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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Understanding 'about' in bunker consumption clauses

21 Nov 2017 13:57 GMT

The five percent margin and 'double benefit' discussed.



The issue of speed and bunker consumption claims has been a topic of discussion in recent times. Protection and indemnity (P&I) insurance provider Skuld informed its members on Friday about the legal terms often included in speed and consumption warranties within charterparty contracts between shipowners and charterers.

The P&I club pointed out that an issue that often causes problems is the qualification of speed and consumption warranties by the word 'about'.

Skuld explained that 'about' is virtually always interpreted to mean a margin of 0.5 knots for speed and 5 percent for bunker fuel consumption.

A year ago, maritime arbitrator Jagmeet Singh Makkar noted that although this 'rule' seems to be applied invariably in London arbitrations, it is not actually the law.

Singh explained that, in the case of speed, the extent of the margin "must be tailored to the ship's configuration, size, draft and trim etc (The Al Bida [1987] 1 LLR 124)".

For bunker consumption, there is also no fixed margin according to English law; however, Singh noted, "it seems to have been generally accepted in the industry that a margin of 5 percent will be allowed for 'about'". (See London Arbitration 12/85 - LMLN 158; London Arbitration 2/87 - LMLN 188).

Another contentious issue is the question of whether one can include a double 'about', e.g 'about 13.00 knots on about 28.00 mt'. Currently, there is no consensus as to whether, in this example, the owner may have the right to a 'double benefit' from the 'about' and therefore run at 12.5 knots and consume 29.4 mt without being in breach of the warranty. (See London Arbitrations 12/85 and 2/87 - LMLN 188).

Skuld says the most effective qualification owners can include in charterparties are the words 'without guarantee'.

"It has been held that the effect of stating that the vessels' performance data is provided "without guarantee", is that the figures will no longer constitute a warranty. The charterer can no longer rely on them. The only legal requirement on owners is, that the figures given are given in good faith at the time the vessel is fixed (The Lipa [2001]). The belief does not even have to be reasonable (The Lendoudis Evangelos No.2 [1997]). In practice, it will be very difficult indeed to prove bad faith," Skuld said.


Image: Odfjell's oil/chemical tanker, Bow Clipper. Image credit: Odfjell




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