London Arbitration 12/24
A vessel was time chartered under an amended NYPE 1993 form for the transport of paddy rice from Rio Grande to Veracruz. A dispute arose regarding the final hire accounts. Owners claimed US$11,854.31 for unpaid hire. Charterers denied liability, arguing deductions made to the claim were valid, citing underperformance, off-hire for crane failure, and a discrepancy in the LSMGO figures.
Voyage Facts
On Feb. 5, 2022 a 39,784 DWT bulk carrier was delivered to Charterers at Rio Grande. The vessel logged 550.594 mt VLSFO and 159.594 mt LSMGO. On Feb. 6, while in Rio Grande, they stemmed VLFSO, but not LSMGO.
On Feb. 7, WRC X, a weather routing company, was appointed by Charterers to provide weather routing and AIS monitoring services for the voyage to Veracruz. The master was ordered to maintain about 13.5 knots for the voyage.
Upon arrival in Veracruz on Mar. 1, the vessel tendered notice of readiness (NOR). WRC X assessed the vessel’s good weather performance speed at 12.73 knots. Using this speed, WRC X calculated a loss of 9.65 hours on the voyage. No fuel overconsumption was recorded. Nor was there a credit for savings proposed.
In Veracruz, the Statement of Facts (SOF) maintained that loading stopped on Mar. 13, 2022 between 18:45 and 19:35 due to failure of the vessel’s crane #4.
The vessel was redelivered to Veracruz Mar. 15 at 02:12 with 471.026 mt of VLSFO and 159.594 mt of LSMGO remaining on board. Charterers alleged upon redelivery, the quantity of LSMGO was 159.736 mt.
Crane Failure and Off-Hire
Clause 9 of the charterparty required Charterers to employ experienced crane operators at their time and expense. In addition, Clause 28 (“Cargo Gear and Lights”) provided the following:
The Owners shall maintain the cargo handling gear of the Vessel which is as follows:
VESSEL IS EQUIPPED WITH THE CARGO HANDLING GEAR IN GOOD WORKING CONDITION, WHICH IS AT CHARTERERS’ FREE DISPOSAL, WHENEVER REQUIRED … IN CASE OF VESSEL’S POWER FAILURE, BREAKDOWN OF VESSEL’S CRANE(S) AND/OR GEAR(S) (NOT CAUSED BY DEFAULT OF SHORE LABOURERS/CHARTERER’S SERVANTS), VSL IS TO BE CONSIDERED OFF-HIRE PRORATA TO THE NUMBER OF CRANES IN WORKING CONDITION. …”
With regards to Off-Hire, Clause 74 (“Master/Officer/Crew Assistance”) provided the following:
With reference to Clause 8 of this Charter Party, hire includes the customary assistance, which shall mean all types of work which the Master and the crew would normally do when the ship is trading for the Owners’ account provided that all or part of such works are permitted by port authorities, and/or local regulations, such as, but not limited to:
– raising and lowering of cranes and/or gangways in preparation for loading and discharging
– opening and closing of hatches in connection with loading and discharging, including if related to adverse weather conditions.
– customary supervision of loading and discharging.
– maintaining sufficient power and all cranes in good order whilst loading and discharging including regular maintenance of the Vessel’s gear…”
The SOF from Veracruz documented discharging operations were temporarily stopped between 18:45 – 19:35 on March 13 “DUE TO FAILURE SHIP’S CRANE NO.4 FM H5.” The Master added a comment on the last page which said “Vessel do not agree and refute to the delay on 13th March from 1845 LT to 1935 LT. This stoppage was due to ship staff had to re set crane limit switches due to negligence of crane operator and to match the height of crane wire and hopper”.
Charterers contended that since the joint agent had deemed the delay “due to a failure of the crane” and there was no evidence substantiating the Master’s note, per Clause 74, this time was for Owners’ account.
The arbitrator held that the delay was not caused by a defect in the crane itself but rather by the events that occurred at the end of loading. When the operator took the jib outside the safe limits, he triggered the safety switches, which the crew then had to reset. The arbitrator further held that the Master’s comments were consistent with these events. Since the delay was ultimately due to operator error, this time was not off-hire, but instead for Charterers’ account.
Discrepancy in LSMGO quantities
The arbitrator dismissed Charterers’ claim as unsubstantiated, given that discrepancies in ROB were within the expected tolerance for trim and temperature changes.
Underperformance
The fixture recap provided the following:
… SPEED/CONSUMPTION
ABT 13.5 KNOTS ON ABT 22 MT LSIFO (MAX 0.5% S) 380 CST INCLUDING AUXILIARIES IN PORT
IDLE ABT 3.1 MT LSIFO (MAX 0.5% S) + 0.1 MGO IN PORT WITH CRANES WORKING ABT 5.5 MT LSIFO (MAX 0.5% S) + 0.1 MGO
ECO SPEED (WOG): ABT 12.0 KNOTS ON ABT 18 MT LSIFO (MAX 0.5% S) 380 CST INCLUDING AUXILIARIES IN PORT.
