London Arbitration 18/23

The arbitration concerned the charter of a vessel under a modified NYPE 1946 form and centered on disputes over delivery time, redelivery conditions, in-port fuel consumption, performance claims, and AIS monitoring. The owners sought payment of $227,628.11 in outstanding fees, while the charterers counterclaimed $31,272.08.

Delivery Claims

The owners asserted that the vessel was delivered at 15:30 GMT on June 26 in Singapore as per the charter agreement. However, the charterers pointed out that the vessel’s AIS had been turned off at 17:24 UTC on June 25. Based on its last reported location, it was deemed implausible for the vessel to have reached Singapore by June 26. The owners defended their position by claiming their vessel was capable of higher speeds and that the AIS had been turned off due to piracy concerns, which they supported with logbooks. In response, the charterers presented evidence suggesting that such speeds were uncommon for similar vessels in the region and highlighted another vessel’s tracked journey under normal conditions with AIS activated.

The charterers also raised concerns about the authenticity of the logbooks, suspecting that they were compiled by a single person. They requested logs from different officers, which the owners claimed did not exist in separate forms but were compiled after the fact based on memory or rough notes. The tribunal expressed skepticism about this practice and requested a sworn statement to clarify the logging process. A brief statement from the captain confirmed entries were based on memory or rough notes, raising further questions about the accuracy of the vessel’s documented movements.

Held,

The tribunal found it perplexing that critical details such as times and measurements were recorded from memory. They were also surprised by the owners’ assertion that no rough log existed. With the owners failing to provide independent evidence countering the charterers’ claims about the vessel’s location when the AIS was turned off and lacking proof of the vessel’s capability to cover the distance claimed, the tribunal accepted the charterers’ delivery time of 03:24 UTC on June 27. The bunker quantities reported on board at that time were also accepted.

Re-Delivery Claims

The fixture recap specified redelivery “1SP SOUTH CHINA, NOT NORTH OF XIAMEN,” setting the geographical context for redelivery.

Clause 57:

“Charterers hereby guarantee that they will supply the correct quantity of bunkers as agreed in the bunker clause, prior to the redelivery of the vessel, in order to meet the redelivery quantities, in full compliance with the cp. In case Charterers fail to supply the correct bunker quantity vessel not to accept redelivery and vessel will remain on hire until the correct bunkers are supplied. Only then the vessel will be considered ‘redelivered’ and will tender redelivery notice.”

Clause 71:

“A. Bunkers on delivery about 700 MTS VLSFO and about 80 LSMGO. … same quantities on redelivery as on delivery, and any discrepancies to be settled with prefinal hire statement on redelivery.”

The charterers claimed redelivery occurred in China on July 19 at 06:20 UTC, but the owners contested this due to insufficient fuel onboard. They invoked Clauses 57 and 71, asserting their right to reject redelivery until the correct amount of fuel was supplied. These clauses ensured clarity in redelivery terms, offering the charterers two options: matching the original fuel quantity or resolving any discrepancies financially post-redelivery.

Held,

The tribunal found that Clauses 57 and 71 complemented each other without contradiction, thereby ensuring coherence in commercial terms. Clause 57 obligated the charterers to provide adequate bunkers for redelivery, with the owners retaining the right to refuse until this condition was met. Clause 71 provided the framework for resolving financial disputes arising from bunker discrepancies. The vessel was therefore deemed redelivered at the time asserted by the owners.

Fuel Consumption

The recap provided:

“PORT CONSUMPTION ABT 4 MT VLSFO DAILY WHEN IDLE PLUS ABT 0,3 MT LSGO WHILST BALLASTING/DE-BALLASTING +1,5 MT VLSFO AND +0,75 MT LSGO ON ABOVE PER 24 HRS.”

Although the tribunal did not find the wording entirely satisfactory, they decided that it must be ready as if there was a full stop before “WHILST”.

The charterers contested excessive in-port consumption, focusing on calculations up to July 19, despite redelivery being confirmed on July 26. The owners’ calculations were criticized for including main engine consumption during port steaming, which was not covered by the port consumption warranty. Their assessment also omitted fuel used during a ballast shift to Hong Kong and did not adjust for a 5% variance in maximum warranted bunker consumption under different conditions.

Held,

The tribunal adjusted the owners’ calculation to account for these issues. They found that the vessel consumed 2.36 metric tons more LSIFO and 13.77 metric tons more LSMGO than allowed.

Under Performance Claims

Clause 75, headed “Weather Routing Clause” provided in part:

“(e) Any speed & consumption claim by Charterers shall be calculated based upon the steaming of good weather days as outlined in below. No extrapolations allowed.

(f) Good weather days for the purpose of evaluating speed and consumption shall be days when the weather/sea does not exceed Beaufort 4, swell does not exceed 1.25 m and speed is not impaired by adverse current or otherwise due to operational requirements, necessary speed reductions, navigational hazards or other impairments.

(g) Any speed & consumption claim shall be submitted in writing with the support of a performance evaluation report taking into account the terms of the charterparty by latest 15 days after completion of sea passage in question failing which it shall be considered as waived.

…(j) The method of the voyage/performance evaluation of the vessel by the weather routing company is not binding in any way, unless accepted by the Owners. Owners maintain the right to create counter-voyage/performance evaluation and if performance proved to be within the CP warranties, expenses for the counter-evaluation to be for Charterers’ account.”

The charterers relied on a report from a weather routing company (WRC) to support their claim of under-performance. However, the owners disputed this, pointing out discrepancies in the WRC’s classification of weather days and its deduction of a favorable current factor, contrary to contrary to the decision in Eastern Pacific Chartering Inc v Pola Maritime Ltd (The Divinegate) [2023] 1 Lloyd’s Rep 442.

Held,

The charter agreement didn’t say that the routing company’s report should be final. The owners also invoked clause 75(g), stating that any claims related to the voyage had to be submitted in writing by July 27. However, the charterers only presented their claim during the arbitration. The tribunal agreed with owners that this made the claim invalid or time-barred if it was valid.

Award

The owners were awarded $172,028.27, and the charterers’ counterclaim failed. The owners’ last offer was considered irrelevant since the awarded amount was significantly higher. However, the owners lost on two issues: the delivery time and in-port fuel consumption, which totaled about $55,000. The charterers had to cover their own costs and 80% of the owners’ costs.