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The parties sometimes neglect the weather routing clause. The clause functions to extend to the source of data from which good weather might be derived and permit the engagement of a weather routing company (“WRC”) to assess the vessel’s performance strictly as per the contractual yardstick. Notably, it adds that the parties refer the dispute to another WRC or expert for final and binding determination or provide an alternative procedure before the parties commence arbitration. Then, in case of dispute, the parties realise the costly and time-consuming process of interpreting or implementing the clause, e.g. what at first glance seems to be a ‘final and binding’ determination; on closer reading, it is not always the case. In consequence, an awkward party may want to raise the issue as a tactical obstacle to push for settlement, especially in low-value claims. Therefore, the matter needs detailed examination when it arises, and it can be very challenging.  Current case In this case that was settled, the parties disagreed on these matters: (1) whether the issue falls within the scope of the weather routing clause; (2) whether, as a matter of construction, the issue falls to be determined by a 3rd WRC (construed as an ‘expert determination clause’) or shall be referred to arbitration without delay; (3) whether the parties should agree on the instructions to be given to a 3rd WRC to make the assessment(citing case law to support that otherwise the experts’ appointment is not complete), (4) whether it is a prerequisite the WRC prove it is independent, and (5) whether there are grounds to challenge the performance analysis of the expert or another WRC. Previous cases- observations Based on experience in similar cases, the parties less frequently challenge the findings of a 3rd WRC if adequately appointed. Instead, a third-party involvement fails to get off the ground simply because of a failure in the appointment process, mainly when the primary issue concerns a question of interpretation, e.g. whether positive currents apply or not, whether 24 hours of good weather should prevail between noon-noon, ECO WOG, etc. Some debated issues (the list is not exhaustive) were: Part A (1) whether the clause is enforceable (an agreement to agree);(2) whether the clause bites in the circumstances or not (words like independent, reputable, well-established, substantial / significant / consistent discrepancies or differences, etc. caused a point of argument);(3) whether it is a proscription of an optional contractual procedure as distinct from a mandatory one (”shall be referred” make the alternative procedure mandatory?); (4)Whether other dispute resolution procedures must be exhausted before arbitral proceedings commence;(5) whether there are procedural prerequisites that, on its true construction, are conditions precedent to a valid arbitral reference; (6) whether the condition has been waived by the party relying on the clause; (7) whether commencing proceedings would breach the agreed dispute resolution mechanism set by the clause (premature claim, real vs hypothetical dispute);(8) whether and when it is the right moment to refer the matter to arbitration as to avoid potential challenge (it is for the arbitrator to determine the consequences of any alleged breach of the procedural requirements stipulated in the relevant clause); (9) whether this is a matter of jurisdiction or admissibility; Part B (10) whether the clause contains the elements of an ‘expert determination clause’ and can be construed in this way under this context; (11) if yes, whether there are grounds to challenge/attack the determination;(12) whether the parties must agree on the instructions/methodology before the WRC make an assessment and same to be on reasonable terms; (13) whether implied duty of the parties to cooperate and expedite or not impede the procedure (duty of reasonable diligence to bring about the event) ; (14) whether the ‘expert’ has exclusive jurisdiction to decide the issues in dispute (say, there is an ECO WOG claim, will this be referred to a WRC for determination?);(15) whether the expert/ WRC is precluded as he has predetermined the issue (e.g. a WRC that has shared/published their general methodology to clients, etc.) . (16) whether the expert ( when the clause referred to expert and not to WRC- an important distinction to be made) applied the agreed weather data and the proper methodology in assessing performance, etc. For the above, the parties referred to authorities to support their position but under a different context. For speed and consumption claims, a few published London Arbitration awards touch on this topic. The issue becomes more challenging when: there is (not often) a ‘pathological arbitration clause’ (i.e. specific characteristics are not satisfied as to be an effective arbitration agreement), there is a multi-tiered dispute resolution clause or a time bar provision or when hire deductions were made against the express wording of the charter- a party makes an application for a partial final award without delay. Since the possibility of challenging the expert’s decision is limited, the parties rely either on points of construction, especially when the clause is ambiguous or on technical procedural obstacles that may strangle this process at birth. Fewer disputes arose when: (1) the wording was precise (without words like consistent/ significant/ reputable, etc.), (2) the clause listed the companies to be appointed in case of a dispute over the vessel’s performance or (3) as most times the parties would not leave the entire process at the discretion of the expert (or a WRC), there was an option to either settle amicably within [x] number of days or refer the matter to arbitration. The parties engaged more in settlement discussions and settled the dispute without following time-consuming procedures. The above makes clear that, when the clause is said to be construed as an expert determination clause, there are some well-known critical areas of complexity and uncertainty, which might be said to be not within the background knowledge of the parties and did not qualify as part of the “matrix of fact” ( a literal interpretation should be avoided). Besides, it is necessary to examine the contract itself to decide what the parties intended in every case, and only limited assistance can be gained from previous cases decided under different contexts. Therefore, the issue needs detailed examination when it arises, and it can be very challenging. Still, it is more sensible that the parties’ presumed intention was to leave the WRC to consider the evidential part only. As said, it is unlikely the parties to have intended the tribunal to deal with deductions from hire based on breach of the performance warranty but the WRC to decide the validity of the claim, as this would preclude both disputes from being determined by the same dispute resolution process; thus the clause cannot be construed as an expert determination clause and a WRC is not the final decision-maker.

