Imperator I Maritime Company v Bunge SA

A continuing performance warranty in a time charter applies according to its clear terms. It is not qualified merely because underperformance results from compliance with the charterer’s lawful orders or from ordinary marine fouling during contractual trading. An implied indemnity assists the owner only where the loss arises from a risk which the owner did not contractually assume. Parties intending to exclude performance liability after waiting in warm-water ports must use appropriate contractual wording.

These were appeals under section 69 of the Arbitration Act 1996 concerning concurrent arbitration awards under consecutive NYPE time charters. The vessel’s performance declined after a prolonged wait in tropical waters, owing to marine fouling. The arbitrators found that the speed warranty applied to all sea passages, including passages after the wait, and that the owners had assumed the risk of the resulting performance loss.

The owners argued that compliance with the charterers’ orders was a defence to a claim for breach of the continuing speed warranty, relying on the contractual scheme, the implied indemnity and the Hague Rules. The central question was whether that defence was available where the underperformance resulted from a risk which the owners had assumed.

Mr Justice Phillips dismissed both appeals.

1. The speed warranty was expressed in wide and unqualified terms. It required the vessel to be capable of maintaining, and to maintain, the specified performance on all sea passages, subject only to the express fair-weather limitations. It was therefore a continuing warranty of actual performance, not merely a warranty of capacity when newly built.

2. The court would not imply an additional exclusion for voyages following a prolonged wait in warm water. The parties had included an express weather restriction but had not excluded performance after warm-water waiting. The clear contractual language had to be given effect.

3. The implied indemnity for consequences of charterers’ employment orders does not cover ordinary risks which the owner has agreed to bear as part of the chartered service. It may provide a defence where the loss results from an unusual or unexpected risk not assumed by the owner. It did not assist here because ordinary marine fouling during legitimate deployment was an assumed risk.

4. The incorporation of the Hague Rules did not alter the analysis. It might have enabled the owners to prove an applicable exception, but the Rules did not justify limiting the speed warranty by implication.

5. The proposition in The Pamphilos and paragraph 3.75 of Time Charters was too widely stated. Compliance with charterers’ orders is a defence only where the resulting underperformance arose from a risk not contractually assumed by the owner and for which an indemnity was available.

High Court (Commercial Court): The arbitration appeals under section 69 of the Arbitration Act 1996 were dismissed. The issues raised by the Respondents’ Notices were not determined because they were unnecessary to the result.