Tanker players are awaiting a UK High Court ruling, which could have big
implications for charterers.
An impending decision by the High Court in London on a VLCC time-charter is
likely to have wide implications for tanker chartering. Speed and consumption
clauses in the widely used Shelltime 4 charter-party form are at the heart of
Greek manager European Navigation, whose broker is Elka Shipping, has taken
action against Korean shipowner Hanjin Shipping for deductions to hire on the
256,000-dwt Eleuthera (built 1984) towards the end of its charter period and after.
Hanjin said the vessel failed to perform to the agreed speed and consumption.
Hanjin chartered the Eleuthera for three years from 1996 at around $24,000
to $25,800 per day. But during the final year and at the end of the period the
Korean owner made deductions amounting to $1.1m from the hire payments. Hanjin
paid around $430,000 of this amount at the end of the time charter in 1999, and
last month paid a further $150,000, leaving around $440,000 outstanding on the
Court costs for the case could rack up to around £200,000 ($313,000),
with high contractual interest on top of this.
Justice Mark Havelock-Allan will rule on a number of issues in the case, including
how a vessel's speed and consumption should be calculated. Assessing the figures
on a voyage-by-voyage basis, as the charterer has done in this case, or on a year-by-year
average basis, according to European Navigation's calculations, produces very
He will also rule on the most appropriate method of calculation for situations
where more than one speed has been ordered by the charterer in the same year.
In addition the judge will decide on whether the sub-fixture details sent to
the ship's master constitute orders to the charterer as to the ship's speed.
Experienced tanker brokers say the speed-and-consumption clause is one of the
main points of negotiation between owners and charterers in time-charter parties
like the widely used Shelltime 4.
In a time-charter contract, the charterer pays for the bunkers throughout the
period, something that tends to concentrate their attention to a vessel's performance.
More Fisher Brown is acting for Hanjin and newly set-up maritime law practice
EG Arghyrakis & Co is representing Elka.
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