The vessel followed the longer route, and the master’s decision was not justifiable on the evidence. Owners were liable for the added costs and time due to deviation. Some observations on the adopted deviation methodologies were included, mainly due to CII rating scheme. The Background The vessel was chartered on an amended NYPE 1946 form for five voyages, three southbound and two northbound. During some voyages, the charterers contended that the ship took a longer route than the customary shorter route, deducting hire and fuel costs. However, the owners asserted that the Master’s route choice was justified during the hurricane season for the safety of the crew, vessel and cargo. As a result, the dispute was referred to arbitration under the HMAA Rules, and the sole arbitrator found for the charterers. The arbitral tribunal The charterers bear the burden of proving deviation. In this case, deviation existed as the vessel did not follow the shorter route ( i.e. the northern route). Under clause 8, owners have a duty to proceed with the “utmost despatch”, and by following a longer route, the charterers have established a prima facie case of deviation. The burden is now shifted on the owners to prove the deviation was reasonable. The speed and consumption clause stated, “it is agreed that Ocean Routes, Inc.’s report shall be final”. However, this did not make the weather routing the final decision-maker as the dispute was unrelated to this clause. [ Comment : the tribunal was not addressing this point as it found it unrelated to the claim and should not be implied that if the issue falls within the clause, a different decision would be reached- see here: https://www.charterpartydisputes.com/post/weather-routing-company-report-final-and-binding ]. Owners alleged that the deviation was reasonable as the voyages occurred during the hurricane season. Still, no weather warnings were issued that time. Additionally, the Owners failed to submit evidence to prove that the weather was severe or bad to support their contention that the choice of route was a necessary precaution for safety reasons. Finally, the voyages were short, and the Master would have sufficient advance notice of bad weather (if any). Thus, the tribunal found the owners’ argument unpersuasive. Owners relied on clause 11 to support the proposition that the charterers have a duty to provide explicit voyage instructions, advising the Master which route to take. However, the tribunal rejected this proposition as the clause 11 relates to general instructions and matters of navigation fall on the owners under clause 26. Owners raised a waiver/ estoppel argument to support that since the charterers never objected to the masters’ choice upon receiving the masters’ daily reports in advance, charterers have waived their right to claim deviation. Again, the tribunal rejected this argument. General comments There are various adopted methodologies in the market to calculate loss due to deviation. In a previous case, owners and charterers appointed their weather routing company to issue a post-performance analysis and a deviation report. The x report showed that there is time loss due to deviation even if the ship follows a shorter than the proposed route since by applying weather models, the X company’s report showed that the actual route was not the quickest, hence the time loss. Therefore, the issue turned on the applied weather factors to produce the results and whether this methodology was warranted. Of importance, some weather routing companies adopting this methodology include a note in their reports that they would not be able to support any inquiries about this methodology. By default, this causes a point of argument. On the other hand, Y company expressed the view that it is illogical to produce any deviation claim when the actual route was shorter than the direct route. In particular, their methodology was as follows: one compares the distances (actual vs proposed route), and there is deviation only when the actual route is longer than the proposed route (for example, as happened in this case). The obligation to proceed with utmost despatch means taking the shortest and quickest route to the destination port. The shortest route is not always the quickest route. “Utmost despatch” relates to distance and time -not just distance that some WRC erroneously apply- as illustrated by London Arbitration 10/05 and the Hill Harmony (HL). However, the time aspect is still not yet based on a proper methodology and remains a troublesome issue. Notably, a third routing co. will be appointed when there is some basis to support the masters’ decision to proceed on another route(see London Arbitration 15/05) and (likely) calculate different time losses by applying a different methodology(for example, based on weather factors), thus assisting a party in negotiating the claim. Here, the masters’ reasons for disobeying the charterers’ orders were unconvincing, which was fatal to the owners’ case. This and many other examples of deviation claims illustrate the complexity of calculating loss due to deviation, and their results can be quickly challenged in some cases. Another practical example with six different methodologies discussed in my published article: https://charterpartydisputes.com/how-do-you-calculate-loss-following-a-triangle-form-deviation/ Therefore, will the varied methodologies adopted so far require changes in view of the CII scheme? Note: This is only a summary of the full award(issued in 1999) published in JUS MUNDI ( https://jusmundi.com/en/conflict-checker ). Most of these awards come into the public domain through enforcement under the NYC 1958. Picture: prepared in Netpas: http://netpas.net/

The words “without guarantee” (WOG) have a comparatively well-settled meaning  viz  that there is to be no liability in the absence of fraud or bad faith. However, similar disputes occasionally come before arbitral tribunals or – under specific circumstances – are settled in practice. For example, this was an unreported (up to recently) decision issued in 2012 dealing again with this matter. The readers may find the decision regarding the unsuccessful defence on “duress” interesting since there are limited published LMAA decisions on this point ( https://www.charterpartydisputes.com/london-arbitration-economic-duress-and-quantum-meruit ), and commonly this defence failed. *This practice area cites part of this award (after removing the parties’ names) and general observations from other settled claims. The underperformance claim (Award) The charterers claimed $23,524.82 on the basis that there was underperformance on a voyage from Ponta Madeira to the South West Pass. They relied upon a X company’s report. D’s first response was that there was no speed or consumption warranty in the charter and therefore no claim could lie. This was because in Appendix A to the charter, which set out the description of the ship’s performance, appeared the words “all details about and without guarantee”. Y sought somehow to suggest that the charter did not accurately reflect the parties’ agreement. However, they did not claim rectification, a failure which itself would seem to be fatal to this contention. In any event, there was no basis for the argument. The fixture recap, although not containing the phrase in question, confirmed that all the terms and details were to be as per the “BTB” charter, i.e. the head charter which itself incorporated the “without guarantee” provision. That is enough to dispose of this point. In addition, the X report did not approach the matter properly. Y referred to D’s criticisms of this report as being “doubtless well-trodden”. Whilst that description may be correct, if somewhat sarcastic, it is right because the criticisms are right. So, even absent the “without guarantee” point, Y had no basis for this claim. General comments and observations This dispute arose in 2008 under strong market conditions when the hire rate was USD 70,000.00 per day. That assists in understanding that the speed reduction was minor to produce a claim of $23,524.82 