Background
The warranties are simple to state but notoriously difficult to police. The vessel’s performance varies with sea state, current, hull and propeller fouling, draught, displacement, fuel quality, weather routing, ballast or laden condition, and a host of secondary factors. The warranties are typically expressed in terms of an idealised “good weather” performance, with conditions defined by reference to the Beaufort scale, the Douglas sea state scale, and sometimes wave height in metres. When the actual voyage is reconstructed for the purposes of a performance claim, the parties argue about which periods qualify as good-weather sampling periods, how those periods extrapolate to the whole voyage, and what underperformance, if any, is attributable to causes for which the owner is responsible.
This article examines the fundamentals of the speed warranty, the consumption warranty, the weather definitions that frame both, the distinction between good-weather and all-weather warranties, the role of hull cleanliness, the use of weather routing services as evidence, the BIMCO Speed and Consumption Clause and the BIMCO Slow Steaming Clause, the principal weather routing data providers, the calculation of performance claims, the most common dispute patterns, the “no specific direction or order” defence, mitigation, and modern monitoring through vessel performance optimisation systems.
Speed Warranty Fundamentals
A speed warranty is a continuing obligation by the owner that the vessel will be capable of, and in good-weather conditions will achieve, a defined service speed. The classical NYPE 46 and NYPE 93 forms describe the vessel at the head of the charter as “capable of steaming, fully laden, under good weather conditions about [X] knots on a consumption of about [Y] tonnes of [grade] fuel”. The word “about”, the word “good weather”, and the words “fully laden” each carry significant interpretive weight.
“About” has been held by the English courts to permit a margin of half a knot on speed and approximately five per cent on consumption, although the precise margin is fact-sensitive (The Apollonius (1978), The Al Bida (1986), The Didymi (1988)). The “about” margin is defensive: it does not mean that any deviation up to half a knot is acceptable, but that minor deviations within that band do not constitute breach.
“Good weather” is defined by reference to the Beaufort scale (typically Beaufort force 4 maximum, sometimes force 3) and to the sea state (Douglas sea state 3, sometimes 2), with no adverse current. Some clauses add a wave-height limit in metres or specify “no swell”. The good-weather definition is critical because it determines which periods of the voyage are usable for performance sampling.
“Fully laden” or “in laden condition” identifies the loading state for the warranty. Most modern charters provide separate ballast and laden warranties, and some provide separate eco-speed and full-speed warranties for vessels with multiple operating modes. The warranty is a continuing one: a vessel that meets the warranty at delivery but fails to meet it at a later date is in breach for the period of underperformance.
Consumption Warranty Fundamentals
The consumption warranty is the mirror image of the speed warranty: it is the owner’s undertaking that the vessel will burn no more than a defined quantity of fuel per day at the warranted speed. Modern charters distinguish between sea consumption (main engine plus auxiliary engines while the vessel is under way), port idle consumption, port working consumption (e.g. with cargo gear running), and “in-port at anchor” consumption.
The consumption warranty is typically expressed in metric tonnes per day at the warranted speed, with separate figures for the principal fuel grade (VLSFO or LSMGO depending on the area) and for any pilot fuel or auxiliary fuel. Where the vessel is fitted with an exhaust gas cleaning system (scrubber), there is typically a separate scrubber-sulphur consumption schedule.
A subtle but important point is that the consumption warranty is at the warranted speed, not at any speed. If the charterer orders the vessel to steam faster, the consumption will rise more than linearly (cubic in speed for resistance, and worse than cubic when wave-making and propeller efficiency are taken into account), and the increased consumption is for the charterer’s account. Conversely, when the charterer orders slow steaming, the consumption falls dramatically, which is the principal commercial benefit of slow steaming.
