Speed and performance warranties: how long is a ‘good weather period’?


12 February 2016

Was it wrong in law to exclude periods of good weather which lasted less than 24 hours when determining whether a vessel had failed to comply with good weather speed and performance warranties?

Was it wrong in law to exclude periods of good weather which lasted less than 24 hours when determining whether a vessel had failed to comply with good weather speed and performance warranties? 

This was one of the questions which the Commercial Court was asked to consider in the recent case of the “Ocean Virgo” [2015] EWHC 3405 (Comm). 

The vessel was chartered for a time charter trip consisting of a ballast voyage (from Chang Jiang Kou to Roberts Bank) and a laden voyage (from Roberts Bank to Donghae). The ballast voyage fell into two separate legs, as the charterers gave new voyage orders as to speed part-way through the voyage. 

The charterers (represented by Birketts) made deductions from hire on the basis that the vessel had failed to meet the speed and performance warranties in the charterparty. The owners brought a claim in arbitration for the unpaid balance of hire. 

The charterparty defined ‘good weather’ as “up to max BF SC 4/Douglas sea state 3 (maximum 1.25m), no adverse currents, no negative influence of swell”. 

The sole arbitrator found in favour of the owners. He stated in his reasons that for any period to be admissible as a good weather period, it must constitute at least 24 consecutive hours running from noon to noon. 

The arbitrator had found that there were two periods of good weather during the first leg of the ballast voyage, lasting 14 and 16 hours respectively, but had dismissed these on the basis that both periods lasted less than 24 hours. He found that the good weather encountered during the second leg of the ballast voyage (at 5.51% of the total voyage time) did not constitute a representative sample of the voyage as a whole. 

As to the laden leg, the arbitrator had noted that the weather routing company found 27 hours of good weather (amounting to 5.336% of the voyage), but disagreed that six of these hours should be counted as good weather. As the remaining good weather time was less than 24 hours, he found it should be disregarded. 

As there were no good weather periods of 24 consecutive hours or more during either the ballast or the laden voyages, the arbitrator held that the claim for under-performance should fail. 

The charterers appealed to the Commercial Court. 

Allowing the charterers’ appeal, Teare J. held that there were no words in the charterparty which justified construing “good weather” as meaning good weather days of 24 hours from noon to noon. As such, the arbitrator had made an error of law. 

While the judge found that a tribunal was entitled to make a finding of fact that the available good weather periods were not a representative sample, and so could not constitute evidence of under-performance, he noted that the arbitrator had not made this finding of fact as regards the first leg of the ballast voyage. Rather, he had rejected the evidence from this leg only on the basis that the periods of good weather were less than 24 hours. This amounted to an error in law. 

The judge also held that the arbitrator had made a further error in law in finding that, had a breach been established by reference to the performance of the vessel on the first leg of the ballast voyage, the charterers’ claim would be restricted to this leg. This failed to give effect to the principles set out in The Didymi ([1988] 2 Lloyd’s Rep. 108) and The Gas Enterprise ([1993] 2 Lloyd’s Rep. 352). 

Accordingly, the Award was remitted to the arbitrator for him to determine whether the two periods of good weather encountered in the first leg of the ballast voyage (14 and 16 hours) were a sufficient sample for a breach of the speed and performance warranties to be established. If a breach was established in this way, then it should be applied to the whole period of the charter. 

If you would like to discuss this topic further please contact Lisa Wortley or a member of Birketts’ Shipping and International Trade Team.