ALL FIGURES STATED FOR SPEED AND CONSUMPTION ARE “ABOUT” ALWAYS UPWARDS IN EFFECT FOR BUNKERS BASIS OPTIMUM TRIM AND CLEAN UNDER WATER HULL, SUBJECT TO GOOD WEATHER CONDITIONS, CALM SEA NO ADVERSE CURRENT AND NO NEGATIVE INFLUENCE OF SWELL, UPTO MAX BEAUFORT 4 SEASTATE 3. NO WARRANTIES APPLY FOR PERIODS WHERE CONDITIONS EXCEED BFF4 AND/OR SS3.
FOR THE PURPOSE OF CALCULATING VESSEL’S PERFORMANCE UNDER THIS CHARTER PARTY IT IS AGREED THAT ALL DAYS WHERE THE WEATHER EXCEEDS BFF4 AND SS3 ARE EXPRESSLY EXCLUDED FROM CALCULATIONS.…ALL FIGURES ABOUT.”
The rider clause stated the following:
Clause 72 – Performance / Weather Routing:
The Charterers have the option to let the Vessel be monitored by an independent weather routing company at Charterers’ expense but always excluding … or …. Charterers are not allowed to appoint … or … under this charter. The independent weather routing company may, prior to the Vessel’s departure from port, give the Master a recommended route to the next port of call and may make further recommendations during the voyage. The Master shall at any time comply with the reporting procedure as required by the independent weather routing company. Evidence of weather conditions shall be taken from the Vessel’s log books and the independent weather routing bureau reports. In the event of a consistent discrepancy between log books and bureaus reports a mutually acceptable weather buro to be appointed whose findings will be binding.”
Per the above, “about” was to be factored as 0.5 knots for speed and 5% for consumption for this voyage. Owners warranted that the vessel could maintain a minimum average speed of 13 knots and corresponding average consumption rate of 23.1 mt/day on delivery and for the duration of the voyage in good weather, calm seas, absent adverse currents, and negative influence of swell. The benchmark conditions to measure performance were established as follows:
(a) In winds not exceeding BF4.
(b) In sea conditions up to Sea State 3 (SS3).
(c) No adverse current.
(d) No negative effect of swell.
WRC X sent the following reports to Charterers:
Feb. 28 – This mid-voyage report alerted Charterers of the vessel’s alleged underperformance by 0.35 knots, with a loss of 10.51 hours on the voyage.
Mar. 1 – This first full report confirmed the vessel’s underperformance by 0.27 knots, an average all weather speed of 13 knots over 6,073 miles, over 467.3 hours (19.5 days). It also informed Charterers of a good weather performance speed of 12.73 knots and reported a loss of 9.65 hours with no overconsumption of fuel. Charterers filed a claim based on these numbers.
Owners countered the claim directly to WRC X, highlighting the 18.85 mt of fuel oil savings which should have been used to offset the claim. WRC X acknowledged that their analysts published the report with default settings and did not factor in the charterparty clauses and the fuel oil savings.
An April 12 report restated that 9.65 hours were lost and now included 18.85 mt of potential fuel oil savings. However, by Sept 29, WRC X published two additional reports. The third report removed the 0.1 knot deduction for beneficial current, revised the time lost to 6.18 hours, maintained a -0.17 knot underperformance, and acknowledged 22.19 mt in potential fuel savings. It also reported that the average speed achieved on good weather days was 13.53 knots and that 19.71 hours were saved in addition to potential fuel savings of 47.11 mt.
Decision
The arbitrator established that WRCs are intended to be independent monitors that observe and assess vessel performance impartially in all conditions; therefore, WRC reports are examined to establish data accuracy and adherence to best practices before being compared to the vessel’s contemporary records. In this case, the arbitrator found deficiencies in both the detail and quantity of data produced by WRC X.
Further, WRC X failed to follow the guidelines set forth by previous London Arbitrations for weather reporting and disregarded the agreed benchmark conditions for good weather. This affected 12 days (60%) of the voyage. WRC X included the first 7 days, ending Feb. 16, when the adverse effect of the Brazil Current reduced vessel progress, as evidenced by the high slip figures.
The arbitrator ruled that WRC X utilized methodology and performed analyses that did not follow English law, for no quantifiable loss was directly tied to the underperformance claim. No time was lost on the 19.5-day voyage, and the WRC’s calculation of all-weather speed was 13 knots, the same minimum speed Owners warranted. Furthermore, there was no overconsumption. The arbitrator believed that WRC X should have advised Charterers that they did not have a valid claim.
Even with the alleged loss of 9.65 hours ($11,459.37), the fuel savings of 18.85 mt ($13,402.35) outweighed the alleged lost time.
Although Charterers attempted to introduce another WRC, Owners objected. The arbitrator elected to examine WRC Y’s data and compared it to WRC X’s reports, noting no significant discrepancies between the two data sets and concluding that neither was wholly correct or incorrect.
Based on the factual evidence and the arbitrator’s maritime knowledge, the more reasonable explanation for the changing speeds was that the vessel encountered the Brazil Current, which reduced her progress to Veracruz. The adverse effect continued until the vessel reached latitude 5° south and longitude 35° west, off Cabo de São Roque, where it encountered the South & North Equatorial Current(s) and the North Brazil Current.
Award
The arbitrator dismissed Charterers’ claim ruling that the deductions were not justified. Owners’ claim succeeded. Charterers were ordered to pay US$11,854.31, plus Owners’ costs and interest.