Carmine Shipping Ltd. v Hanjin Shipping Ltd.

Under a time charterparty, a recap of a separate voyage charterparty normally provides information rather than a clear order to the Master. The contractual service speed therefore remains applicable unless a contrary speed is expressly ordered. A laycan date does not, without more, require the vessel to reduce speed, and does not displace the service speed. A performance clause may operate as a complete compensation code, so compensation is assessed by the contractual formula even where the vessel arrives before laycan and the charterer’s actual loss is uncertain. Where different speeds are ordered, performance should generally be assessed using separate cumulative averages for each ordered speed and accounting period. Deductions from hire require facts sufficient to support a good-faith and reasonable assessment of an amount payable under the charterparty.

The owners claimed the balance of hire and interest under a Shelltime 4 charterparty. The charterers had made substantial deductions during the second and third years of the charter, asserting under-performance in speed and fuel consumption and other losses. The principal disputes concerned the effect of recap telexes, laycan dates, orders for economic or minimum speed, the method of calculating performance under clause 24, fuel used for cargo-tank inerting, and the timing of deductions under clause 9.

The court determined the contractual meaning and operation of those provisions and the charterers’ liability for interest on deductions made before the relevant performance facts had been ascertained.

1. Speed orders. The charterparty made the service speed the guaranteed speed unless a clear contrary instruction was given. Recap telexes containing details of a voyage charterparty were generally informational and did not constitute clear orders to proceed at the speed stated in that voyage charterparty. The vessel’s performance was therefore assessed at 13 knots on the laden passages, save where an express order required 12.5 knots, and at 14 knots on ballast passages unless a lesser speed was expressly ordered.
2. Laycan dates. A laycan date was not, by itself, an order to reduce speed or to arrive at the earliest possible time. Even where a communication operated as an order to proceed to a particular destination, it remained subject to the service speed or any expressly ordered lesser speed. Clause 24 provided a complete code for compensation for time lost and excess consumption. The charterers could therefore claim under clause 24 despite early arrival or the absence of demonstrated financial loss. The court treated the clause as a liquidated-damages mechanism.
3. Economic and minimum speed. In the circumstances, an order for economic speed meant 12.5 knots. Although “minimum speed” was potentially ambiguous, the contractual range did not include the separately stated minimum speeds of 9 knots in ballast and 8 knots laden. The relevant order therefore also meant 12.5 knots. An express speed order prevailed over any implication arising from a laycan or target date.
4. Performance calculation. The preferred method was a modified cumulative average: separate cumulative averages were to be calculated for each ordered speed and each accounting period. This best reflected the annual or part-year compensation scheme and avoided selectively crediting under-performing voyages while ignoring over-performance.
5. Consumption and deductions. There was no guaranteed consumption rate below 12.5 knots. Fuel used to inert cargo tanks for charterers’ purposes fell within the guaranteed consumption rates. Under clause 9, deductions could be made only after facts sufficient to justify them had been ascertained and the charterers had made a good-faith, reasonable assessment of the amount payable. The earlier unauthorised deductions could not be retrospectively justified by a performance claim first formulated shortly before redelivery.