“THE DIVINEGATE” – Speed and Performance Disputes

Eastern Pacific Chartering Inc. v Pola Maritime Limited (The Divinegate) [2022] EWHC 2095 (Comm)

Speed and performance disputes often generate significant argument, not only because these disputes can combine complicated scientific and methodological questions with legal issues, but also because the law itself can be unclear given that these cases are usually dealt with in arbitration and, as such, different arbitrators reach differing and sometimes conflicting conclusions.

The recent judgment in “The Divinegate” from the English High Court brings some much-needed clarity to a contentious issue, namely the treatment of positive currents when calculating a vessel’s performance in circumstances where the good weather warranty in the charterparty simply says: ‘NO ADVERSE CURRENTS’.

It is common practise for weather routing companies in their voyage reports to apply a current factor for positive currents to the performance of the vessel.  If there is a positive current factor, this will then usually be deducted from the vessel’s speed to determine its performance against the warranty so that the owners do not get the benefit of the positive current. Up until now, there have been conflicting arbitration decisions as to whether this approach is correct.

In “The Divinegate”, the judge held that the words ‘NO ADVERSE CURRENTS’ mean that only time with negative current effect should be excluded from good weather periods; it did not mean that periods with positive currents should also be excluded.  Accordingly, there should be no deduction made from speed for positive currents and owners can get the benefit of the positive currents.  If the parties wish to exclude periods with positive currents from the calculation, then express wording would be needed to that effect.

A further point of interest is that the case also looked at alternative methods to calculate underperformance claims.  The most common method to calculate a vessel’s performance is to determine the vessel’s performance in good weather and then extrapolate that performance over the whole voyage (i.e., following the approach in The Didymi[1]), irrespective of the basis of liability (e.g. breach of warranty, or breach of clauses 1 and or 8, or off-hire).

However, there is dicta from certain cases (e.g. The Ocean Virgo[2]) that this is not the only method by which underperformance can be calculated.  This is also supported by the authors of Time Charterers[3].  This, of course, becomes particularly pertinent where a vessel may have clearly underperformed – perhaps due to significant hull fouling or an engine defect – but there is no way to calculate the loss against the performance warranty because there is no good weather on the voyage as contractually defined.   To date, there is no authority on what alternative methods might be acceptable in these circumstances.

In The Divinegate, the judge agreed with the contention that The Didymi approach was not necessarily the only approach.   The charterers also alleged underperformance based on a breach of clause 8 (to proceed with due despatch) and a breach of clause 1 (due to the hull being fouled on delivery) and as off-hire under clause15 for the loss of time.  In order to prove the breach of clause 8, charterers alleged that the crew operated the engine to conserve fuel in such a way that the RPM was not high enough to maintain the warranted good weather speeds.

The judge was not persuaded by this argument.  She concluded that the methodology applied was not reliable because it worked on an assumption that the resistance on the hull would be the same irrespective of the RPM (i.e., whether run at 92 or 96 RPM), and as it also failed to consider the weather conditions.

As to the hull-fouling, the judge only made a few comments as she was generally concerned about the reliability of the evidence adduced.  However, she was unconvinced as to the accuracy of the method proposed to determine the reduction of speed that hull fouling may cause as the scientific papers cited concerned warships, which may not necessarily be applicable to bulk carriers.

The quick ‘take aways’ from the case are:

• If the charterparty contains the words ‘NO ADVERSE CURRENTS’, this only refers to negative currents. Time periods of sailing with positive currents should be included in the calculation.  Owners can get the benefit of favourable currents.  Weather routing providers should not deduct a positive current effect from the vessel’s speed.

• It is possible to advance performance claims that do not follow the accepted methodology of examining the vessel’s performance in good weather and extrapolating that across the whole voyage. Whilst each case will hinge on the facts and evidence in question, a simple RPM method for determining performance is unlikely to succeed.  It would also be necessary to consider the vessel’s slip at differing RPMs together with the prevailing weather conditions on the voyage.   In summary, any alternative method that is too theoretical is unlikely to succeed: it must be a reliable method and consistent with the performance warranties.   It remains to be seen what alternative method can satisfy these requirements.

[1] [1987] 2 Lloyd’s Rep. 352

[2] [2018] Lloyd’s Rep Plus 101

[3] 7^th Edition at §3.68