A very common type of time charter disputes are performance disputes.
Charterers will sometimes claim that a chartered vessel did not perform as promised, against which owners will try to protect themselves by qualifying the “good weather days” during which the vessel is to perform as promised, but not guaranteeing any sort of performance outside “good weather days”.
A recent judgment of the English High Court focuses on one of the pitfalls which owners may encounter when qualifying the performance warranty. The judgment is also a valuable reminder to be careful when agreeing on the terms of the charter-party, as otherwise the provisions are at risk of being interpreted contrary to the intention of one of the parties.
The facts
The charterers had chartered the “Gaz Energy”, [2012] 1 Lloyd’s Rep 211, on an amended SHELLTIME 3 form with rider clauses and Gas Form C.
The standard clause 24 provided that
“Owners warrant that … the vessel shall be of the description set out in Gas Form C …
(…)
Further but otherwise [without] prejudice to the generality of this clause Owners guarantee that the average speed of the vessel will be not less than knots in ballast and knots fully laden, with a maximum bunker consumption of tons diesel oil/tons fuel oil per day for all purposes excluding cargo heating and tank cleaning. See additional clause 42 attached which also overrides any references to over performance herein.
The aforesaid average speeds shall be calculated … on all sea passages and over the whole of the time the vessel is on hire …
In the event of any conflict between the particulars set out in the aforesaid Form and any other provision (including this Clause) of this Charter, such other provision shall prevail.”
Clause 42 read:
“Speed about 15 knots average.
Consumption about 40 mts IFO … at sea plus about 0.2 mts GO and about 10 mt IFO … at port plus about 0.2 mt GO.
Otherwise as per Gas Form C.”
Gas Form C guaranteed an average speed “on a year’s period and max wind force 4 in Beaufort scale” of about 14.5 knots in laden condition and about 15.5 knots in ballast and additionally set out consumption figures for the main engine, auxiliary engine, boiler and inert gas generator.
Owners contended that the reference to Gas Form C showed that the performance of the vessel was only warranted during weather conditions of up to Beaufort 4, whereas charterers contended that owners had in fact given an all weather warranty.
In the end charterers’ view prevailed.
The decision
The court found that clause 24 of SHELLTIME 3 was found unambiguously and clearly to constitute an all weather warranty whether or not this could be regarded as a particularly commercial result. If the parties were interested in a different result, they could have opted for a different standard charter-party form such as SHELLTIME 4 which contains a “good weather” performance clause.
Further, it was found that it was evident from the wording of clause 24 that clause 42 filled in the gaps of clause 24. This was also the clear intention of clause 42.
The reference to Gas Form C in clause 42 could be construed in different ways, but the court found that the right construction was so that only the performance items which were additional to those mentioned in clause 42 were read into clause 42. This conclusion was reached even though it made the reference to the Beaufort scale in Gas Form C redundant.
Accordingly, the court looked aside from the “good weather” qualification of Gas Form C and ruled that the owners had warranted the vessel’s performance in all weather conditions.
Comment
It is quite common to see that charter-parties are drafted on the basis of older charter-parties and amended by using pre-typed standard clauses provided by both charterers and owners. This practice increases the risk of conflicting clauses and, as a result thereof, disputes between owners and charterers which the tribunals or courts are left to solve.
The decision of the court is a useful reminder that owners – and also charterers for that matter – need to be careful when drafting charter-parties and not just blindly believe that a given clause will be enforceable in accordance with its intention if it is contrary to the other provisions of the charter-party and the charter-party as a whole.