LONDON ARBITRATION 4/25
Facts and Background
This arbitration concerned disputes arising under a single-trip time charterparty on an amended NYPE 1981 form. Owners sought recovery of US$157,967.39 for hire withheld by charterers, together with interest and costs. Charterers had deducted 3.42 days’ hire based on alleged speed and consumption underperformance of the vessel and substandard grab operations. Owners also claimed damages for a shortfall in bunkers upon redelivery.
Charterers initially participated through solicitors but, thirty days after service of owners’ submissions, counsel withdrew. The tribunal issued a procedural order requiring service of defense submissions, followed by a final and peremptory order upon non-compliance.
Subsequently, charterers informed the tribunal that their corporate entity had been administratively dissolved in the British Virgin Islands and suggested the arbitration could not proceed. Owners disputed the legal effect of the dissolution, citing BVI Companies Act Section 216, and maintained that the company retained legal capacity to defend the claim. The tribunal accepted this and proceeded. Charterers did not participate in the arbitration.
Charterers claimed underperformance during both ballast and laden legs of the voyage, relying on reports from a weather routing company (WRC). The owners contested the methodology and compliance of those reports with the charterparty’s strict weather benchmarks, particularly the requirement for 24 hours of continuous good weather without adverse swell or current.
The tribunal held that although the vessel likely suffered from hull fouling (as evidenced by slip records and excessive rpm), the WRC reports failed to satisfy the contractual criteria necessary to support performance deductions. Thus, the performance-related hire deductions were not substantiated.
The clause in question read in relevant part,
… NO ADVERSE CURRENT, NEGATIVE INFLUENCE OF SWELL, MODERATE SEA, WIND NOT EXCEEDING BEAUFORT FORCE 4 AND /OR DOUGLAS SEA STATE 3 (MEANS SIGNIFICANT WAVE HEIGHT LESS THAN 1. 2 5M) AT THE CONDITION OF CLEAN BOTTOM IN OPEN, CALM AND DEEP SEA CONDITION WITH MINIMUM 2 4 HOURS STEAMING TIME. POSITIVE CURRENT SHALL NOT BE USED IN DIMINISHING VESSEL’S PERFORMANCE… “
The Panel did note the definition of “about” in regards to speed was a 0.5 not variance whereas in regards to consumption it is a 5% variance.
Charterers further deducted 1.71 days’ hire alleging the vessel’s grabs underperformed due to reduced operational capacity. Owners acknowledged the grabs were operated in a reduced configuration but argued that this was safe and suitable given the cargo’s characteristics and stowage factor. No breakdown or breach of employment orders was alleged or evidenced.
The tribunal found that the charterers had not sufficiently particularized their claim. Absent evidence or a contemporaneous protest, the deductions were deemed unjustified.
The charterparty required redelivery with bunker quantities approximately matching those on delivery, allowing a variance of ±5% to be settled at charterparty prices. The vessel was redelivered with 609.11 mt of VLSFO, short of the minimum 649.763 mt. Owners calculated their loss at US$5,284.89 based on the difference between the contractual and market prices at the nearest bunkering port following redelivery.
The tribunal accepted this methodology and the quantum claimed, which was unchallenged.
In short, the tribunal found in full for the owners, awarding the full US$157,967.39 as claimed. Charterers were ordered to pay interest at 8% per annum compounded quarterly from two weeks post-redelivery to the date of payment.
Owners’ legal costs of £6,700 were awarded in full as reasonably incurred. Additionally, charterers were ordered to pay the full cost of the award (£11,425), with interest accruing at 8% annually, compounded quarterly.
The owners were also entitled to reimbursement of any portion of the tribunal’s costs they had advanced.