Weather Conditions Definitions
The Beaufort scale and Douglas sea state scale are the principal anchors for “good weather”. Beaufort force 4 corresponds to wind speeds of 11 to 16 knots and to “moderate breeze” conditions; Beaufort force 5 corresponds to 17 to 21 knots and to “fresh breeze”. Most modern speed warranties are written at Beaufort force 4 maximum, though older or larger-vessel charters may extend to force 5.
Douglas sea state 3 corresponds to slight seas of 0.5 to 1.25 metres significant wave height; Douglas sea state 4 corresponds to moderate seas of 1.25 to 2.5 metres. The interaction of wind and sea is non-linear: a Beaufort 4 wind blowing against a contrary current can produce sea state 4 seas. The good-weather definition therefore typically requires both conditions to be satisfied simultaneously.
Adverse current is a separate exclusion. Most clauses define “no adverse current” by reference to a current speed threshold (e.g. less than 0.5 knots against the vessel’s heading) or to the ocean current charts published by hydrographic offices. Swell, if separately defined, is typically a wave-height threshold from a direction other than the wind direction.
Good Weather vs All Weather Warranties
The most important distinction in modern speed and consumption warranties is between the good-weather warranty (the dominant form) and the all-weather warranty (used in some industrial contracts and in long-term COAs). The good-weather warranty is performance-sampled: the vessel must meet the warranted speed during good-weather periods, and the underperformance during those periods is then extrapolated to the rest of the voyage. The all-weather warranty is voyage-averaged: the vessel must meet the warranted speed averaged across the whole voyage, regardless of weather encountered.
The good-weather warranty has the advantage of fairness to the owner, who is not penalised for weather outside its control, but the disadvantage of complexity: the parties must agree, often in arbitration, which periods qualify and how to extrapolate. The all-weather warranty has the advantage of simplicity, but it shifts weather risk to the owner and is therefore typically priced into a higher daily hire.
The English courts in The Gas Enterprise (1993) and The Didymi (1988) confirmed that the good-weather warranty is a continuing one, breach of which gives rise to a damages claim for the period of underperformance. The all-weather warranty, where used, has typically been treated as a voyage-by-voyage warranty.
Hull Cleanliness Reference
Hull and propeller fouling progressively degrade vessel performance. A vessel that meets warranty at delivery may, after twelve months in tropical waters with intermittent service, have lost two knots of speed and gained two tonnes a day of consumption simply from biofouling. Modern charters address this through hull-cleanliness clauses that require the owner to maintain the hull and propeller in a defined condition, typically by reference to the time since last drydocking and to a periodic underwater inspection regime.
The BIMCO Hull Fouling Clause for Time Charter Parties 2013 provides a standard approach: it requires the charterer to nominate ports and stays consistent with the vessel’s anti-fouling specification, and it allocates responsibility for cleaning where the charterer’s trading pattern has caused fouling beyond the anti-fouling system’s design capability. The clause is a useful counterweight to the speed warranty: without it, an owner can be held to a speed warranty in conditions of severe fouling caused by the charterer’s own trading orders.
The interaction between the speed warranty and the hull cleanliness clause is one of the most common sources of dispute. Owners argue that fouling is the cause of underperformance and that the charterer’s trading orders have caused the fouling; charterers argue that the fouling is normal wear and tear and that the speed warranty is unconditional. Tribunals typically apportion responsibility on the facts, often by reference to expert evidence on biofouling growth rates in tropical waters.
Weather Routing Service Evidence
Weather routing services provide independent voyage analyses that have become the dominant form of evidence in performance disputes. The major providers (Weather News Inc, Applied Weather Technology / AWT, StormGeo, DTN/Sofar Ocean) supply daily noon-position-based analyses of the weather encountered by the vessel, the corresponding speed and consumption performance, and the resulting good-weather sampling periods.
A charterer typically appoints a weather routing service at the start of the period charter and instructs it to produce a performance report at the end of each voyage or each period. The owner usually has the right under the charter to appoint its own weather routing service, and the disagreement between the two reports often becomes the substance of the performance claim.