since the distance between these two ports is about 3,250 nm. Likely, such speed reduction cannot justify technical or mechanical issues- a similar observation was made in London Arbitration 4/94. Under English law, three very short judgements deal with the words “without guarantee” or “WOG”, with the more recent being The Lipa [2001] 2 Lloyd’s Rep 17, which emphasised construction issues; the word “details” was a linguistic stumbling block. It seems that construction issues arose in the above LMAA award when the description was incorporated by reference to the charter as Appendix A and in another LMAA award published in 2006 that the tribunal found the relevant provision as not “the most carefully drafted”. While in a more recent LMAA award, the charterers sought disclosure of documents to indicate that the speed and consumption figures were given in good faith, the claim again failed for many reasons. Notably, the ship was slightly underperforming, and the methodology applied was incorrect (albeit not discussed in the summary). So, even absent the “without guarantee” point, the claim would likely fail in any event. The previous awards and decisions involved largely matters of interpretation, but there is also a factual element regarding the loss calculation, and owners’ statements about speed and consumption are bona fide . However, it has not been considered in the above cases -as it did not arise- how the loss would be calculated when there is an established breach under the off-hire provision, maintenance clause or the due despatch clause and the speed/consumption figures were given on a WOG basis. One way suggested was to consider the difference in the hire rate, as the charterers would pay less hire if the vessel had been adequately described. In general, the loss calculation- what the actual performance of the vessel is measured against- has been a constant debate during settlement negotiations. Thought-provoking views For example, it was stated in a journal law article: “This case has caused considerable debate within the shipping industry… the arbitrators are required to follow the law unless the charter party in a dispute has sufficient provisions distinguishing it from The Lipa decision”. The author raised an important question: What if the ship performed at 9 knots where she was described at about 13 knots? He expressed the view that that would be enough to lend the owner in giving the description in bad faith. Another author proposed (for the previous cases before the Lipa) another way to approach the WOG by breaking down the kind of obligations and then identifying when the without guarantee applies. First, there is an obligation to exercise reasonable care in giving an estimate. Second, there is an obligation to provide the estimate in good faith; e.g., if he did not genuinely believe that his estimate is correct, it would be in bad faith. And third, there is an additional obligation to meet the estimate- once given- at the time the other party is required to perform. The WOG can only apply on the last part to safeguard for unforeseen events after giving the estimate (examples are found below). To exclude the obligation of reasonable care requires more precise words than “WOG”. Otherwise, there may be an abuse of the estimate, or it will act as a shield to claims even when the estimate was seriously wrong. Can this work by analogy to “WOG” speed and consumption description? Another author expressed the view that these words are damaging the rational purpose of commercial contracts. The author suggests that a better way forward is to depart from the judgement of Longmore J ( The Lendoudis Evangelos II ) and construe the words as requiring the presentation to be made in good faith and on reasonable grounds . Another author provides practical (but short) guidance on the alternative ways to pursue a claim in case the speed & consumption description are given on a “WOG” basis. As explained, this is not the last word for the Charterers; still an uphill challenge. Another author referred to the effect of the UK Misrepresentation Act 1967 that was not in place in the Japy Freres (CA) and not considered later in the Lipa. He recognised that WOG description as a representation of fact under s 2(1) is yet to be tested, and there can be some uncertainty associated with the future of “WOG” qualifications. Another recent judgement confirms that it is challenging to succeed in an actionable misrepresentation of performance warranties. Many practical examples prove that a vessel was delivered with a hull fouled for reasons beyond the parties’ control, i.e., sudden delays at ports, non- availability of divers, port restrictions to carry out underwater cleaning (muddy waters), etc. Settlement negotiations Again, even relying on alternative ways, it remains “without guarantee” that a party will succeed in arbitration. For reasons explained, the published summaries offer no guidance on what happens in cases of hull fouling or engine issues, while the description was given on a “WOG” basis. In a previously settled case in arbitration, the charterers sought disclosure of documents proving the vessel’s performance before entering the charter since an underwater survey showed excessive hull fouling. The tribunal rejected the charterers’ request for disclosure. It highlighted that a breach of a good faith qualification amounts to an allegation of bad faith; a serious allegation. The tribunal was unwilling to assist a party in gathering evidence retrospectively to support this allegation. The lack of corresponding RPM made the charterers’ case more difficult. Since the disclosure request failed, the prospects of success were substantially reduced, which prompted settlement. Of interest, Charterers would produce a report from technical experts as persuasive material before the tribunal to use as a guideline to assess the quantum of loss. The alternative loss analysis compared the time under a clean hull (corrected distance using current corrected speed/average speed on hull clean) and the actual time per vessel’s logs. By analogy, see the Divinegate-https:// www.charterpartydisputes.com/post/the-divinegate-2022-performance-claims Construction issues Some construction issues that arose during the settlement negotiations were: 1-whether the terms from a previous CP incorporated in full or in part, and could be read sensibly together with the terms in the host document. 2- whether the provision in the recap is to be read together with the printed version or in substitution for it. 3- whether the recap terms entirely replace the performance clause in the questionnaire/ separate document forming part of the CP by reference. 4- the parties tried to distinguish the Lipa, as it was a decision under a Baltime form, and the parties had not raised any arguments about hull fouling or other technical issues affecting performance. For example, it was argued that the position is different under container vessels’ contracts, given the entirely different nature and characteristics of such agreements. 5- the speed and consumption figures were linked to a specific RPM, and the vessel was not proceeding with that RPM. The point was that the speed might not be warranted, but the RPM is. As a result, some claims were settled. A right balance? The words “without guarantee” provide a strong defence for owners. As sometimes suggested, if it cannot be removed, a special clause could be added to strike the right balance. For example, charterers request evidence of prior performance as a condition to agree on the ‘WOG” description, or the “WOG” in speed and consumption does not apply in cases of fouling or other mechanical/ technical issues affecting performance. Then, the described speed will be used for calculating loss, etc. Note: the LMAA award was published in Jus Mundi https://jusmundi.com/en/conflict-checker . Such awards mostly come into the public domain through enforcement under the NYC 1958; the operative provisions of the Convention have been transposed into the law of England and Wales by Part III of the Arbitration Act 1996.

