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Eastern Pacific Chartering Inc v Pola Maritime Ltd (“The Divinegate”) [2022] EWHC 2095 (Comm)

Background Facts

The case concerned a time charter dated 18 Sept 2019 under which the Claimant (Eastern Pacific, disponent Owners) let the Vessel to the Defendant, Pola, as charterers, for a trip between Riga and New Orleans.

Owners claimed outstanding hire, bunkers and expenses in the amount of US$99,982.79. Pola said it could make deductions for underperformance and for the wrongful arrest of the POLA DEVORA such that the balance in their favour was US$59,129.25.

This matter was dealt with in the English High Court because the parties had made provision for that forum in the Charterparty (with LMAA SCP for disputes under USD50k).

Both parties relied upon expert evidence (Owners relied upon expert evidence from Mr Ian Hodges of TMC and Pola called Mr Nick Chell of ABL).

The Vessel was delivered into the charter at Rotterdam on 21 September 2019 and the trip covered the ballast leg from Rotterdam to Riga, and then the laden leg from Riga to New Orleans. The Vessel was ordered to steam at “eco-speed” on the laden voyage. The Vessel was redelivered on 3 November 2019.

Pola advanced various claims including a speed and performance claim based on a weather bureau report and a survey report from Fernandez Maritime Consultants (“FMC”) concerning hull fouling.

Charterparty Clauses 

The fixture recap performance warranty provided for the usual “speed and consumption” warranty “basis no adverse currents and valid up to and including Douglas Sea State 3 / Beaufort Force 4”.

The amended pro-forma terms also included at clause 74 a definition of Douglas Sea State 3 “to be taken as a swell wave height of less than 1.25 meters and no adverse current.”

Pola Deductions 

Pola argued that, following a weather bureau report, the Vessel lost a period of 83.6 hours during the laden voyage between Riga and New Orleans (US$93,074.55). Pola’s claim was put on the following two bases:

• 51.4 hours lost due to: (1) breach of clause 8 in failing to proceed with utmost despatch; or (2) “default of Master, officer or crew” under clause 15;
• 32.2 hours lost as result of hull fouling due to (1) breach of the delivery obligation to deliver the Vessel in a thoroughly efficient state in hull, machinery and equipment or (2) defect of the hull for the purpose of clause 15.

The second counterclaim was for damages in the sum of US$72,628.01 on grounds that Owners wrongfully arrested the POLA DEVORA to obtain security for their claim to outstanding hire.

Owners argued that the speed claim was time barred under clause 102 of the charterparty because a claim was not presented with supporting documents within 90 days of completion of the voyage. The court preferred Pola’s argument that the purpose of the clause was to put the owner on notice and enable it to investigate and preserve its own documents and that Pola’s message shortly after completion of the voyage met this standard.

Slow steaming 

It was common ground that the simplest way of establishing a breach of clause 8 and/or off-hire under clause 15, for default of the Vessel in slow steaming, was by using what was described as “the good weather method” (i.e. to pro-rate underpeformance in good weather against the entire period under review).

Pola relied upon a report from Mr Nick Chell. He said that by reference to a good weather period of 32 hours between 23/24 Oct the Vessel lost 37.64 hours of time. Pola said that based on Mr Chell’s analysis the Vessel underperformed by 16 hours if no account was taken of positive current (but 37.64 hours if 0.5 knots was deducted for the effective of positive current).

Pola also relied upon an alternative method of calculating damages different to the “good weather method” which was labelled the “RPM method”. Pola said that the Vessel’s main engine had been operated at 92RPM or lower which meant a default by the crew in not maintaining sufficient engine speed to meet the warranted eco-speed. Owners asserted that the RPM method was not a recognised way of assessing underperformance and that the speed at which the engine was operated (below 92RPM) simply reflected the weather conditions.

