Voyage Charter - Speed Warranty - Owners' Defences

December 2001

(Sea Venture Volume 20)

If a vessel fails to perform as expressly warranted on speed, does an owner have any defences, apart from express exceptions, to a claim for damages for breach of warranty? The Commercial Court in London had the opportunity to consider this question¹ when the charterers of the "Leonidas" appealed from an arbitrators’ award on this issue.

The owners of the "Leonidas" had chartered her for a voyage from the Arabian Gulf to the U.S. Gulf. Shortly after completion of loading the vessel suffered a main engine breakdown and was, as a consequence, unable to perform the warranted speed of 11 knots. As a result, the parties varied the charterparty so as to allow for discharge in South Africa. Various disputes arose between the parties and were referred to arbitration in London.

The charterparty contained a preamble according to which Part I would prevail over Part II in the event of a conflict.

Part I incorporated, inter alia, an additional clause 20

"20. Speed

Vessel will perform a laden passage at 11 knots weather and safe navigation permitting."

Part II contained a clause 20 which incorporated the provisions of the United States Carriage of Goods by Sea Act, 1936 (the Hague Rules).

The preliminary issues before the Commercial Court were:

1. Whether the "Leonidas" failed to perform a laden passage at 11 knots weather and safe navigation permitting as warranted in clause 20 of the charterparty.

2. Whether the Hague Rules exceptions are capable of constituting a defence to a claim for damages for breach of an express warranty.

The Tribunal had answered "no" to the first question and "yes" to the second. Langley J in the Commercial Court accepted that tailor-made clauses² will normally prevail over typed clauses³, but only when there is a conflict between the two. He went on to say,

"The Courts will, however, seek to construe a contract as a whole and if reasonable commercial construction of the whole can reconcile two provisions (whether typed or printed) then such a construction can and in my judgment should be adopted."

Accordingly, the speed warranty was to apply to the voyage but subject to the owners establishing, if material, that the cause of the vessel failing to reach 11 knots was one or more of the statutory exceptions. Langley J also said that the speed warranty may well be "in effect a provision that the vessel is capable of a speed of 11 knots on "a" laden voyage rather than an absolute warranty that it would perform the chartered voyage at that speed come what may (except bad weather or navigation)" and that, in his judgment, such a result would be both legitimate and indeed commercially appropriate. Accordingly, the charterers’ appeal was dismissed.

The effect of this ruling is that where an owner has warranted a certain speed during the currency of the charter and cannot comply with his warranty, then he can seek to invoke the defences of the Hague or Hague-Visby Rules, if incorporated into the charterparty.

¹ [2001] 1 Lloyd’s Rep. 533.
² Such as additional clause 20 in Part I.
³ Such as the Clause Paramount in Part II clause 20.