It has recently become a frequent issue during settlement negotiations of performance claims whether currents must be factored in to calculate loss when the performance warranty mentioned nothing about currents. The parties relied on performance reports issued by their appointed weather routing companies to defend or pursue the claim. The applied methodology in the reports was different in some cases. The scope of this post is to share some practical observations from handling or negotiating claims and not to answer the below questions. However, a proper answer to these questions may assist the parties during settlement negotiations. For example, the minimum good weather speed was 12.00 kts. The charter party warranty speed was in good weather up to and including BF 4 and DSS 3 (Significant wave height 1.25 meters). The starting point was to consider whether the vessel performed as described, i.e., did she attain the minimum good weather speed 12.00 kts? If the vessel performed, shall the currents be factored in to produce a loss technically? i.e. does this comply with normal rules on damages or does it bring the claimant to a better financial position? Will a tribunal award damages when no “actual” damages exist? The next point was, should the currents be factored in when the vessel did not perform? Say the ship performed at 11.00 kts (facing adverse current -0.30 kts). Shall the speed applied for loss calculation be 11.30 kts? if not, will that lead to over-compensation? Will a tribunal award “more” damages or be cautious not to “over-compensate”? Does this methodology comply with the minimum performance rule? Does The Divinegate offer any guidance on the point or not? Some say it provides guidance, but others say it does not because it deals with another issue; “no adverse current” was part of the warranty, whereas here, the warranty mentioned nothing about currents. If the Divinegate does not directly address this point, does it still guide the parties to the point regarding “over-compensation” addressed above? In case the vessel did not perform, will a tribunal consider other methods in calculating loss? See, for example, the recent awards London Arbitration 23/21 and 15/23 that the slip was considered. In London Arbitration 2/24, the tribunal (specialist arbitrator) would consider the slip in case he found that the ship underperformed. However, because the ship performed that was the end of the issue (does this answer the question 1 above?). In another unpublished award, the tribunal also held that if the ship performed, no matter whether this was with the assistance of currents or not, that was the end of the issue. The list of the questions is not exhaustive.

Context and Diver’s Inspection A significant point of contention was the impact of a brief shifting period between two loading ports on activating the hull fouling clause. The diver’s inspection of the underwater area, including the propeller, hull, and rudder, highlighted the challenges faced in assessing such conditions, particularly in the demanding environments of West Africa. Dispute Overview The core issue was whether this shifting period interrupted or reset the 20-day timeframe required to trigger the hull fouling clause. This clause would mandate that the charterers be responsible for cleaning the vessel before it departed from the loading port. The diver’s inspection was crucial in determining the state of the vessel’s underwater components, which directly influenced the dispute’s outcome. Entangled ropes at the propeller added another layer of complexity, potentially impacting the vessel’s performance. Legal and Operational Considerations The underperformance claim had to be evaluated against other charter party provisions regarding hull fouling liabilities due to prolonged stays at the port. The key considerations included: Interpretation of the Hull Fouling Clause: Whether the clause was clear regarding the uninterrupted 20-day period required to trigger cleaning responsibilities. The potential for ambiguity in the clause, which could influence the charterers’ obligations. The clause was not the standard Bimco Hull fouling Clause ( https://www.bimco.org/contracts-and-clauses/bimco-clauses/current/hull_fouling_clause_for_time_charter_parties_2019 ), but an amended version. Impact of the Shifting Period: Determining if the brief movement between ports constituted a significant interruption that reset the hull fouling period. Assessing the extent of hull fouling based on the vessel’s prolonged stay at these ports, with high sea water temperature. Assessing its implications on the vessel’s performance and charterers’/ Owners’ responsibilities. Evidence from Diver’s Inspection: The diver’s findings on the condition of the propeller, hull, and rudder provided evidence for the dispute. However, there were some conflicting and unclear points about the condition of the hull and the extent of fouling. Another issue was whether the diver’s report was to be considered as conclusive evidence binding the parties. It was not. The report was challenged on various grounds. Conclusion The dispute required a detailed analysis of the hull fouling clause’s wording and the diver’s inspection report. Ultimately, the decision hinged on whether the brief shifting period was considered an interruption significant enough to reset the 20-day period, thereby affecting the charterers’ liability for cleaning the vessel before departure from the loading port. In some instances, the diver’s report may not sufficiently establish the extent of fouling (for different reasons). In such cases, additional evidence can be crucial in determining the extent and nature of the fouling. Closely examining the engine parameters from the vessel’s logs and independent performance reports on the voyage can be helpful. #divers #fouling #hullfouling #Underperformance

Performance dispute- bunkers- alleged engine issues- slow steaming- entangled ropes- performance analysis- bunker quantity dispute The vessel departed from the loading port, and the charterers observed she was slow steaming en route. At the intermediate port, the charterers supplied the vessel with bunkers. Due to slow steaming (suspecting fouling), the charterers arranged for an underwater inspection, which revealed entangled ropes in the propeller and the diver removed the ropes. The vessel then resumed her sea passage to the discharge port and delivered the cargo. The charterers brought an underperformance claim. The owners denied that the vessel underperformed, submitting a performance report from their appointed Weather Routing Company (WRC) that indicated no good weather conditions were present during the voyage and the report produced no performance results. Furthermore, the owners argued that the bunkers supplied by the charterers were off-spec, leading to deficient performance. They also contended that the vessel was not on an “even keel” during the voyage, which was a condition in the performance warranty. Upon redelivery, the vessel had less bunker quantity than stipulated, and the owners claimed the price difference between the Charter Party (CP) rate and local market prices for the short quantity (“about”= 5% applied). The charterers rejected the owners’ arguments, asserting that the bunkers were not off-spec and that this was not verified by an independent laboratory. They also stated that the owners’ laboratory analysis did not show any significant operational difficulties with burning these bunkers. Additionally, the charterers argued that the entangled rope in the propeller was the owners’ responsibility and contributed to the slow steaming. They insisted that the bunker shortfall resulted from the owners’ breaches and should be their liability. Furthermore, the charterers contended that the WRC report from the owners did not apply the agreed benchmark conditions for measuring performance and should be ignored as evidence. Lastly, the charterers claimed losses due to subsequent delays at the discharge port, because of the Vessels delayed arrival. In conclusion, both sides presented several claims and counterclaims regarding the vessel’s deficient performance. The core question remains: who was responsible for the vessel’s deficient performance (affecting also the other claims), and how should the loss be quantified (even if there was no good weather)? a WRC report is not sufficient to resolve such claims.

