Speed and Performance: FAQs

There are many factors that can impact a vessel's performance, including engine performance, hull fouling and, of course, weather conditions.

There are few reported cases on speed and performance issues as they rarely make it to Court. Whilst there are reports of decisions by arbitration tribunals on certain points, these are often conflicting and the outcome in each matter is dependent on: 

• the precise wording of the good weather definition in the charterparty; and 
• the evidence as to weather conditions before the tribunal.

This FAQ seeks to discuss some of the common issues which arise.  

Question: Does the Charterparty contain a speed and performance warranty?

The first step is considering whether the charterparty contains a speed and performance warranty. 

If not, which is unusual in a time charter, there is no contractual warranty as to the vessel’s speed or consumption and no good weather benchmark against which to measure performance. In these circumstances the Charterer’s remedy is likely to be for breach of the obligation of due despatch which will be a difficult case to prove and possibly subject to seaworthiness obligations.

If the charterparty does contain a speed and performance clause this will  usually be in the form of a contractual undertaking from the Owner that the vessel is capable of:  

• Achieving a certain speed; 
• Consuming fuel at a set rate; and 
• Doing so in certain conditions.

By way of example, in the New York Produce (NYPE) 1946 form the performance of the ship is described as (see lines 9-11) ‘...and capable of steaming, fully laden, under good weather conditions about... knots on a consumption of about... tons of... best grade fuel oil...’

Question: When is a vessel required to comply with a speed and performance warranty? 

The vessel must be capable of performing as warranted on the date it is delivered into the charterparty service. However, unless the charterparty specifies that the warranty is “continuing”, it is open to a Charterer to argue that the warranty does not apply throughout the duration of the charterparty service.

However, this is subject to the duty on the Owner to maintain the vessel throughout the charterparty period.

The ship’s description may be stated to be “without guarantee”. This phrase is likely to reduce an Owner’s obligation in respect of speed and performance to be no more than an estimate given in good faith¹.

Question: How is the term “about” applied?

The word “about” is frequently inserted to qualify the stated speed and performance. Whilst the Court of Appeal has stated that the term ”about” must be “tailored to the ship’s configuration, size, draft and trim, etc” , and there is no fixed allowance to be applied, in practice half a knot on speed or 5% on consumption are commonly applied. 

Where the term “about” has been inserted prior to the warranted fuel consumption and the warranted speed, there is no consensus on whether the term “about” is to be applied twice, i.e. to both speed and consumption³. However, where the term “about” has been inserted prior to each of the warranted fuel consumption and the warranted speed, the understanding is that an allowance should be made on both⁴. 

For the sake of clarity, Members may wish to expressly define the “about” tolerance to be given in the charterparty, by using the term “about” prior to each of the warranted speed and consumption and also including words to clarify that “about” means +/-0.5 Knots and +/-5% consumption, with both tolerances to apply.

Question: In what conditions does the speed and performance warranty apply?

Normally, the speed and performance warranty will be expressed to apply only in certain weather conditions. This will frequently include qualifications such as weather not to exceed DSS3/Douglas Sea State 3 and Beaufort Force 4 but may also extend to swell, specified sea states and currents. 

Where “good weather” is not defined, this is understood to mean wind conditions of Beaufort Force 4 or below⁵.

Once any good weather days have been identified, the usual approach is then to determine the ship’s performance in good weather only and then apply any shortfall in performance across the whole voyage (aside from any periods of slow steaming at Charterers’ request or off-hire).⁶ Therefore, if the ship can be shown not to meet the performance warranty in good weather periods, the Charterer will be entitled to damages in respect of both good weather and bad weather periods. A recent arbitration decision⁷ commented on a charterparty provision which expressly provided for “NO EXTRAPOLATIONS TO BE MADE FOR WEATHER CONDITIONS OTHER THAN THOSE DESCRIBED ABOVE.” It was held that the clause permitted extrapolation from data obtained in qualifying good weather but prohibited reliance on data from weather conditions outside the defined criteria.

