Not Logged In, Login,

Thursday, January 18, 2018

CHARTERPARTY Q&A – SPEED AND CONSUMPTION CLAIM – SHELLTIME 4 CLAUSE 24

INTERTANKO gives its opinion on a claim that was made by owners against their time charterers for over-performance. Charterers accepted that owners were entitled to an increase in the hire due to the vessel proceeding at a faster speed than had been warranted but disputed an increase in hire due to a saving of bunkers consumed.

We were recently asked to consider a somewhat unusual speed and consumption claim where the vessel had over-performed both in terms of bunkers and speed. The vessel was chartered on the Shelltime 4 form of charter, clause 24 (b) of which provides:

QUOTE:’

‘’If during any year from the date on which the vessel enters service (anniversary to anniversary) the vessel falls below or exceeds the performance guaranteed in clause 24 (a) then if such shortfall or excess results

(i)                 (i)                 (i)       from a reduction or an increase in the average speed of the vessel, compared to the speed guaranteed in clause 24(a), then an amount equal to the value at the hire rate of the time so lost or gained, as the case may be, shall be deducted from or added to the hire paid;

(ii)               (ii)               (ii)      from an increase or a decrease in the total bunkers consumed, compared to the total bunkers which would have been consumed had the vessel performed as guaranteed in clause 24(a), an amount equivalent to the value of the additional bunkers consumed or the bunkers saved…shall be deducted from or added to the hire paid…’’

UNQUOTE

Whilst the parties agreed on the additional sum of hire due with respect to the vessel’s over-performance on speed they did not agree if there had been an over- performance in terms of the bunker consumption. The point is best discussed with the aid of an example.

A vessel proceeded from A to B, a passage of some 1,200 miles. The vessel's guaranteed speed was 10 knots. However, instead of taking 120 hours she took 96, an over-performance of 24 hours, for which owners were entitled to an increase in hire. This was not in dispute.

The vessel consumed 100 mts of bunkers. The guaranteed consumption is 25 mts/day at 10 knots. It could be said that the vessel did not over- or under-perform on bunkers as in fact the vessel used 4 days for the passage and still only burnt 100 tons of fuel. However, if account is taken that the guarantee was for 25 mts/day at 10 knots the consumption is put into a different context. It is clear that the vessel did over- perform, i.e. the vessel's efficient use of bunkers whilst steaming faster resulted in a saving for charterers which owners were entitled to be compensated for in terms of an increase in hire. If the vessel had performed as guaranteed the passage would have taken 120 hours and she would have consumed 125 mts of fuel. However, in fact 100 mts were consumed, i.e. a saving of 25 mts.

The confusion arose due to the provision in clause 24(b)(ii) that the decrease in bunkers should be compared to the total bunkers that would have been consumed had the vessel ‘’performed as guaranteed in clause 24(a)…’’. It should be remembered that the guaranteed bunker consumption should not be viewed in isolation but in conjunction with a particular speed. Therefore, owners were in the circumstances entitled to an increase in the amount of hire due to the over performance in terms of bunker consumption.

Should members wish to submit any charterparty questions to INTERTANKO they should be sent to John Fawcett-Ellis mailto:john.fawcett-ellis@intertanko.com