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.

The master decided to alter course and speed within the Bay of Biscay to mitigate the effects of severe weather and to ensure the safety of the crew, ship and cargo. After that, the master stopped the ship for some hours to an area close to shore and less affected by the bad weather. The master reported damages on the deck. Charterers said that the ship was off-hire and/or claimed damages for this delay, i.e. the deviation and stoppage for some hours. Owners denied liability. Consequently, the parties entered into settlement negotiations. One of the parties asked my assistance in negotiating this claim. I provided comments in an effort to settle this case and avoid arbitration proceedings. Finally, the parties settled the case without incurring substantial costs to pursue or defend this case. The parties focused on the following points: The relevant provisions in the charter concerning off-hire or damages claims. Masters’ overriding authority. Contemporaneous documents proving the severity of the weather. Whether the ship was unseaworthy and/or the master failed to prosecute the voyage with the utmost despatch. Charterers asserted that the master was incompetent and was afraid to meet the weather ahead, which was not so bad for this particular period. In contrast, other ships did not stop inside the Bay of Biscay. The course of other ships in the area (this is not always relevant). It depends on many parameters. The WRC’s deviation calculations for the various manoeuvres inside the Bay of Biscay. Two weather routing companies’ advice on the prevailing weather conditions and their risk assessment by following the direct route or alternate route. Given the progress of settlement negotiations, there was no need to adduce expert evidence regarding the masters’ navigational decisions and incur further costs. Important Note: no further information can be provided as to the parties or their representatives or otherwise. #BadWeather #Deviation #Offhire #Routing

The MOA did not specify the substantive law of the contract. A panel of three LMAA Arbitrators considered this matter in a dispute that arose under a Memorandum of Agreement along with other issues referred to below. The tribunal held that although the MOA contained no express choice of law clause, there was an implied choice of English law, and it was determined that English law was thus the substantive law of the contract. The tribunal had to consider whether the Seller induced the Buyer to enter into the MOA and open the Letter of Credit in its favour by means of fraudulent misrepresentations. There is a lengthy discussion on the law of fraudulent misrepresentations that this short post does not refer to. The arbitration clause If any dispute should arise in connection with the interpretation and fulfilment of this agreement, same shall be decided by arbitration in the City of London, United Kingdom., and shall be referred to a single arbitrator to be appointed by the parties hereto. If the parties cannot agree upon the appointment of the single arbitrator, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the London Maritime Arbitrators Association. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place. If one of the parties fails to appoint an arbitrator, either originally or by way of substitution, for 2 (two) weeks after the other party having appointed his arbitrator has sent the party making default notice by mail, cable, telex or fax to make the appointment; the party appointing the third arbitrator shall, after application from the party having appointed his arbitrator, also appoint an arbitrator on behalf of the party making default. The substantive law The MOA did not specify the substantive law of the contract. By e-mail dated 19 October 2021 to the Parties, the tribunal noted that Section 46 of the Act provided as follows: Rules applicable to substance of dispute. (1) The arbitral tribunal shall decide the dispute— (a) in accordance with the law chosen by the parties as applicable to the substance of the dispute, or (b) if the parties so agree, in accordance with such other considerations as are agreed by them or determined by the tribunal. (2) For this purpose the choice of the laws of a country shall be understood to refer to the substantive laws of that country and not its conflict of laws rules. (3) If or to the extent that there is no such choice or agreement, the tribunal shall apply the law determined by the conflict of laws rules which it considers applicable. Prior to making its decision in this matter, the tribunal requested the Parties to make submissions on which conflict of laws would apply and which substantive law was to be applied. By e-mail dated 3 November 2021, the Buyer made submissions on the issues. The Seller did not respond. A clause choosing London arbitration is not without more and ipso facto a choice of English law but nevertheless it can in certain contexts constitute sufficient grounds for finding an implied choice of English law. A clause choosing