The English commercial courts and London arbitration tribunals have, since The Ocean Virgo (2018), been increasingly receptive to weather routing evidence as the primary basis for performance claims. The earlier judicial reluctance reflected concern that the routing service’s data were “second hand” and not subject to cross-examination; modern practice accepts routing reports as expert evidence, with the report’s author available for examination if the dispute reaches a hearing.
BIMCO Speed and Consumption Clause
The BIMCO Speed and Consumption Clause for Time Charter Parties (2017 revision) is a standard provision that sets out the warranty in a structured form: a base speed and consumption table covering ballast and laden conditions, a good-weather definition (typically Beaufort 4 / Douglas sea state 3 maximum, no adverse current, no swell), a sampling rule (a minimum of 24 consecutive hours of good weather), and a performance claim calculation methodology. The clause is widely incorporated by reference into NYPE 93, NYPE 2015, BALTIME 1939 (revised 2001), and SHELLTIME 4 fixtures.
The 2017 revision tightened the sampling rule and clarified that the warranty applies to the actual voyage performance, not to a hypothetical vessel performance under standard conditions. It also expressly provides that the consumption warranty is at the warranted speed and that consumption at higher speeds is for the charterer’s account. The clause is supported by the BIMCO Performance Claims Sub-Clause, which sets out the methodology for converting underperformance into a damages claim.
BIMCO Slow Steaming Clause
The BIMCO Slow Steaming Clause for Time Charter Parties (2011 revision) addresses the situation where the charterer wishes to instruct the vessel to steam at a speed below the warranted service speed in order to save bunkers. Slow steaming was widely adopted from 2008 onwards in response to high bunker prices and weak freight markets, and it has continued in modified form as part of the industry’s response to IMO 2030 carbon-intensity targets and to the EU ETS.
The clause confirms that the charterer is entitled to order slow steaming, requires the owner to use reasonable endeavours to minimise mechanical risks of operating below the engine’s design optimum (in particular the risk of fouling the turbocharger or causing combustion-chamber deposits), and provides that the charterer is responsible for any consequential damage to the engine if the slow-steaming period exceeds defined limits. It also provides for a separate slow-steaming consumption schedule, typically agreed at the time of fixture and appended to the charter.
The clause is closely associated with the Sea Cargo Charter framework, under which charterers commit to disclosing the climate alignment of their chartering activities; slow steaming is one of the principal levers by which charterers can improve climate alignment.
Weather Routing Data Providers
Weather News Inc (WNI), based in Tokyo, is the largest weather routing service worldwide and produces the majority of the routing reports used in Japanese and Asian time-charter disputes. AWT, now part of StormGeo following the 2017 acquisition, dominates the European and US markets. StormGeo’s Bergen and Houston offices produce the bulk of routing reports used in London arbitration. DTN/Sofar Ocean is a more recent entrant focused on real-time observed-data integration.
The methodologies of the principal providers differ in detail but converge on the use of European Centre for Medium-Range Weather Forecasts (ECMWF) and US National Weather Service Global Forecast System (GFS) numerical weather predictions, post-processed with the vessel’s actual observed positions and noon reports. The differences in output between providers are typically small for offshore voyages but can be material for coastal or short-sea voyages where local effects dominate.
Performance Claim Calculations
A performance claim calculation typically proceeds in five steps. First, the routing service identifies the good-weather periods during the voyage, applying the charter’s good-weather definition. Second, the actual vessel performance during those periods is computed (average speed and average consumption). Third, the underperformance is calculated as the difference between actual and warranted. Fourth, the underperformance is extrapolated to the whole voyage to produce a “total time loss” or “total fuel overconsumption” figure. Fifth, the time loss is multiplied by the daily hire rate, and the fuel overconsumption is multiplied by the bunker price, to produce a damages figure.
