Speed and Performance – In-House Analysis

By Prokopios Krikris, FCIArb, Arbitrator

Speed and consumption claims have long generated considerable interest and debate within the shipping industry. These claims encompass factual and legal questions, as well as matters relating to market practices (see "Reflections on Speed and Performance Claims", Part IV, in I-LAW).

A recent trend is the establishment by certain major shipping companies of internal departments dedicated to performance analysis. For instance, when a dispute arises, these companies present their own "in house" analysis to support a claim and a corresponding deduction from hire. A typical question raised is whether this satisfies the tests formulated in The Kostas Melas [I leave this to the Readers' consideration].

In London Arbitration 15/23, for example, the tribunal approached such internal analyses with caution. Moreover, in London Arbitration 12/24, the tribunal said that WRC must remains impartial.

Based on my observations, Owners have raised several issues in challenging these types of claims:

1. Owners have argued that Charterers rely on methodologies that have not been tested in English Courts or London Arbitration (at least as the published awards corroborate). This point, for instance, arose as a significant concern in the Divinegate case.

   
   

2. Owners have asserted that the Charterers’ in-house analysis does not constitute an “independent” assessment required under the relevant weather routing clause. Charterers, in response, contended that the claim was not a typical “performance claim” but something distinct. Owners maintained that, regardless of how Charterers seek to frame their case, they must produce a proper report that applies the terms of the charterparty- see e.g. The Ioanna, The Pearl C and The Divinegate.

   
   

3. Owners further relied on London Arbitration 15/23, in which the tribunal rejected the use of an in-house analysis. The Owners said that an unofficial analysis in house carries no evidential weight.

   
   

4. Although Charterers submitted that they could provide evidence in support of their position, Owners contended that such evidence must be “independent” and satisfy the requirements applicable to expert evidence.

   
   

In a recent case, it was noteworthy that the Weather Routing Company report reflected the vessel’s performance as warranted. The Charterers’ in-house team, however, produced an alternative method that applied a weather factor derived from the Molland curves. They argued that, due to fouling, their internal analysis could recalculate the additional resistance attributable to such fouling and thereby determine the corresponding extra consumption.

Although the vessel’s daily actual consumption remained within the permitted limits and there was no time loss during the voyage, the Charterers argued that, had the vessel been delivered with a clean hull, consumption would have been even lower—even if still within the allowance, so they can claim the 'extra' consumption. Owners averred that this is against the very purpose of claiming damages as Charterers suffered no loss and the ship performed.

Important Note: This article summarises certain brief positions advanced by the parties and does not reflect the authors’ own views on the issues discussed.