Transatlantic Lines v. Tidewater Marine
The Charterer made deductions from the final hire statement for underperformance for both speed (US$156,817.50) and consumption (US$75,247.50). It based its position on the Owner’s representations about the vessel’s specifications relating to speed and consumption contained in Annex A to the Charter. The Owner argued that it never gave any such representations and that Annex A was only for informational purposes. The Panel majority decided that the Annex was part of the Charter. The Panel then examined the vessel’s actual performance and determined that the vessel had met her speed representation but was deficient as to fuel consumption
DMC Category Rating: Confirmed
This case note has been contributed by Patrick V. Martin, a retired New York attorney and active arbitrator, who specializes in charter party and commodity disputes
At the time the Charter was being negotiated, the Owners, Tidewater, insisted that the parties use the Supplytime form even though it was not easily adapted for the vessel’s intended service. This form also contained a standard Annex to be completed by owners, which gave details of the vessel’s characteristics and specifications. In this instance, Tidewater did not fill out this form. Instead, Tidewater simply took its pre-printed promotional form setting forth the specifications and taped the Bimco form "Annex A" header to the top. This document then became "Annex A" to the charter. Included in the form, now Annex A, was a simple statement: "Cruising vs Fuel Consumption:…Cruising 12.0 knots…95gph".
The information in Annex A was the description of the "Sly Fox" as an Offshore Supply Vessel before any modifications were made. After the modifications, the vessel was inspected by the Coast Guard and Class. However, Annex A was not redone to reflect any of these changes.
At the time the vessel was delivered under the charter, the Charterer issued standing voyage instructions, which were applicable for the entire duration of the charter, for the vessel to maintain a service speed of 12.0 knots "…weather and safe navigation permitting…" The performance of the "Sly Fox" in this new service was marginal. At the end of the Charter, the Charterer made deductions from the final hire payment for various claims including underperformance for speed and consumption based on the bench mark statements in Annex A.
The Owner denied that there was any breach or that the statements in Annex A were meant to be warranties of performance; they were merely "information". The Owner argued strenuously that the information given in Annex A was for promotional purposes only. It was never the intent to make this information into a representation of actual performance capabilities. The Owner emphasized that the "Sly Fox" had been used only as an offshore supply vessel and had undergone major modifications before being put into winter North Atlantic service. Therefore, it was not reasonable to think that Owner could have given performance guarantees for this new service.
The major issue before the Panel, therefore, was the legal effect to be given to Annex A, particularly the performance statements concerning speed and consumption.
The Panel then examined the vessel’s actual performance and considered the analyses submitted by experts on both sides. It found that, in fact, the vessel did maintain a speed of 11.99 knots overall and a speed greater than 12.0 knots on 12 of 24 voyages. The Panel decided that the vessel was not deficient in speed, considering the weather and sea conditions to which she was exposed in the North Atlantic. The Panel denied Charterer’s claim for underperformance with respect to speed.
The Panel then turned to fuel consumption. It found that the vessel had consumed an average of 121 gph during good weather, which was substantially more than the representation of 95 gph. It therefore awarded the Charterer damages in the sum of US$60,453, representing the excess consumption after allowance made for the vessel throttling down in periods of heavy weather.
Mr. Martowski's dissent that, in his view of the evidence, Annex A was only for informational purposes of the "Sly Fox" as an OSV and not as a container vessel in her actual service, adds emphasis to the point.
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