Question: What data is used to assess the weather when calculating performance?

Information as to weather is typically obtained by Charterer in the form of a voyage performance report by a weather routing company and is also recorded by the vessel in its log books. There are often discrepancies between these two sources which can lead to disputes as to which days were in fact good weather days for the purpose of assessing performance. 

The charterparty may state what source of information should prevail in the event of a discrepancy, however, this is often not the case. 

If there is a discrepancy between the two sources of information, arbitration tribunals will often give more weight to the log books⁸. The reasoning for this is that mariners are recognised by the World Meteorological Office as trained weather observers. In addition to this, the vessel logs will record the weather conditions actually experienced by the vessel on that particular day/time.  Conversely, weather routing companies often use information from weather buoys which cover large areas which may be situated a significant distance from the actual vessel position. 

A Charterer may argue that the ship’s logs are unreliable and that the voyage performance report should be preferred⁹. Any evidence of inaccurate, inconsistent or fraudulent entries in a log book may be sufficient to persuade an arbitration tribunal to favour the performance report.

Question: What period of good weather is required to calculate a speed and performance claim? 

This may be stipulated by the terms of the charterparty, for example it may be stated that there needs to be a good weather period of 24 consecutive hours. 

If there is no contractual stipulation, the period of good weather must be a sufficient sample on which to judge the vessel’s performance¹⁰. This is subjective and may depend on the overall length of the voyage.

Question: Do positive or adverse currents have to be accounted for? 

The good weather definition will often include a provision for currents, for example “no adverse currents.” If this wording is included, time spent sailing with adverse currents is not to be treated as good weather.

There is no widely accepted understanding as to whether a warranted performance in good weather is to apply irrespective of currents and there are contrasting views in reported arbitration decisions¹¹. 

Another point to consider is whether a ”current factor” has been applied by the weather routing company. There is no consistent approach as to how these are applied and they can be controversial. The rationale is that if no adjustment is made, a vessel which has travelled predominantly with the ocean currents would gain a windfall as compared with a vessel going in the opposite direction.  Some experts have taken the view that ocean currents are a natural phenomenon and ought to be taken into account in the absence of express charterparty wording. An alternative view is that where the charterparty is silent on the issue of currents, their impact on the vessel's performance should be disregarded. 

However, the Divinegate¹², has clarified that the exclusion of positive currents when assessing performance is only permitted where it is expressly provided for in the charterparty. If there is no specific reference to positive currents in the speed and performance warranty, the benefit of positive currents will not be deducted when assessing performance.

Question: Are there any defences to a speed and performance claim?

An Owner may have a defence if he can demonstrate that the underperformance resulted from poor quality bunkers supplied by the Charterer or as a consequence of following the Charterer’s employment orders. For example, an Owner may be able to argue that the underperformance resulted from hull fouling as a result of a long port stay.¹³

Question: How is a calculation performed if there is no good weather?

Good weather can be defined with so many qualifications that there may in fact be no period which comes within the definition. There is however no bar to a Charterer alleging underperformance and presenting a claim even though they cannot do so by way of the usual mechanism provided in the charterparty. However, where the parties have agreed a performance warranty based on good weather, applying the warranty will be the primary method for assessing any claim¹⁴. 

Whilst alternative methodology for assessing performance is available, it must be established as reliable and consistent with the express performance warranty in the charterparty. 

In the Divinegate, the Charterer sought to calculate  its claim based on two methods: (i) by reference to the measured Revolutions Per Minute (RPM) of the main engine propeller and comparing this to be RPM at which the main engine needed to be operated at to achieve the warranted speed,  the argument being that there was a default by the crew in not maintaining sufficient engine speed; and (ii) hull fouling which was a breach of the delivery obligation to deliver the Vessel in a thoroughly efficient state in hull, machinery and equipment. However, neither of these theoretical calculations presented by Charterers were accepted by the Court which highlights that presenting an “alternative” claim is likely to be challenging.

