award, which the tribunal deemed appropriate.
Pursuant to Section 41 of the Arbitration Act 1996, titled "Powers of the Tribunal in Case of Party’s Default," the tribunal applied the sanction stipulated under Section 41(7)(c), allowing it to "proceed to an award on the basis of such materials as have been properly provided to it." The Charterers' failure to participate in the arbitration resulted in no submissions being made regarding fouling and an alleged breach of Clause 8. The tribunal observed that while a breach of Clause 8 of the NYPE form was possible, no submissions to that effect were presented- which could lead to a different decision.
It is noteworthy that the tribunal is not obligated to assume the role of the Respondent in defending the claim. This does not imply an automatic default award in favor of the Claimant; rather, the tribunal is required to assess the evidence presented to ensure that a valid claim exists. The tribunal examined the weather routing reports and the evidence before it.
2. Slip and Fouling
The tribunal’s decision is consistent with recent arbitration findings, indicating that a high slip in favorable weather conditions suggests fouling, which consequently results in an RPM reduction to avoid "an exponential increase in consumption", as per the principles of Cubic Law.
The tribunal concluded that the weather routing reports submitted by the Charterers were non-compliant and inadequate for a verifiable evaluation of any loss arising from the tribunal’s findings. Had the Charterers provided substantive submissions on this issue, the outcome might have differed. Even where a performance report is deemed non-compliant, loss calculation is feasible, as evidenced by previous cases (e.g., London Arbitration 23/21 and 15/23).
3. WRC Report and Other Considerations
The WRC report failed to include the slip percentage, which would typically assist in identifying the limited number of WRCs that may have been involved in this case. Several observations can be made regarding the Owners' arguments and the report (and other points):
The Owners' assertion regarding speed reduction in heavy traffic could be verified by cross-referencing reported RPM, engine consumption, and engine load (by analogy, see The Kefalonia Wind case).
It is uncommon for ballast speed and consumption figures to be identical (e.g., "about 14.2 knots on about 35.5 mts IFO"), both in ballast and laden conditions.
The performance warranty specifies conditions such as "no adverse current, negative influence of swell... at the condition of clean bottom," with the restrictive language preceding the "clean bottom" condition. It has been argued that since the condition of the hull differed and it was a condition to apply the strict definition, an alternative way should be adopted.
The clause stipulates "negative influence of swell," which, when read in conjunction with "no adverse currents," (as it sits next to it) extends the "no" to the negative influence of swell(i.e. no negative influence of swell). The clause defines the significant wave height as 1.25 meters, whereas the report indicated a swell height of 1.6 meters.
The wording as adopted in the clause is not drafted correctly. The clause states that a minimum of 24 hours of steaming time, and the tribunal interpreted it as "a minimum of 24 consecutive hours". The word " consecutive" was added, and extended to "noon to noon" reports.
The tribunal determined that during the identified periods, most weather conditions met the criteria of Beaufort 4 or less with low swells. Consequently, the existence of representative periods, even if not strictly good weather, could have enabled an objective calculation of loss due to fouling had the Charterers participated and submitted adequate arguments. A swell of 1.6 meters does not always have a negative influence. The drop in performance was significant ( about 2 knots in laden). The percentage deficiency, if applied to the sailing time, objectively reflects the prolongation of the voyage and the loss of time (Clause 15) or damages (Clause 8), along with the corresponding consumption. Another loss application is based on the increased slip and voyage prolongation.
The summary supports the notion that alternative methods exist to calculate losses resulting from fouling or similar issues, although reliance solely on the WRC report may be insufficient. However, the data and parameters within the WRC report could serve as valuable reference points for third parties or the tribunal in certain contexts to make proper factual findings.
The absence of strictly good weather does not preclude an underperformance claim due to fouling, engine issues, or intentional slow steaming. A reasonable and objective loss assessment is deemed sufficient without necessitating an excessive evidential burden or complexities. A thorough examination of the facts of the case and the available evidence will allow a specialist or an experienced arbitrator in such disputes to render a well-informed decision. This fact-finding exercise is not within the scope and role of the WRCs.
Note:Â This commentary serves as an analytical perspective and does not constitute a reproduction of the original award summary, which can be accessed through LMLN.