By a voyage charter party, on an amended Gencon 1994 form, the Owners chartered their vessel to the Charterers to load bagged bentonite jumbo bags at Mundra, India, for discharge at Sagunto, Spain. Owners claimed demurrage of US $181,057.20. The Charterers disagreed with the Owners’ calculation but admitted a lesser amount of US $88,538.44. Charterers had made no payment. Consequently, the parties referred the dispute to arbitration in London and each party appointed an arbitrator, both were LMAA Full Members. English Solicitors represented owners. English Solicitors initially represented charterers, but following a peremptory order, they advised the tribunal that they had no instructions to serve Defence submissions. Therefore, the tribunal determined the issues based on the documents and written submissions before them. The tribunal awarded Owners the amount claimed of US$181,057.20, together with interest and costs. The issue in this arbitration concerned the calculation of demurrage. Owners claimed the Vessel exceeded the laytime allowed and was on demurrage for 18.57 days. Owners claim US$181,057.20 is due after calculating demurrage. Charterers denied the full amount but admitted to a lesser amount of US$88,538.44. However, Charterers made no payment. The contract included the “General Strike Clause” and loading/discharging rates pwwd. The facts The Vessel arrived at the Outer Anchorage Tuna Buoy Mundra at 2112 on 21 September 2006, and NOR tendered. NOR was accepted at 0900 on 22 September. Laytime started to count as from 1400 on 22 September. The Vessel berthed at 1515 on 1 October 2006 for loading jumbo bags only. Loading commenced at 1805 on 1 October and completed at 0630 on 2 October. The vessel then shifted to the anchorage. She berthed again at 0435 on 3 October and commenced loading the bulk part of her cargo at 0600. That completed at 0230 on 4 October and the vessel shifted back to the anchorage at 0315. The vessel re-berthed at 2250 on 4th October and commenced loading the bagged cargo, which completed at 0855 on 6th October. The documentation was completed at 1015 and the vessel sailed. Owners submitted an invoice claiming demurrage of US $117,800.00 for the load port. The Vessel arrived at Sagunto at 0030 hours on 4 November 2006 and tendered NOR. Discharged commenced at 0800 on 9 November and completed at 2045 on 13 November 2006. Owners allowed a 50% demurrage rate due to strike action between 0800 on 6 November and 0800 on 8 November. Owners submitted an invoice claiming demurrage of US $67,900.00 for the discharge port. The dispute Charterers disputed Owner’s calculations and submitted their own laytime statements, arriving at a demurrage of 4.71987 days or US$ 47,198.71 for the load port and 4.13397 days or US$41,339. 73 for the discharge port. They did not, however, provide any explanation as to why they considered the Owners calculations to be wrong and just attached their calculations. However despite their own assessment, Charterers failed to pay to Owners even their own calculated demurrage in the sum of US $88,538.44. General Strike Clause (a) If there is a strike or lock-out affecting or preventing the actual loading of the cargo, or any part of it, when the Vessel is ready to proceed from her last port or at any time during the voyage to the port or ports of loading or after her arrival there, the Master or the Owners may ask the Charterers to declare, that they agree to reckon the laydays as if there were no strike or lock-out. Unless the Charterers have given such declaration in writing (by telegram, if necessary) within 24 hours, the Owners shall have the option of cancelling this Charter Party. If part cargo has already been loaded, the Owners must proceed with same, (freight payable on loaded quantity only) having liberty to complete with other cargo on the way for their own account. (b) If there is a strike or lock-our affecting or preventing the actual discharging of the cargo on or after the Vessel’s arrival at or off port of discharge and same has not been settled within 48 hours, the Charterers shall have the option of keeping the Vessel waiting until such strike or lock-out is at an end against paying half demurrage after expiration of the time provided for discharging until the strike or lock-out terminates and thereafter full demurrage shall be payable until the completion of discharging, … (c) Except for the obligations described above, neither the Charterers nor the Owners shall be responsible for the consequences of any strikes or lock-outs preventing or affecting the actual loading or discharging of the cargo. Laytime calculations According to the owners’ load port calculations, laytime commenced at 1400 on 22 September and expired at 0536 on 24 September, when the Vessel came on demurrage. Shifting time was not counted. Charterers’ laytime calculations allowed laytime at only 50% for waiting time but there was no justification for this. The tribunal found no obvious errors in Owners’ calculation and allowed demurrage as claimed. At the discharge port, laytime began to run at 1400 on 4 November. A strike, of which Charterers had prior notice, started at 0800 on 6 November and ended at 0800 on 8 November. According to Owners’ calculations laytime was only claimed at 50% whilst the strike continued. The Vessel came on demurrage at 0130 on 7 November. Although the strike ended at 0800 on 8 November, rain did not permit discharge. Owners’ statement correctly shows demurrage as running during the rain period. Charterers, on the other hand, did not allow any time for the strike and they disallowed the period of the rain stop on 8 November. According to Clause 16 (b), The General Strike Clause, time counts until the expiration of the stipulated time allowed for discharge and thereafter at half demurrage until the strike terminates. Notwithstanding Owners’ entitlement to claim in full during the laytime period, they only claimed at 50%. Once again, the tribunal found no obvious errors in Owners’ calculation and allowed demurrage as claimed. Costs As the Owners were successful, they were entitled to their recoverable costs to be assessed on the standard basis in accordance with Section 63(5) of the Arbitration Act 1996. The tribunal reserved jurisdiction to assess recoverable costs should the parties not agree. Note: For more information, you can visit: https://jusmundi.com/en #BadWeather #Laytime #Strike

Disputes arose under a Contract of Affreightment (COA) on a modified Gencon form. Owners commenced arbitration to recover the costs regarding the extra war risk premium for calling Messaied, bunker escalation surcharges and shifting expenses/ bunkers during shifting. A panel of three arbitrators determined the disputes. According to the contract, “All disputes arising out of or in connections with this contract shall be exclusively arbitrated at New York in the following manner and subject to U.S. law..” The relevant clauses to these disputes read as follows: Clause 31 – (Shifting) “… Shifting between berths if any ordered by the Port Authority to be at Charterer’s time, risk and expense.” Clause 32- (Port Charges) “All port charges and any other expenses relating to the vessel are /or Owners (sic) account including taxes/ dues on vessel.” Clause 33 – (War Risk Premium) “.. Any increase in premium imposed on or after the date of this contract or additional premiums and or calls for such insurance including blocking and trapping and any crew war bonus and/or additional wages are to be borne by Charterers and are due on presentation of Owner’s invoices and are to be settled with Owners every 5 voyages.” Clause 44 – (Bunker Escalation/Descalation) “This contract of Affreightment is concluded on the basis of a price of U.S. $350.00 per metric ton of IFO 380 CST ISO 8217:2005 RME 180„ U.S. $361.00 per metric ton of IFO 180 and U.S. $660 per metric ton MDO ISO 8217:2005 DMB (‘the base prices’). If the prices actually paid by the owners during the period of this contract for the quantity consumed on the contracted voyage(s) are U.S. $5/metric ton or more higher or lower than the figures in the above paragraph, then the difference between the base prices and the prices actually paid shall be paid by the Charterers to the owners (sic) or Owners to Charterer as the case may be on production of the Owner’s account thereof.”  