There has been two recent arbitration decisions in which an alternative calculation has been put forward:

1. In London Arbitration 1/26, a claim could not be made under the performance warranty due to the particular wording of the clause. The Tribunal was however persuaded by Charterers’ marine expert’s evidence which, having ruled out other explanations for underperformance, concluded that the reason for the reduction in the vessel’s speed was substantial hull fouling. Charterers’ claim for off-hire succeeded.
2. In London Arbitration 4/26, Charterers claimed that Owners had failed to deliver the Vessel free of hull fouling and claimed underperformance. In support of the claim Charterers used both a performance report and an alternative loss calculation. The findings of the performance report were dismissed on the basis that there was in fact no good weather. So far as the alternative calculation was concerned, the evidence of hull fouling was inconclusive and the loss was not properly quantified. 

As weather evaluation technology evolves, it may be that alternative methods of calculating performance are refined such that they are accepted by a Tribunal or  Court. However, for the time being, while an alternative calculation may be possible, there is no settled mechanism by which a reliable performance assessment can be established in the absence of a good weather period. 

Question: What wave height is applicable for Douglas Sea State 3?

There are conflicting decisions on what wave height is permissible when this is not expressly stated and the good weather definition provides for Douglas Sea State 3. Recent decisions have made it clear that the performance report should separate wind and swell waves to properly assess compliance with charterparty criteria¹⁵. To reduce scope for disputes, parties should consider expressly identifying the limits of sea and swell waves in the good weather definition clause. 

Question: How should disputes be resolved?

The charterparty may state a method by which any dispute is to be resolved. For example, clause 12 of NYPE 2015 provides that disputes are to be referred to an independent expert or alternative weather service selected by mutual agreement, whose report shall take the vessel’s log data and the Charterer’s weather service data into consideration and whose determination shall be final and binding on the parties. 

Appointing an independent third-party expert to perform a calculation can be a pragmatic resolution. A compromise is almost always preferable to a long and protracted arbitration, which can become very costly due to the technical nature of these disputes.

Key Takeaway

Speed and performance claims are common but assessing the validity is not always straightforward. This guide illustrates that disputes in relation to these claims are often complex and careful consideration of the charter terms, alongside the log books and any weather routing reports relied upon, is required. 

Whilst this guide provides a practical overview of the principles underpinning speed and performance disputes, it is important to highlight that it is not a substitute for legal advice, and Members of the Club are encouraged to approach their usual contacts at the Club for advice on the particular charter terms and facts.

 ¹ The Lipa [2000] 2 Lloyd’s Rep 17
 ² The Al Bida [1987] 1 Lloyd’s Rep. 124 
 ³ London Maritime Arbitrations 12/85, 6/88, and 15/07
 ⁴ London Maritime Arbitrations 10/01 and 15/07
 ⁵ London Maritime Arbitration 15/06, LMLN 699
 ⁶ The Didymi [1998] 2 Lloyd's Reports 108 and The Gas Enterprise [1993] 2 Lloyd's Reports 352
 ⁷ London Maritime Arbitrations 5/26
 ⁸ London Maritime Arbitration 6/19
 ⁹ The Dimitris Perrotis (2000) LMLN 533
 ¹⁰ The Ocean Virgo [2015] EWHC 3405 (Comm.)
 ¹¹ London Maritime Arbitrations 15/05 and 21/04
 ¹² The Divinegate [2022] EWHC 2095 (Comm)
 ¹³ The Pamphilos [2002] 2 Lloyd’s Rep. 681
 ¹⁴ The Divinegate [2022] EWHC2095 (Comm)
 ¹⁵ London Maritime Arbitration 23/21, London Maritime Arbitration 29/22 and London Maritime Arbitration 32/22