Time Charterparty
Off-hire
Hull Fouling
Accumulation of marine growth on ship’s plating in warm tropical seas is often a cause of significant reduction in ship’s speed and impairment of vessel’s performance. Such accumulation produces particularly negative effect on speed characteristic when vessel remains waiting at anchor in tropical water for a period of more than 3-4 weeks. Obviously, this natural factor also affects positions of the shipowner and the charterer under time charter contract in a way that it can lead to loss of time resulted from underperformance and expenses plus time losses associated with hull cleaning.
Main question lies here in allocation of liabilities for delays related to slow speed steaming and hull cleaning. Generally, any cause such as deficiency of men or stores, fire, breakdown or damages to hull and machinery which deteriorates vessel’s performance against that declared in time charterparty triggers off-hire clause and shifts liability to the owner’s side.
In Santa Martha Baay Scheepvaart & Handelsmaatschappij N.V. v Scanbulk A/S (The "Rijn")[1981] 2 Lloyd’s Rep. 267 it was held that apart of preventing the full working of the vessel, only those clauses qualify for consideration under clause 15 of NYPE time charterparty form, which are fortuitous, whereas speed reduction due to hull fouling during 3 months inactivity at the loading port, was the natural result of the ship complying with the charterers’ orders and was not a "defect in hull". As a result neither the time spent for hull-cleaning, nor any subsequent loss in time during the voyage from loading port Lourenco Marques to Baltimore fell within the wording of clause 15.
In Bulfracht (Cyprus) Ltd. v Boneset Shipping Company Ltd. (The "Pamphilos") [2002] EWHC 2292 extensive presentation of technical details on protection against marine growth provided by application of anti-fouling paints and their operation to protect the hull was examined by Colman J.
The owners claimed the balance of hire and interest on it due under a trip time charter deducted by the charterers from the hire under allegation that the vessel had underperformed by reason of her slow speed and excessive fuel oil consumption. Vessel indeed underperformed and over consumed the bunker but the owners contended that while the vessel was at anchor off Sepetiba for 21 days her hull had become heavily fouled with marine growth and this had the effect of reducing her speed and increasing her consumption of fuel. Clearly, the owners were trying to bring themselves within the scope of decision in the "Rijn" case, discussed above, arguing that the vessel’s failure to comply with the speed and consumption warranty was caused solely by her compliance with the charterers’ instructions to lie at anchor and accordingly the charterers were not entitled to make any deduction from the hire.
Arbitrators, by majority, allowed owners’ claim, considering as sufficient the evidence provided by the owners: application of antifouling paint at the dry dock, the fact that the vessel did not have a record of underperformance during the period of trading between dry-docking and her delivery at Sepetiba under the time charter, evidence as to fact that vessel’s performance "improved dramatically" after underwater cleaning afloat following re-delivery under the time charter and the samples of the barnacles obtained in the course of underwater inspection and subsequent cleaning.
On the other hand arbitrators declined the owners claim under the second head that the charterers were in breach of their obligation to redeliver the vessel in like good order and condition, because the fouling of the hull was, in the absence of an extraordinary event, an ‘occupational hazard’ which therefore fell under the redelivery proviso ‘ordinary wear and tear excepted’.
Charterers’ appeal in the High Court on the grounds of serious irregularity and on a question of law failed. In his concluding words Colman J said:
In the present case, the lack of co-operation between the parties is to be strongly deprecated, but the majority of the arbitrators deployed such evidence as they had in an entirely proper manner, bringing to bear on it their own commercial experience in an entirely fair and appropriate way in order to make positive findings of fact where they were needed. It would be extremely undesirable and totally contrary to the policy of the 1996 Act if arbitrators were discouraged from approaching issues in this way by the threat of applications under section 68.
In the most recent case of Action Navigation v Bottiglieri Navigation Inc (The Kitsa)[2005] All ER (D) 229 Aikens J in the High Court rejected the owners’ claim that they entitled to be indemnified under an "implied indemnity" in the charterparty for the consequences of obeying the lawful order of the charterers requesting the vessel go to Visak where she stayed inactive for prolonged time and considerable amount of marine growth accumulated on the ship’s hull to such extent that subsequent hull cleaning have become required. The judge held that "this type of risk" was one that the owners agreed to accept at the time the charterparty was made. He, moreover, concluded that the expenses of hull cleaning were ordinary expenses of trading under charterparty in question and that the parties (at the time the charterparty was made) would have so regarded this type of expense.
The judge also rejected the owners’ claim under the second head that the charterers had wrongfully put the vessel off-hire for the period whilst the de-fouling work was being done at Portland on the basis of arbitrators finding that this call was for "Owners’ purposes" in order that they might comply with their obligation to maintain.
To avoid collision with decision of Mustill J in The Rijn [1981] 2 Lloyd’s Rep. 267, Aikens J held that the arbitrators referred to clause 54 and not to clause 15 of NYPE in their ruling on whether the vessel was off-hire during hull cleaning. He commented decision of Mustill J and arbitrators ruling in the following words:
44. If the arbitrators had intended to hold in this case that the vessel was off - hire under the terms of clause 15 of the Charterparty, they would have had to distinguish Mustill J’s decision in The "Rijn". Two of the arbitrators are very experienced shipping lawyers. I am sure that they would have been aware of Mustill J’s decision and would not simply have ignored it. Therefore I conclude that the arbitrators were not focusing on clause 15 at all, but decided the off - hire issue on the basis of clause 54.
Conclusion
Considering combined effect of decisions in the Rijn, the Pamphilos and the Kitsa it would be proper to conclude that the length of period of inactivity is probably a decisive factor when allocation of risk for delays related to hull fouling is at issue. The test proposed in the Kitsa is whether such period is longer or not than that which is usual for said type of vessel trading at this particular port. If period of inactivity is longer or rather considerably longer then risk of hull fouling is fortuitous, otherwise it is not fortuitous and was within the reasonable expectations of owners. Being so, "this type of risk" was one that was foreseeable and foreseen by both parties at the time the charterparty was concluded and one that the owners agreed to accept at the time the charterparty was made.
Hull fouling had to be carried out by the owners because of their obligation to keep the vessel in a thoroughly efficient state throughout her service. If such fouling has been suffered during relatively short period of time and falls short of fortuity test mentioned above, then the charterers are permitted to deduct from hire time spent by the owners for deviation to clean the hull but not permitted to make deductions from hire due to underperformance arising from fouling.
Owners also would probably be restricted in their claim that the charterers failed to redeliver the vessel in like good order and condition, unless by some extraordinary event marine growth would fell out of 'ordinary wear and tear’ exception.
Finally, as the Pamphilos shows, there is again at issue an importance and all-increasing role of proper collection, recording and witnessing of evidence as well as a matter of joint under water inspection to ascertain an extent of hull fouling by marine growth.
If parties will not co-operate on matters such as inspection, the taking of samples and disclosure of documents, the resolution of their disputes by arbitrators becomes far more difficult and far more expensive. That, however, does not normally render inadmissible evidence which has been obtained unilaterally and without co-operation with the opposite side, although such evidence may be of little weight.
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