I. Introduction

A bottom fouling clause is often incorporated in charter parties upon agreement between the owner and the charterer on arranging hull cleaning whenever necessary to avoid vessel underperformance and over consumption. In such cases, an underwater inspection will be scheduled previously for assessment and plan-making.

The clauses are however not always adequately drafted and have given rise to frequent disputes over the inspection costs. By going through two recent cases, the Club hopes to call Members’ attention to the matter so that they can ponder their wording when negotiating the contract.

II. Case No.1

The Club found it a great reference for shipowners when handling the case. The vessel stayed in the port of discharge for over 20 days at the charterer’s instruction. The owner arranged an underwater inspection at the next port and was later notified that cleaning was unnecessary. Yet by whom the incurred inspection costs should be borne became a problem.

It was set out in Clause 8 – Performance of Voyages of the charterparty that:

“the Master…shall be under the orders and directions of the Charterers as regards employment and agency;”

and in Clause 98 – Bottom Fouling Clause:

“in case of bottom fouling due to Charterers ordering the vessel to stay in or off water port(s)/place(s)/area(s) in excess of 20 (twenty) days total, Owners not to be responsible for any speed deficiency or over consumption thereafter. In such a case Owners will carry out bottom cleaning at a place to be mutually agreed thereafter in Charterers time and at their expense…”

The issues

The charterer maintained that:

1.      Only hull cleaning costs were specified in the contract, not the inspection costs, which should be otherwise provided expressly if to be borne by the charterer.

2.      No hull cleaning work was required as suggested by the inspection.

3.      It’s generally believed that owners should accept the consequences of complying with the charterer’s order, which in this case is the inspection costs. The Kitsa [2005] 1 Lloyd’s Rep. 432.

The owner argued that:

1.      The costs are recoverable under the general indemnity contained in clause 8 against the consequences of following Charterers’ orders (The Island Archon [1994] 2 Lloyd’s Rep. 227) and clause 98 makes it clear that the risks of hull fouling in the event of a stay exceeding 20 days, should for charterers’ account (the implied indemnity should apply to those risks).

2.      According to the charterer, a fouled hull will be spotted only when the warranted vessel speed/consumption is not maintained, which is clearly not what was intended in Clause 98.

The arbitration award

The owner is entitled to claim indemnity from the charterer, for:

1.      In circumstances where the charterer was liable for actual cleaning costs, it would be illogical to ask the owner for inspection costs, if bottom cleaning had been required for a prolonged stay.

2.      The indemnity under Clause 8 shall apply if Clause 98 has been triggered.

3.      There’s no legal precedent disapproving the indemnity under Clause 8.

III. Case No.2 (London Arbitration 15/19)

The vessel was chartered by the owner on an amended NYPE 1993 form and stayed at Hazira Port, India at the charterer’s order for a period exceeding the agreed number of days from June 22^nd to July 27^th.

The contractual position

Clause 104 of the charterparty provided:

104. Prolonged Port Stays

… If the vessel is encountering prolonged stay, minimum twenty-five (25) days in port and/or at anchorage, and there is strong reason to believe that the vessel’s hull has acquired excessive marine growth affecting vessel’s speed/consumption due to the stay at the specific port and/or anchorage, Owners are to arrange for a diver inspection. Should the result of this diver inspection indicate that there is excessive marine growth on the hull, which is directly related to this specific port/anchorage stay, Owners to arrange underwater scrubbing of the hull in Charterers time and at Charterers expense, prior to vessels departure from the port or anchorage, if same can be done without unreasonable delay.

If the underwater scrubbing is not available or cannot be carried out at the port in question, same to be carried out in Charterers time/expense in the next convenient port.

The facts

On July 20^th, the charterer asked the master for evidence of any marine growth and demanded the owner to obtain a quotation for underwater inspection, bottom cleaning and propeller polishing services. The cleaning company made an offer at US$ 23,287.50, advising that sea state was rough in monsoon season and the work can hardly be done. A same alert was given by the chartering agent. The charterer proposed to pay a lump sum of US$8,000 as an amicable settlement in lieu of underwater cleaning.

On July 27^th, the vessel was redelivered without being cleaned despite the fact that the owner had forwarded the charterer photos of some growth on the rudder blade and the hull with the growth on the hull from the mid-ship to bow being more obvious than aft.

The vessel then sailed for Rio Grande for delivery into its next employment and deviated to Port Louis, Mauritius for underwater inspection and cleaning. The result suggested a 10-15% fouling of the starboard side, port side, flat bottom and rear area.

The issues

The owner hence claimed indemnity from the charterer for expenses on deviation, underwater inspection and foul cleaning. Here we’ll focus only on the inspection costs.

The owner submitted that it was a term of the charter, to be implied as a matter of law, that the charterer would indemnify the owner against loss suffered by the owner as a consequence of complying with the charterer’s order unless, by the terms of the charterparty, the owner has consented to bear the loss in question. Pursuant to clause 104, the owner had not consented to bear such loss and hence the inspection costs should be recoverable.

The charterer denied that there was any such implied term and said that clause 104 provided a complete code governing the dispute. The charterer was only to pay for underwater cleaning where “… (c) the owner had arranged a diver’s inspection at that place (noting that while the clause made provision for cleaning to take place elsewhere it did not do so in relation to inspection) …”

The decisions

It was apparent from clause 104 that the parties understood and agreed that the charterer would be liable for the time and expense of cleaning the vessel’s hull if it became fouled as a result of a port stay of 25 days or more. For the owners that was sufficient to establish their entitlement to the sums claimed, and to the extent that the terms of the clause did not expressly encompass the facts of the case then a term was to be implied to give effect to the parties’ clear intentions.

The charterer, on the other hand, saw the liability as being defined by the express provisions of clause 104 and extending no further. The charterer was correct in pointing out that although clause 104 anticipated that underwater cleaning might be carried out at a port other than that where the fouling occurred, the provision for the arrangement of inspection was limited to the place where such fouling was said to have occurred.

However, it was unrealistic to read from that the arranging of an inspection at Hazira prior to redelivery was a strict pre-condition to any recovery from the charterers in circumstances where they acknowledged that conditions did not permit such an inspection to take place and were not prepared to keep the vessel waiting for conditions to improve so as to enable the owners to undertake the inspection. That was an over-literal construction of clause 104 and one that, if put to any officious bystander (or indeed to the parties themselves at the time of contracting), would be rejected, particularly bearing in mind the express provision to be made for cleaning at the next convenient port of call.

Accordingly, on a proper construction of clause 104 the owner’s right to recover the time and expense of an underwater inspection and cleaning were not precluded by the fact that the inspection could only for practical reasons take place after redelivery.

In case the tribunal was mistaken in that view, it considered that a term was to be implied into clause 104 in order to give effect to the obvious intention of the parties and efficacy to the charter that where it was not possible to arrange for inspection by divers prior to redelivery, such inspection might take place at the convenient port in the same way as the parties expressly acknowledged that underwater cleaning itself might take place there.

IV. Conclusion

Frequently disputed is not only the liability for hull cleaning expenses, but also for the underwater inspection costs when obligations of each party are not strictly addressed in the charterparty. Although the costs fell for charterers’ account in both cases, the Members are advised to take good consideration of the wording of the bottom fouling clause in order to avoid unintended consequences.

For further consultation, please contact CPI FD&D team.