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Speed Warranty

Marine Growth
Last updated: 06-Jul-2016

In Santa Martha Baay Scheepvaart and Handelsmaatschappij N.V. v Scanbulk A/S (The Rijn), [1981] 2 Lloyd’s Rep. 267 per Mustill J at p. 272:

"In my judgment, only those causes qualify for consideration which are fortuitous, and are not the natural result of the ship complying with the charterers’ orders. These requirements would be complied with, in the case of fouling by marine growth, in the exceptional situation where the growth was of a wholly extraordinary and unpredictable nature: see Cosmos Bulk Transport Incorporated v China National Foreign Trade Transportation Corporation [1978] 1 Lloyd’s Rep 53, a decision on a rather different form of words, where there was a very special finding of fact by the arbitrator. But in the great majority of cases, the accretion of growth is simply a natural consequence of the ship remaining in service, with nothing fortuitous about it. In the present case, furthermore, it is a fair inference from the findings in the award that the excessive growth stemmed from the abnormally long period which the vessel spent at Lourenco Marques awaiting cargo. It was the charterers’ own choice to keep her at rest in tropical waters for nearly three months, and it would be unjust if they could seek financial relief for the natural consequences of the delay.

I have formed the same opinion as regards the claim under the second part of the clause. I am bound to say that I find it hard to visualize the accumulation of marine growth during the contract service as a "defect" in the hull. But even if it were, the defect arose as a natural consequence of the way in which the charterers chose to employ the ship. I do not consider that the loss of time thus caused should be deducted from the amount of time for which hire is payable.

The Pamphilos [2002] 2 Lloyd’s Rep 681 per Colman J:

The redelivery obligation was qualified by the fair wear and tear exception. The burden of proof of breach lay on the owners who had to establish at least a prima facie case that the barnacles had grown during the charter service and that their growth fell outside the exception. The arbitrators accepted that the barnacles had grown during the charter period but found that they were an ordinary incident of trading in accordance with charterers’ lawful orders and the owners therefore failed to prove their claim. The issue whether hire could justifiably be deducted by the charterers depended on the quite different point as to whether compliance with charterers’ orders was the sole cause of the growth of the barnacles, regardless of whether that growth was fair wear and tear. The exception was not applicable to protect the charterers from the consequences of their orders having caused the vessel’s under performance. The scheme of the contract involved that charterers bore the cost of under performance caused by their orders and the cost of restoration of the vessel to her on-delivery condition where the deficiency was due to compliance with their orders and was not fair wear and tear. If the latter, the owners bore the cost.

In ENE Kos 1 Ltd v Petroleo Brasileiro SA (No 2) [2012] 2 AC 164, per Lord Sumption at para 11:

The owners are not entitled to an indemnity against things for which they are being remunerated by the payment of hire. There is therefore no indemnity in respect of the ordinary risks and costs associated with the performance of the chartered service. The purpose of the indemnity is to protect them against losses arising from risks or costs which they have not expressly or implicitly agreed in the charterparty to bear. What risks or costs the owners have agreed to bear may depend on the construction of other relevant provisions of the contract, or on an informed judgment of the broad range of physical and commercial hazards which are normally incidental to the chartered service, or on some combination of the two. The classic example of a loss within the indemnity, and probably the commonest in practice, is one which arises from the master complying with the charterers’ direction to sign bills of lading on terms of carriage more onerous than those of the charterparty …

On the other hand, the indemnity will not apply to risks which the owners have contractually assumed, which will usually be the case where they arise from, for example, their own negligence or breach of contract or consequences such as marine fouling which are incidental to the service for which the vessel was required to be available.

In Imperator I Maritime Company v Bunge SA (The Anny Petrakis) [2016] EWHC 1506 (Comm), per Phillips J at para 28:

28. In my judgment there is no basis for reading the warranty in the way suggested by the Owners, the language being clear and unambiguous. Further, I consider that the Owners’ acceptance that they cannot rely on the implied indemnity undermines their proposed construction for the following reasons:
i) As set out above, the Owners had an implied indemnity against any risks arising as a consequence of the Sub-Charterers’ orders which the Owners had not assumed as part of the charter. It follows that there is simply no need to read into the warranty an exclusion for such risks, including the consequences of unusual and unexpected fouling: the indemnity would provide the Owners with a defence to a claim under the warranty by way of circuity of action.
ii) On the other hand, where no right to an indemnity arises because the risks were assumed by the Owners, such as usual and expected marine fouling during legitimate deployment of the Vessel, it is difficult to see why the warranty should be read as not applying where performance is affected as a consequence of such an assumed risk. The Owners have given the continuing warranty at the same time as assuming that risk, without excluding it from the warranty, so the warranty must be taken to apply with full force.

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