London arbitration has been held to be such a strong indication and sufficient basis for finding an implied choice of English law where (a) the clause contemplates maritime arbitration in London, (b) the contract is in English, using legal expressions with well-known meanings in English law, and (c) the parties are of different nationalities and can therefore be presumed to have intended to choose the neutral substantive law of a major commercial and maritime law jurisdiction like England; see e.g. Oldendorff v Liberia Corporation [1996] 1 Lloyd’s Rep 380, 390 Clarke J, and Enka v Chubb [2020] 1 WLR 4117, §114 Supreme Court. All of these characteristics were present in this case. In any event there is a default rule that English law will be applied where neither party has pleaded foreign law (FS Cairo (Nile Plaza) LLC v Brownlie [2021] UKSC 45). There is also in the absence of contrary evidence (as to which none was presented here) a presumption that any relevant foreign law is materially similar to English law. Clause 6 of the 2017 LMAA Terms provides, inter-alia, that “in the absence of any agreement to the contrary, the parties to all arbitral proceedings to which these Terms apply agree: (a) that the law applicable to their arbitration agreement is English and; (b) that the seat of the arbitration is in England.” In light of the above, the tribunal held that although the MOA contained no express choice of law clause there was an implied choice of English law, and determined that English Law was thus the substantive law of the contract. On the other issues, the tribunal held that: The Seller induced the Buyer to enter into the MOA and open the Letter of Credit in its favour by means of fraudulent misrepresentations. The Seller made further fraudulent misrepresentations to the Buyer after contracting. The Seller procured payment under the Letter of Credit by means of fraudulent misrepresentations. The Buyer was entitled to damages and an indemnity as aforesaid for breach of Clause 8 of the MOA in a sum to be assessed by the tribunal in and by a further award. Declaratory award, 9 December 2021 Note: This website removes the names of the parties and the tribunal. For more information, you can visit: https://jusmundi.com/en

This case turned on the particular facts and the characteristics of the Yacht. However, the decision reflects the potential conflicting arguments in such cases, along with how the judge approached the expert evidence adduced by the parties to support their case. Parties should consider the expert’s qualifications and experience before appointing an expert to give evidence in each case. This claim concerns a transatlantic yacht delivery from La Rochelle, France to Bear, Delaware, on the eastern seaboard of the USA. The yacht was “VLARODA”, “designed for winds that may exceed wind force 8 (Beaufort scale) and significant wave height of 4 m and above”. The yacht had sustained damage during her voyage and the claimant brought a claim for damage alleging that the crew had chosen the wrong northerly route for crossing instead of the southerly route and failed to use proper weather routing, sailing into a storm. The defendant counterclaimed sums due under the contract. The central issue in the case was how and why the damage was sustained. Expert Evidence Both the weather and routing were the subject of detailed expert evidence. The parties were given permission to rely on expert evidence in the fields of (1) navigation/weather planning and (2) marine engineering. In both fields, the court approached the weight to be given to the opinion evidence, having first examined the qualifications and experience of the experts. Regarding the marine engineering experts, neither had formal engineering qualifications. Both were highly experienced and knowledgeable. They gave evidence in a way that promoted respect and confidence in that each listened carefully to questions, did not try to avoid or deflect them, gave considered answers and made concessions where appropriate. Turning to the navigation experts, the defendant’s expert qualifications and experience were of more relevance and carried more weight than those of the claimants expert who’s primary experience was as master of a variety of large tanker vessels. Although he also had extensive yachting experience and had served as sailing master aboard a Sea Cadets Square Rigger, he had never planned or undertaken a trans ocean voyage in that capacity. His experience as an expert witness was predominantly in the commercial field. He had no formal qualifications in meteorology (though I acknowledge that his Master Mariner ticket and his degree in Maritime Studies would both have involved a close study of the subject). By contrast, the defendant’s expert was a professional yachtsman who had planned and made numerous ocean passages. But to the extent that they differed, the judge found the defendant’s expert evidence more useful and more reliable and preferred it. The Northern route choice On the facts found the Judge held that the much shorter and more direct northern route via the Azores and Bermuda was a reasonable choice in November provided that it was properly planned and executed. Weather and route planning Based on forecasting available from the US National Weather Services (the “NWS”) and, by reference to that forecasting, it was alleged that the Halcyon crew had sailed VLARODA into “a storm” or “a low-pressure system which became a storm”. The proper course, it was alleged, would have been to have planned and taken a more southerly route and/or to have delayed departure.  