The damages figure is typically deducted by the charterer from the next hire payment, although the charter may require it to be settled separately. The owner may dispute the deduction and refer the matter to arbitration. Most performance disputes are resolved in arbitration rather than litigation, and the LMAA Small Claims Procedure is frequently used for performance claims below USD 100,000.
“No Specific Direction or Order” Defence
The owner has a recognised defence to a performance claim where the charterer’s orders, rather than the vessel’s condition, have caused the underperformance. The defence has two limbs: first, that the charterer ordered the vessel into weather worse than the good-weather threshold (e.g. into a typhoon track), in which case the underperformance is attributable to the charterer’s orders; second, that the charterer ordered the vessel to steam at an uneconomic speed, in which case the consumption overrun is attributable to the order.
The defence is typically pleaded as “the charterer did not give a specific direction or order” only in narrow circumstances; more often, it is pleaded affirmatively as “the charterer’s orders caused the underperformance”. The English courts have accepted the defence in principle (The Aquacharm (1982), The Pamphilos (2002)) but have applied it cautiously, requiring the owner to show that the charterer’s orders, rather than independent vessel deficiencies, were the operative cause.
Mitigation
The owner has a duty to mitigate underperformance, principally by maintaining the hull and propeller in a clean condition, by ensuring that the engine is properly tuned, and by responding promptly to charterer notices of underperformance. Mitigation does not require the owner to drydock the vessel mid-charter, but it may require underwater hull cleaning where the trading pattern permits.
The charterer has a corresponding duty to mitigate by giving timely notice of underperformance and by allowing reasonable time for the owner to investigate and address it. A charterer that withholds notice and accumulates a large performance claim at the end of the charter may find that the tribunal reduces the claim for failure to mitigate.
Modern Monitoring and Vessel Performance Optimisation
The decade since 2015 has seen the wide adoption of vessel performance optimisation systems (VPMS), continuous high-frequency data acquisition systems that record main-engine power, RPM, fuel flow, speed-through-water, speed-over-ground, draught, trim, and a host of secondary parameters at intervals of one minute or finer. The systems are typically installed by the owner in newbuildings or during retrofits and are used both for fuel-efficiency optimisation and for performance dispute evidence.
The data quality of VPMS is far higher than the noon-report data on which traditional performance claims have been built, and tribunals have increasingly required the production of VPMS data when it exists. The integration of VPMS with weather routing services produces a near-continuous performance-versus-warranty curve that materially reduces the scope for sampling-period disputes.
Related Wiki Articles
- Time Charter Party
- Voyage Charter Party
- Bareboat Charter Party
- Bunker Quality and ISO 8217
- Sea Cargo Charter
- Statement of Facts
- Notice of Readiness
References
- BIMCO NYPE 93 Time Charter Form
- BIMCO NYPE 2015 Time Charter Form
- BIMCO BALTIME 1939 (revised 2001)
- SHELLTIME 4 (revised 2003)
- BIMCO Speed and Consumption Clause for Time Charter Parties 2017
- BIMCO Slow Steaming Clause for Time Charter Parties 2011
- BIMCO Hull Fouling Clause for Time Charter Parties 2013
- The Apollonius [1978] 1 Lloyd’s Rep 53
- The Al Bida [1987] 1 Lloyd’s Rep 124
- The Didymi [1988] 2 Lloyd’s Rep 108
- The Aquacharm [1982] 1 WLR 119
- The Pamphilos [2002] 2 Lloyd’s Rep 681
- The Gas Enterprise [1993] 2 Lloyd’s Rep 352
- The Ocean Virgo [2018] EWHC 1348 (Comm)
- Wilford et al, Time Charters (8th edn)
- Coghlin et al, Time Charters (7th edn)
- World Meteorological Organization, Beaufort Scale of Wind Force
- Douglas Sea State Scale
- IMO Resolution MEPC.346(78), 2023 IMO Strategy on Reduction of GHG Emissions from Ships
- EU Emissions Trading System Directive (Directive 2003/87/EC, as extended to maritime)