War Risk Premium The tribunal awarded owners reimbursement of $138,162.15, as claimed. This amount covers the “additional premiums” charged by War Risk underwriters for the several vessel calls at Masaieed, an excepted war risk area. Under Clause 33, those charges were for the charterers’ account. The several insurance broker invoices presented adequately supported the charges claimed by the owners. [Author’s comment: the parties usually dispute the applicable charges. Some charter-parties mention the insurance premiums to be “ in line with London Market” or include a capped/ lumpsum amount or a calculation of estimated costs subject to no changes in the situation at the port of call (see for example now, Red Sea)]. Shifting expenses Owners relied on Clause 31 to claim for shifting expenses, including bunkers consumed during the shift between berths. However, Clause 31 did not allocate clearly the cost of bunkers to either party. The tribunal then focused on Clause 32 and considered that the phrase “and any  other expenses relating to the vessel are for Owners (sic) account”  can be read to include the bunkers claimed for shifting between berths. As there was nothing to favor the owners’ interpretation of Clause 31 over the language of Clause 32, the panel considered both clauses to be ambiguous concerning the allocation of the bunkers consumed for shifting between berths. As the COA was authored by the owners, the panel resolved that ambiguity against the owner and disallowed that portion of its claim. The panel was mindful that Clause 31 only entitled recover those shifting expenses incurred by order of the Port Authority. On the evidence, the panel found that in 8 voyages out of 14 voyages there was shifting for the convenience of the port authorities and allowed the shifting expenses to these voyages. Since the panel found that the fuel consumed during shifting was for the owners under clause 32, they have deducted the fuel portion of the owners’ claim from 8 qualified voyages. The panel allowed the owners the sum of $13,115.71 representing the shifting expenses claimed for those voyages less the fuel consumption component. Bunker Escalation/Surcharges As the COA primarily contemplated consecutive voyages, the owners contended that the bunker escalation surcharge was to be applied on a round trip basis for each laden and ballast voyage performed. Charterers questioned that analysis alleging that the clause was slipped into the COA without its knowledge or consent as it was not part of the previous COA. Charterers further argued that the bunker escalation surcharges should not apply to the round voyage but only to the laden voyage between Fujairah to Mesaieed based on Clause 44 “the quantity consumed on the contracted voyage(s)” and also upon the underlying supply contract stating, “Voyage starts from the time the vessel tenders the notice of readiness at Fujairah Port (NOR) and ends at the time the vessel completes discharge at Measieed Port.” The panel found that the charterers had time to examine the COA and object to its terms, rather they jointly signed the COA and were bound by its terms. In the absence of language that the surcharge was to be applied on a round trip basis Fujairah to Fujairah, the panel interpreted the “contracted voyage(s)” to be that or those for which freight was paid. The owners authored the COA and if, as it now contended, the bunker escalation was intended to apply to a round voyage, it ought to have chosen the language used more carefully. Not having done so, and the panel found that the bunker escalation applied only to each single laden voyage from Fujairah to Messaied. Having examined the charterers’ expert report to determine the bunker escalation costs, and owners’ calculations, the panel accepted the single laden voyage conclusions and calculations of the charterers’ expert showing balance due to the owners of $864,362.07 The Award The panel unanimously awarded the owners the sum of $ 1,121,783.12 as follows: Note: For more information, you can visit: https://jusmundi.com/en #BunkerCosts #Shifting

Introduction Loading and the supply of cargo was being delayed because of complications with opening a Letter of Credit for the purchase of the intended cargo, which Charterer stated it was working to put in place. In addition to the demurrage due, Owner asserted a claim for profits that it would have earned had Charterers performed its obligations under the charter party. Notice of Readiness Owners did not submit a copy of a Notice Readiness (NOR) that Owner states was tendered upon vessel’s arrival at the Southwest Pass anchorage. However, Owner’s chartering manager, in a signed Declaration stated the NOR was given at 1110 on February 14, that laytime began 12 hours later at 2310 that day and that the vessel went on demurrage at 0640 on February 16. In a statement dated March 6, 2014, signed both by Mr. X and Owner’s CEO, Mr. Y, Owner confirmed the same times for the NOR and commencement of laytime. Owner’s Amended Submission also states that time on demurrage began at 0640 on February 16. Owner’s laytime calculations and demurrage invoices, however, record time on demurrage beginning 24 minutes later, at 0704 on February l6. This latter calculation reflected allowed laytime based on a cargo intake of 31,900 MT. Given that the charter provided for a cargo of 31,500 MT, 10% more or less in Owner’s option, the panel accepted as correct, the calculation of allowed laytime based on an assumed intake 31,900 and. therefore, accepts that demurrage began at 0704 on February 16, as reflected in Owner’s laytime statement. The panel also accepted that an NOR was tendered at 1110 on February 14, given the numerous references to it in documents sent to Charterers in the period before the charter cancellation, none of which Charterer disputed. Demurrage ends The panel did not accept that the vessel remained on demurrage following Owner’s cancellation of the charter. Neither the provisions of the charter nor any applicable principles concerning the computation of demurrage known to the panel, justify the continuation of demurrage beyond the cancellation of the contract. Loss of profits The panel found that Owner’s claim for lost profits in the amount of $225,574 was insufficiently supported to warrant an award. The panel accepted that Charterer’s failure to supply a cargo was a fundamental breach of the charter party and that this breach gave Owners the right to claim for damages reasonably owing from this act by Charterer. Based upon the documents submitted, the panel was unable to conclude what would have been the specific amount of profit, if any, that Owner would have made if the charter party had been properly performed. The panel did not find the data on voyage costs, such as the time charter hire payable to the head owner, or port disbursements, bunker costs, etc., detailed enough to calculate whether or not the voyage would have been profitable. In addition, details on the ballast voyage expenses were not provided, which the panel needed to appraise the total commercial undertaking. As a consequence, the panel could not calculate the specifics of Owner’s claim and thus was unable to determine whether Owners indeed would have made a profit had the cargo been supplied and the voyage been performed. New York-Three arbitrators 2014 Comment It demonstrates how the panel addressed the issue of the missing NOR and their reasoning behind accepting that the NOR was submitted at 11:10 AM on February 14. The lack of adequate evidence and explanation was detrimental to the Owners’ loss of profit claim. Regarding the termination point of demurrage, a similar perspective has been adopted by other tribunals in London. Please note: Readers are encouraged to visit Jus Mundi ( https://jusmundi.com/en) for further information and a comprehensive understanding of the tribunal’s decision. #lossofprofits #Noticeofreadiness #Repudiation