The experts produced contemporaneous weather charts from the NWS. Of these, the most important were those issued the day before departure. These would have formed an important part of the crew’s decision making. The experts gave evidence as the “prudent” choice of route selection based on the predicted weather pattern.  The judge did not detect a great deal of difference between the experts and held that the route apparently decided upon (and taken) was the “prudent” route described by both, i.e. to head to the south of the low pressure system which was predicted to track (and did track) north east. A decision to head directly west into that system would have been lacking in prudence, or even reckless. But that was not what VLARODA did and there seems little to criticise in the planning aspect of the voyage. Such difference as there was between the experts seemed to lie in the decision to take a predominantly south westerly course in order to achieve the objective of staying south of the stronger winds and larger seas. Claimants’ expert view was that the course should have been due south and then west, i.e. two sides of a triangle. But this view seemed to give too little weight to the need to balance avoidance of stronger conditions with the need to make progress west. This was, perhaps, well-illustrated when it was pointed out that this preferred route plan would have ended up with VLARODA facing directly into a westerly wind, i.e. a headwind. The judge preferred the evidence of the defendants, which was grounded in their long practical experience of the exigencies of transatlantic crossings by yacht (as opposed to tanker). The judge concluded that the weather and route planning showed no lack of care or breach of duty. To express that in terms of the contractual terms, the planning was carried out “with professional care and attention” and was also congruent with “the best interests of the safety and protection of the vessel and crew”. The route taken and the decision to turn back to the Azores From day two the route was predominantly south west from the Azores. The wind was southerly and the log recorded that the course was changed back to a south westerly heading when the wind veered to WNW – a reasonable and seamanlike method of maximising the advantages to be gained from the wind patterns in an area of low pressure. Very importantly to the issues in this case, prior to the decision to turn back VLARODA had not encountered particularly strong winds or heavy seas. The average wind was Force 4 and the sea state was, for the most part, Slight. In other words, VLARODA did not sail into a storm, or anything approaching a storm. On the contrary, the conditions were nothing out of the ordinary and well within the warranted capabilities of the vessel. Against this, the claimant seized on some isolated entries in the log to support the proposition that for economic reasons and without weather information en route the crew had sailed into adverse conditions and then “panicked” and turned back. The submission that the crew did not have up to date weather information is also unsustainable. Why did the crew turn back? They had lost confidence in the yacht because it was “falling apart” (there were a number of observed defects). The judge attached particular significance and weight to the evidence of Mr Green (the defendant, an experienced yacht skipper) and that of the Claimants’ expert that the decision to turn back was the right one and “seamanlike”. This was the view of very experienced yachtsmen. In summary, the judge held that the planning and execution of the proposed transatlantic delivery were both carried out with reasonable care and skill. VLARODA might have been expected to suffer some wear and tear on the voyage. Instead she suffered more serious damage. But that was attributable to manufacturing defects. These were defects concerning the “finishing” of the yacht as opposed to her structure. They were not (as the crew feared) indicative of major failures. Nevertheless, in combination they were at the time reasonably perceived as serious and the crew’s decision to abandon or postpone the delivery voyage and return to the Azores was reasonable. There was no breach of duty on the part of the crew, let alone a repudiatory breach. Nor was that alleged at the time. On the material before him, the claim would have been better directed to the manufacturer. To read the full judgement, see here: Arnold v Halcyon Yachts Ltd [2022] EWHC 2858 (Admlty) (18 November 2022) (bailii.org)