LP 21/2019 When Ships Lying Idle in Certain Places for an Extended Period
A service period is always specified in time charter parties for charterers to operate the ship. But an extended period of ship lying idle in ports or in tropical waters can result in the accumulation of microorganisms on the bottom, and further hull fouling on the performance of the vessel. Agreement between charterers and owners will then be reached upon whom to take the responsibility for inspection and cleaning and how to deal with underperformance if the vessel is fouled.
By observing some recent cases handled by the Club, the author has noticed different construction of “ship lying idle” due to different wordings in the charter party clauses. To avoid potential legal disputes, two examples of clauses that may lead to confusions and another clearly phrased example are given in this article for Members’ reference.
Example No.1
“The vessel to maintain speeds and consumptions described in this Charter Party during whole Charter period, except if the vessel was anchored or berthed at or off the port for more than 25 days in which case Charterers have no right to claim against the Owners for the speed deficiency and/or increased bunker consumption, until vessel’s routine dry docking at Owners time and expense or underwater cleaning performed at Charterers time and expense after which original description again to apply.”
The subject vessel was not able to take berth at the congested port and had to wait at a specific place off the port as the anchorage was rather small. The ship was not either anchored as it was not allowed. In such cases, owners may be challenged if they wish to protect their interests by suspending the performance warranties until such time as the hall can be cleaned, as it’s provided that owners may suspend the warranties only if the vessel was “anchored or berthed at or off the port” for more than 25 days.
In addition, the expression “at or off the port” where the geographical area is not clearly identified, seemingly favorable for owners, can be contentious should the vessel be too far away from the port. Disputes can arise not only on hull fouling, but also on lay time and demurrage calculations, NOR tendering, as well as on determining whether the vessel has become an arrived ship. Normally under voyage charter parties, the phrase “off the port” may seem vague, but in this context is likely to be interpreted as meaning that the vessel must be at the customary anchorage area, where vessels usually wait for a loading or discharging berth at the port when no berth is immediately available, and it is irrelevant that the usual waiting place is a considerable distance from the port (See for §33.3 of Voyage Charters). Whether such an interpretation can be applied to time charter parties remain questionable and try avoiding the expression if possible.
Example No.2
“If the vessel’s performance is adversely affected as a result of bottom fouling by reason of the vessel being at anchor or in port for more than twenty five (25) days then owners shall not be responsible for any under-performance of the vessel and charterers shall not claim against owners in this respect. Owners are to provide charterers with evidence that the sole contributory cause of such under performance is detention as described hereinbefore and nothing else, by the inspection of the vessel’s underwater hull area and cleaning if necessary at first available opportunity with time and expense shared equally between charterers and owners.”
Compared with that in the first example, the expression here poses less restrictions but is still contentious. It’s universally recognized that as per the clause, owners can claim its right if the vessel is either “at anchor” or “in port” for over 25 days, which may put owners in disadvantage. Also, providing that owners can be relieved from the warranties only if the vessel’s performance is “adversely affected” without clearly stating what falls within “adverse” is causative of disputes. Requiring owners to provide evidence that “the sole contributory cause” of underperformance is detention as described in previous provisions is clearly unfavorable to owners as well.
After all, the hull fouling clause is made to relieve owners from speed and consumption warranties with the vessel idling for an extended period and hold charterers responsible for costs arising out of it. Member shipowners are advised to carefully draft the clause to avoid extra responsibilities and potential disputes.
Example No.3
Based on BIMCO standard form clauses, the charter party provides:
“(a) If, in accordance with Charterers’ orders, the Vessel remains at or shifts within one or more places, anchorages and/or berths for an aggregated period exceeding: (i) a period as the parties may agree in writing in a Tropical Zone or Seasonal Tropical Zone (or water temperature not less than 20 degree): 25 days (ii) a period as the parties may agree in writing outside such Zones (or water temperature below 20 degree): 30 days. ……
(b) Notwithstanding the above to contrary, if master or owners bona fide considers hull fouling within reasonable contemplation, either party may call for inspection which to be arranged jointly by Owners and Charterers and undertaken (if charterers absent, owners shall have right to arrange solely or independently) at Charterers’ risk, cost, expense and time……
(c) If, in accordance with sub-clause (a) or (b), as a result of the inspection either party calls for cleaning of any of the underwater parts, such cleaning shall be undertaken by the Charterers at their risk, cost, expense and time in consultation with the Owners. ……”
Compared with the first two examples, words like “the vessel remains at or shifts…” cover a wider range of circumstances and exert no particular limits on the location. With the provision clearly setting out the area and time period of ship lying idle, owners can better protect themselves in negotiations. Since there’s no mentioning of any requirement on providing evidence, owners and charterers are guaranteed of more freedom while their respective responsibilities for inspection and cleaning are specified to moderate the possibility of disputes.
Conclusions
Generally, such disputes would not involve claims on too large amounts of money and not many cases were found for reference. But in practice, the Club has encountered quite a few enquires on the interpretation of “ship lying idle” and many disputes resulted from different constructions on different clause provisions. Member shipowners are advised to carefully draft the hull fouling clause to mitigate the risks of legal disputes.
BIMCO Hull Fouling Clause for Time Charter Parties can be found here:
For more information, please contact CPI FD&D team.