London Arbitration (LMAA, Sole arbitrator 2012)- Repudiation and calculation of net deadfreight claim The Carrier’s dead-freight invoice (US $231,869.26) represented gross dead-freight US $249,000 less stevedoring US $17,130.26. The Carrier stated that the amount said to be stevedoring also incorporated the port expenses that would have been incurred had the cargo been loaded. The Merchant maintained that the figure was too low and that the Carrier had not included the notional port expenses in their calculation of net dead-freight. To illustrate its point, the Merchant submitted a copy of an invoice for pilotage for the “vessel [Redacted]” at Houston in February 2010 in the amount of US $6,148.89, observing that there would have been other expenses, such as wharfage, payable for a call at Houston to load the cargo under the booking note. Held, in agreeing with the Merchant, the figure given by the Carrier as total port and stevedoring expenses which would have been incurred, US $17,130.26, appeared too low. Based on the tribunal’s experience, while that figure was certainly appropriate for stevedoring at Houston, it could not have included port expenses there or at the discharge port. There were, in addition, the stevedoring costs at the discharge port to be taken into account, although these would not have been at the same level as the stevedoring expense at Houston. The tribunal calculated that the loading and discharging port expenses plus stevedoring at discharge would have been in the order of US $20,000. As no figures in this respect had been put forward by the Carrier, however, and to be as fair as possible to the Merchant, it felt better to take a conservative view and deducted US $25,000 from the amount claimed by the Carrier as dead-freight. Please note: For further information and a comprehensive understanding of the tribunal’s decision, readers are encouraged to visit https://jusmundi.com/en #Deadfreight #Repudiation

The Vessel was chartered on an amended BHPTime form. Various disputes arose under the charter and came before two LMAA Arbitrators for determination on documents only. Lawyers represented the parties. Owners’ claims succeeded in full, and Charterers’ counterclaims were dismissed. The disputes referred to arbitration concerned Owners’ claim for a balance of unpaid hire of $306,234.80, liability for which the charterers denied, and the charterers’ counterclaim for a balance allegedly due to them of $729,819.55, liability for which the owners denied. The ship was delivered to Charterers on 28 March 2007; the latest date for redelivery by them to head owners was 27 May 2008. In January 2008, Charterers sub-chartered the vessel on back-to-back terms, providing that the ship was to be redelivered “minimum 14 April 2008 to maximum 27 May 2008”. The major dispute between the parties arose because Charterers (and the head owners) assumed that a voyage that sub-charterers wished to perform could not be completed before 27 May 2008. They also assumed that the cargo Sub-charterers wished to load was not permitted under the charter. In due course, the parties agreed to extend the charter duration at an increased hire rate. One of the issues was whether Charterers’ message to the master to load a cargo of coal, asking for some information, amounted to voyage instructions with which the master failed to comply. The tribunal did not find this convincing, as no specific form was required for voyage instructions or orders. The tribunal turned to consider the nature of the cargo in the context of the agreed terms in the charter party that provided “the ship would not be required to carry bituminous coal” and having regard to expert evidence. Charterers said that during the negotiations for this fixture, oral representations were made by Owners’ brokers to the effect that steam/bituminous coal was a permissible cargo. The tribunal found this unacceptable without any particulars regarding who was alleged to have made such representations, nor when, where or how. Charterers purported to rely on a promissory estoppel or an estoppel by representation. They relied on a statement contained in a questionnaire to the effect that the ship had previously loaded 5 cargoes of coal in bulk. The tribunal thus considered the questionnaire and held that Charterers could not show that this was a representation upon which they were intended to rely, given that the parties had only just expressly agreed that bituminous coal was not to be permitted. It followed that Charterers’ reliance on the questionnaire was wholly misplaced. Charterers’ case on estoppel by representation or promissory estoppel failed. Equally, the tribunal rejected Charterers’ case on estoppel by convention. Charterers’ argument was an assumption as to future conduct rather than an assumption of present fact or law, as was required for estoppel by convention. For this reason alone, the point had no merit. The tribunal was satisfied that the orders to perform that voyage were unlawful as bituminous coal was and remained an excluded cargo, and because they were satisfied that, in any event, the voyage could not have been performed by the latest date for re-delivery, there was no breach by Owners in refusing to perform it, and consequently, no counterclaim arising from Owners’ refusal that could succeed. Charterers brought several counterclaims on different grounds. Charterers raised an underperformance claim relying upon a performance report issued by a major weather routing company. The description of the ship’s performance was given “all details about and without guarantee”. The Tribunal dismissed this claim. Two of the issues (and for this summary) related to Vessel being off-hire due to alleged delays: 1.Delays in discharging wet cargo. Charterers contended that there were delays in discharging because the cargo was excessively wet. Owners pointed out that certain periods during this off-hire period had nothing to do with the problem relied upon by Charterers. Also, the ship was not responsible, and there was no question of off-hire. The cargo was wet because it was loaded during rain, a fact for which Charterers were responsible; there was no failure on the part of the ship to discharge any excess water which accumulated in the holds, and in any event, Charterers could not bring themselves within the off-hire clause because they could not show that the full working of the ship was prevented: rather it was the working of shore equipment that was hindered. Held, there was simply no evidence supporting Charterers’ case, and they could not get within the off-hire clause. At a late stage, in their closing submissions, Charterers sought to argue that Owners were bailees of the cargo, and it was therefore necessary for them to show why the alleged difficulties arose. However, there was no situation of bailment here; Charterers had no right to the cargo, and In any event, the concept of bailment could not affect the burden of proving an off-hire cause, which remained with Charterers. 