Divine ruling on the effect of currents in underperformance claims

August 3, 2022
LCI Law Shipping News

Speed and consumption performance warranties in time charterparties are almost always given for defined ‘good weather’. The two-step practice in London arbitration is to ascertain a ship’s performance in good weather (step 1) and extrapolate it over the whole leg/voyage in all weather (step 2).

The defined good weather usually includes “no adverse currents”, whose meaning generates disputes that are often referred to London arbitration.

The High Court of England & Wales has considered this for the first time in The Divinegate, agreeing with several arbitration award reports that with this phrase the step 1 good weather calculation excludes periods of adverse currents and remaining positive currents are ignored – you do not alternatively modify the speed for currents.

The judge also noted (reflecting comments in several Court decisions and in the textbook Time Charters) this two-step test is the primary one to apply as a matter of practice, not precluding an alternative accurate test if the primary one is not possible (though she noted no such test was identified to her satisfaction in that case).

We have had several unreported awards to this effect and many more disputes on this that have settled. London Arbitration 29/22 is the most recent LMLN-reported award on this and is to the same effect as in The Divinegate. The Court’s decision should provide some needed certainty in this area.

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