Time Charter Ship Description

Time charterer is in control of the commercial operation of the vessel and is obliged to pay hire at a fixed rate throughout the charter period, the profit margin he derives from the enterprise will be largely dependent on the characteristics and performance of the chartered ship. Accordingly, standard time charter forms include in the preamble a detailed description of the vessel covering such matters as its name and flag, ownership, class, gross and net registered tonnage, cargo capacity, speed, and fuel consumption. The success of the adventure may depend on the accuracy of these particulars, since the risk of efficient vessel performance will fall largely on the charterer. It is therefore in his interest to secure as detailed a description as possible and, in cases of doubt, to have the vessel inspected by qualified staff. In the majority of cases, however, the reputation of the shipowner may be a more reliable guide. While any facet of a vessel’s description might be of importance on a particular occasion, as, for example, a vessel’s flag in time of war, the bulk of litigation tends to centre on the three characteristics of cargo capacity, speed, and fuel consumption. In order to minimise the possibility of disputes in the event of minor discrepancies in such particulars, it is usual to qualify any statement by the addition of ‘about’ or some similar phrase, which is normally interpreted as permitting a tolerance of approximately 5 per cent. Similarly, when reference is made to a vessel’s speed, it is normal to add the proviso ‘in good weather conditions’, thus enabling arbitrators to ignore checks made on days when prevailing winds range above force 4 or 5 on the Beaufort Scale. There can be little doubt that specifications of this type incorporated in a charterparty are intended to have contractual effect and amount to undertakings by the shipowner as to the performance of his vessel. Opinions have, however, been divided as to their precise legal effect. Are they merely factual statements as to the vessel’s capabilities at the time of signing the charter, or are they contractual undertakings that the vessel will maintain that capability throughout the period of the charter, or at least until it has been delivered to the charterer? While New York arbitrators generally regard statements as to a vessel’s speed and fuel consumption as continuing warranties throughout the charter, British courts have taken a more restrictive view. In the late nineteenth century the Court of Appeal held that a statement as to a vessel’s classification was not a continuing warranty, but was only applicable to the time at which the charter was signed. This rather extreme view has been modified more recently in the case of Cosmos Bulk Transport Inc v China National Foreign Trade Transportation Co where Mocatta J held that a speed warranty referred to the capability of the vessel at the date of delivery under the charterparty. In that case the vessel concerned was capable of steaming at the speed warranted when the charterparty was signed but her capability was subsequently affected as the result of her hull becoming encrusted with molluscs while calling at a tropical port during the completion of a previous charter. In holding the shipowners liable for breach, Mocatta J expressed the view that ‘commercial considerations require this description as to the vessel’s speed to be applicable as at the date of her delivery, whether or not it is applicable at the date of the charter’. In his opinion similar considerations applied to representations as to fuel consumption and cargo capacity, although he distinguished earlier cases involving classification warranties on the ground that, as changes in classification were outside the control of the parties, the shipowner should only be responsible for the accuracy of statements as to classification at the time they were made. The shipowner is not, however, taken to have guaranteed the accuracy of these specifications throughout the period of the charter, although some oil charter forms contain express undertakings to that effect. In practice, with the notable exception of those relating to speed and fuel consumption, few of the specifications are likely to vary between the signing of the charter and the delivery of the vessel in the absence of some deliberate act on the part of the shipowner as, for example, a decision to sell the vessel which would result in a change of ownership and possibly of flag. The burden of proving failure to comply with the specifications rests on the charterer and, in the circumstances of ocean transport, proof may be difficult to obtain. Breach of such an undertaking may, in the extreme case, give the charterer a right to cancel the charter, but in practice he will normally be restricted to claiming compensation for the vessel’s failure to meet the relevant specification. According to basic contractual principles, the appropriate measure of damages recoverable would be calculated on the difference between the respective market rates of hire for a vessel with the required contractual specifications and one with the specifications of the vessel delivered. In practice such a test may be extremely difficult to operate and, in any event, may result in the award of a derisory amount of damages. It is, therefore, interesting to note that in the Cosmos Bulk Transport case the court adopted an alter- native formula to cover breach of a speed warranty, allowing the charterer to treat the vessel as off-hire for the extra time taken on the relevant voyage. Occasionally alternative remedies for errors in description may be derived from other clauses in the charterparty. Thus the obligation in many charters to prosecute ‘all voyages with the utmost dispatch’ might provide a remedy for a speed deficiency, while an off-hire clause may specifically cover a reduction in speed caused by ‘defect in or breakdown of any part of her hull, machinery or equipment’. An alternative approach to the question of a reduction in speed caused by the fouling of a vessel’s bottom is provided by the New York Produce Exchange form which allows the charterer to request the vessel to be taken off-hire into dry dock for cleaning at the owner’s expense