2. Off-hire to lift bunkers. To reach Wilhelmshaven, the ship had to pass through a sulphur oxide emission control area, where burning high sulphur fuel oils was prohibited under MARPOL. Owners said that Charterers failed to provide suitable oil, rather insisting that the ship proceed through the area whilst burning high sulphur fuel oil. That the ship refused to do, and she called at Flushing to take on some low sulphur fuel oil. Thus, Charterers contended that she was off-hire during that call. Held, in their earlier submissions in arbitration, Charterers had argued that there was a breach of an implied term of the charter by Owners in failing to request bunkers in a timely manner and that no low sulphur oil was available for timely delivery. They did not, no doubt advisedly, pursue those arguments in their closing submissions, but they did persist in saying that the ship should have proceeded through the relevant zone in any event because they had offered an indemnity. However, as Owners argued, any such indemnity would have been void for illegality, and in any event, a ship cannot be required to ignore environmental regulations. As Owners’ expert said, no reasonably prudent owner would countenance a deliberate breach of MARPOL. Accordingly, Charterers’ claim to put the ship off-hire failed, along with all their other contentions in this arbitration. Note: For more information, you can visit: https://jusmundi.com/en

The parties rely on their appointed weather routing company’s report upon dealing with performance disputes during the negotiation stage and when the dispute comes before a tribunal. In practice, these reports are not always identical for several reasons. What follows are some practical tips to evaluate conflicting performance reports submitted by the parties during negotiation or arbitration of performance claims.    Weather Routing Companies First cited in reported cases of Lloyds Law Reports in 1976 (The Washington [1976] 2 Lloyd’s Rep. 453) and later in The Evdokia [1980] 2 Lloyd’s Rep. 107 as “evidence” to contradict the weather conditions reported by the master during the voyage. Later, the reports were used to evaluate the Vessel’s performance. Recently, some London tribunals held that the WRC’ function derives from the parties agreement ( the contract) that permits their involvement to assess the Vessel’s performance but is strictly in line with the charter-party terms. Reports were used as performance evaluations: It is not enough for a party to assert that the Vessel underperformed in order to pursue a claim. It requires evidence (the one who asserts must prove). A tribunal could only decide on the evidence before it; understanding the evidence is part of the reasoning process. A tribunal approaches the case by considering and weighing up all relevant and admissible facts and evidence. However, when a party submits a performance report as evidence, it is not treated per se as a “fact”(a party contends that “ based on X report it is a fact that the Vessel underperformed ”). Its probative force as “evidence” needs to be analysed: It must be evaluated, tested against the other evidence and be given the weight it deserves in the circumstances. It cannot be accepted at face value. Its evidential weight would be lower when the report is not comprehensive (requests for clarifications are useful). Expert evidence (independent evidence) may reduce the evidential weight of the report. Negotiation Step 1 : the starting point is the contract (what did the parties agree?) Any evidence-preference clause? If the parties exclude a company (by agreement), its’ report will be ignored(see, e.g. Arb 21/18). Step 2 : Does the report properly apply the benchmark conditions? any report other than one strictly in compliance with charter-party provisions is non-contractual and unenforceable (see e.g. Arb 32/22). Requests for clarifications; WRC to justify their methodology or missing entries in their report( see e.g. Arb 15/23, 23/21). Step 3 : Does the report’s methodology comply with both the terms and the substantive law of the contract? (referring to the proper application of damages can resolve the conflict). If there is no actual loss, the claim will fail. If there is a loss, does the report calculate it properly (see, e.g. Arb 12/14; The Divinegate- how the court approached conflicting expert evidence)? Step 4 : Use expert evidence(if needed)/ 3rd routing company to challenge or strengthen the findings. As this option adds costs, a party will resort to this option later depending on the value of the claim/ progress of settlement negos. Arbitration The Arbitration Act 1996 is founded on the principles of party autonomy and “the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”( s1 AA 1996). Arbitrators are mindful of their cardinal duty, “giving each party a reasonable opportunity of putting his case and dealing with that of his opponent” ( s 33 AA 1996). It is a balancing exercise between avoiding costs/ delay and giving a reasonable opportunity to a party to put his case. Tribunals strive to give effect to the parties’ bargain, i.e. a weather preference clause will be given effect. Doing so may prevent unnecessary costs and inquiries when evaluating multiple reports as evidence. However, even a “final and binding report” may be held to be unenforceable when not prepared in line with the charter terms. Requests for further information or clarifications enable the tribunal to make a finding, i.e. some entries are missing in one report, or the applied methodology is uncertain (see, e.g. London Arbitration 23/21, 15/23, 2/24). Failure to comply with the tribunal’s  orders can lead to sanctions for a party’s non-compliance( s 41, AA 1996) –  e.g. “ the defence of Sub-Charterers in relation to underperformance/overconsumption (and by extension the indemnity claim against Owners by Charterers) must be struck out” see here: London Arbitration- deductions for underperformance and stevedore overtime expenses – Charter Party Disputes Requests for clarifications regarding the applied methodology may reduce the weight attached to the experts’ conclusions ( see, e.g. Arb 2/24, The Divinegate). Costs orders for exposing flawed methodology (Arb 23/21), or for extensive sets of pleadings (new evidence- revised report(s) during proceedings); tribunal may depart from the normal rule that costs follow the event ( s 61 AA 1996). The tribunal may find both reports unsatisfactory and calculate loss differently ( Arb 15/23). When in doubt, tribunals are not obliged to follow one report or the other if the analysis is wrong. Tribunals are alerted to the risk of over-compensating a claimant. If both reports find that the ship underperformed by applying the good weather criteria ( 1st stage), then the proper loss assessment may resolve the conflict. For more information on these points, you can read: Reflections on speed and performance claims (i-law.com) Author Prokopios Krikris BA, MSc, LLM(Maritime law), Dip Arbitration, PGc legal principles, FCIArb LMAA Supporting Member, Fellow of CIArb, and a Member of the Baltic Exchange Thanks to Mr Brian Williamson , LMAA Full Member, for reading a draft.