Hull Cleaning Costs Under BIMCO Hull Fouling Clause

Under most time charter forms, owners are under an obligation to maintain the vessel throughout the chartered service. The prevention of ordinary hull fouling would normally fall within the scope of that obligation. In many cases, however, hull fouling is a result of a time charterer’s orders for the vessel to remain in one place for a prolonged period of time. The risk is increased if the vessel remains idle at ports with warm waters.  

The BIMCO Hull Fouling Clause for Time Charterparties was first introduced in 2013, following a series of decisions—including The Kitsa and The Pamphilos— to shift responsibility for hull fouling occurring while, as a result of charterers’ employment orders, a vessel remained idle in port or at anchorage. In The Kitsa [2005] 1 Lloyd’s Rep 43 (Hull Fouling - Charterparty Issues},  the fouling in the course of the ordinary employment of the vessel was held to be an operational risk.  Owners had the responsibility to clean the hull (as part of their obligation to maintain the vessel) even where, because of charterers’ orders the vessel remained at a port or place where the risk of fouling was increased due to the temperature of the water.  The risk of fouling was a foreseeable risk which owners had accepted at the time of entering into the charter. Owners were therefore not entitled to claim an indemnity from charterers for the cost of cleaning the hull. In the Pamphilos [2002] 2 Lloyd’s Rep 681, Owners claimed that charterers were in breach of their redelivery obligation because of the growth on the hull. The court, however, held that charterers were not liable for the time and cost of hull cleaning. In the absence of exceptional circumstances, hull fouling would be viewed as “fair wear and tear”, which was an operational risk for owners.

Under the BIMCO Hull Fouling Clause (Hull Fouling Clause for Time Charter Parties 2019), once the agreed time of idling has expired, the responsibility for fouling is transferred to charterers.  The performance warranty is suspended until the hull is inspected and, if necessary, cleaned. The clause recognises that there may be various reasons (e.g. availability of suitable diving teams, or sea and water conditions) why charterers may not be able to inspect and/or clean the hull at the port where the vessel  is idle or at the port of redelivery.

However, are:

• charterers in breach of charter if they fail to clean before sailing from the port where the vessel was idle; and 
• owners to be compensated if they carry out the cleaning after the vessel is redelivered?

Both questions were considered by the tribunal in London Arbitration 12/25.

The vessel was trip time chartered on an amended NYPE form and incorporated, at Clause 39, the BIMCO Hull Fouling Clause. After the vessel was delivered, charterers ordered the vessel to load cargo at Richards Bay, where it remained at anchorage for 26 days before loading the cargo and sailing on the 31st day. Charterers carried out an underwater inspection which showed heavy fouling on the propeller only, but the divers also recommended that the sea chest gratings be cleaned. No cleaning was carried out at Richards Bay and the sea conditions at Paradip, the port of discharge, meant that charterers were unable to clean the hull before redelivery.  

Owners then inspected the hull at Singapore and it was found to be fouled.  Owners cleaned and polished the propeller and the sea chest at total cost of USD 5,500. The remainder of the fouling was cleaned at Shanghai. Owners claimed USD 25,688.72 in respect of the cost of cleaning.      

Owners argued that charterers should have carried out hull cleaning at Richards Bay, and were therefore in breach sub-clause (c) of the BIMCO Hull Fouling Clause. In addition, or alternatively, that charterers failed in their obligation to redeliver the vessel in like good order and condition.

Charterers denied that they were liable for the cost of cleaning and argued that their liability (if any) was limited to the cost cleaning the propeller.

The Tribunal held that charterers were not in beach of charter:

• Sub-clause c(ii) anticipated that it may not be possible to clean the hull at the port of inspection. Charterers can choose, as they did, to postpone carrying out the cleaning to another port. Even if charterers were in breach of clause (c) the tribunal considered that owners had suffered no damage as a result.
• Sub-clause (d) specifically dealt with the situation where charterers are unable to carry out the cleaning prior to redelivery and therefore trumped charterers’ general obligation to redeliver the vessel in like good order and condition.

The tribunal held that charterers remained liable for the lumpsum payment under sub-clause (d). In the absence of an agreement between the parties on the lumpsum amount, the tribunal would determine what amount owners are entitled to. As the inspection at Richards Bay found that the propeller and sea chest needed cleaning, the tribunal held that owners were entitled to a lump sum payment for that cleaning i.e. USD5,500.  

The decision is a welcome one and seems consistent with the purpose of the BIMCO Hull Fouling Clause. It clarifies that charterers do not have to clean the hull before sailing from the port or place where the vessel has been idle. However;

1. if a charterer chooses to postpone the cleaning, the performance warranty remains suspended until it has been carried out; and 
2. There is no breach of the obligation to redeliver the vessel in “like good order and condition if Charterers do not clean the hull ”, since sub-clause (d) envisages circumstances where charterers can redeliver the vessel without carrying out hull cleaning (against payment of a lump sum in lieu).

In this case Charterers remained liable for a lump sum payment to owners in respect of the cost of cleaning the fouling identified as having been caused by the prolonged stay at Richards Bay. However, Charterers were not liable for the cost of cleaning the entire hull, even though fouling was found when the vessel was inspected at Singapore, because they were able to rely on the findings of the underwater inspection at Richards Bay to limit their liability to the cost of cleaning the propeller and sea chest.