The law in applying the performance warranty

The court accepted that the good weather method was not the only way to establish a breach of clause 1, clause 8, or of the performance warranty, or even to establish that a deduction can be made for off-hire under clause 15. However, the court said that alternative methods have not yet been identified. It was mentioned that in the Pearl C decision, the court had endorsed the good weather method as the conventional approach to a claim for breach of the duty to proceed with utmost despatch. 

The impact of positive currents 

Previously some arbitration awards on the issue suggested that positive current should be deducted from the good weather speed[1]. The judge noted however, that the majority of tribunal decisions suggest positive currents are to be excluded if not expressly mentioned [2].

The question of whether positive currents should be excluded from speed and performance calculations has now finally been confirmed: an owner is to have the benefit of positive current unless it is expressly stated to the contrary in the charterparty.

The court said that if a Master maximises the weather or current encountered that is as much a part of the Vessel’s inherent capability as its engine or the condition of the hull. It was also noted that the Vessel’s better performance was for the benefit of charterers as well as owners.

This approach removes the added complexity of measuring the impact of currents, which tend to cancel each other out over the period of a time charter.

The court said that on the wording of this particular charterparty the parties had agreed by the words “No adverse Currents” that time spent sailing with adverse currents was not to be treated as good weather.

Breach and loss due to slow steaming 

The court held there was an adequate period of good weather in the 32-hour period on 23/24 October 2019 as identified by Mr Chell. It was said that it was fair to rely upon the AWT data for this period where Owners’ expert had agreed that the deck logs recording adverse current during such time were unreliable.

In addition, the court noted that in circumstances where the experts acknowledged that the measurement of Douglas Sea State is arguable, and the C/P defined the Douglas Sea state as “a swell wave height of less than 1.25m”, the C/P definition was decisive.

The court found that there was underperformance against the performance warranty giving rise to a loss of time of 16 hours (i.e. if no account was taken of positive current as per Nick Chell’s analysis of the AWT report).

The court decided that Pola had established that there was a failure to proceed with utmost despatch since it established an unjustified underpeformance by reference to the Vessel’s speed during the identified good weather period. The court said that the logbook evidence (supported by Mr Chell’s analysis) suggested the engine was unjustifiably being operated at lower engine speeds to maintain her consumption below the C/P warranty rather than in response to weather conditions experienced during the voyage.

The court further held that the alternative method of assessing performance put forward by Pola, “the RPM Method”, was not a reliable method to identify any loss of time.

Hull Fouling

The counterclaim for damages for hull fouling failed. The claim was put forward on a retrospective basis relying upon an inspection of the vessel after the subject voyage in New Orleans. The court did not find Pola’s expert evidence on hull fouling convincing. The court said that in circumstances where Pola had established a loss from slow steaming under the good weather method, there would be double recovery if Mr Chell’s calculation (of hull fouling losses) was added since the good weather period also covers underperformance by reason of hull fouling.

The counterclaim for wrongful arrest

The court found that the disponent owner, the claimant, was not liable for wrongful arrest based on the evidence and the apparent lack of bad faith / malice or gross negligence.

Key Points 

The general points to take away from the above, bearing in mind that the outcome of any future speed and performance claim will turn on the specific facts and the specific contractual terms, are that:

• An owner is to have the benefit of positive current unless it is expressly stated to the contrary;
• Periods of adverse current should be excluded when assessing any good weather periods;
• The “good weather method” of assessing performance is the established methodology but it is open to parties to adduce different methods if they can convince a court or tribunal that they are reliable enough.
• The “good weather method” is also the benchmark used for assessing alleged breach of the obligation to proceed with utmost despatch under clause 8 and/or clause 15 of the NYPE Form.

This article was prepared by Alastair Moir. Alastair regularly advises on all Charterparty issues, including speed and performance claims.

[1] London Arbitrations 15/07, 15/5, 4/12, 22/18

[2] London Arbitrations 21/04, 21/18, 6/19, 26/19, 27/19