Who Pays for Bottom Fouling?
Bottom fouling by marine growth is a subject of frequent disputes in time charters. Fouling increases friction and affects the performance of the vessel in terms of speed and fuel consumption, and it also necessitates cleaning. The bottom may be in a fouled condition at the time of delivery or - as happens more frequently - it may get fouled during charter service.
When the bottom is fouled during service, often it is due to orders given by the charterer for a long idle stay at a port or anchorage. Bottom fouling may also result from slow steaming ordered by the charterer.
Various factors influence bottom fouling. They include the idle or near-idle period, the speed that the vessel steams at if not idle, the vessel’s distance from the shore, the depth of the water, the temperature of the water, the freshness of the water, sea current, duration and intensity of sunlight, etc. The chance of attracting marine growth is greater in tropical waters and near shore. It is less in freshwater (e.g. the Mississippi River) and under high current (e.g. Chittagong). Vessels may perform ‘paint runs’ to break the idle period. Often, however, a paint run may not yield the desired result. Usually, the anti-fouling paint is unlikely to be effective if the vessel is idle or near idle for more than two weeks.
If the bottom is fouled at the time of delivery, the shipowner has to bear the loss caused by the consequent underperformance as well as the cost of cleaning and the loss of time in cleaning by off-hire. The question is more difficult if the bottom is fouled during charter service as a result of the charterer’s orders. The shipowner’s standpoint will be that the charterer must bear the consequences because it happened by charterer’s orders. The charterer will take the opposite standpoint.
First, we consider bottom fouling from the perspective of the standard NYPE form (referring to the oft-used 1946 version), the most popular form for dry cargo time charters. Second, we will look at the common modifications made to this form that affect the bottom fouling issue. Third, we will consider the subject from the perspective of SHELLTIME 4 form – the oft-used form in time charters of tankers.
The NYPE form, unlike NYPE 2015 form, has no specific provision dealing with bottom fouling, but a few other clauses have an impact on this issue. The shipowner warrants the speed-consumption capability of the vessel at the time of delivery (lines 9-10). The shipowner is to maintain the hull, machinery and equipment in a thoroughly efficient state throughout the charter service (cl 1). Clause 8 requires the shipowner to comply with the employment orders given by the charterer. This comes with an implied indemnity by the charterer for the consequences. The charterer is to redeliver the vessel in the like good order and condition as delivered, ordinary wear and tear excepted (cl 4).
It has been held that the obligation to maintain includes the obligation to keep the bottom free from fouling throughout charter service. Accordingly, if the bottom gets fouled during service, the shipowner will be liable for the underperformance (The Al Bida) and for the cost of cleaning (The Kitsa). The charterer cannot be faulted for redelivery with fouled bottom (The Kitsa).
Does the vessel go off-hire for the time of cleaning (cl 15)? In one case, the court rejected an off-hire claim for the cleaning-time (The Rijn). In another, the court admitted the off-hire claim but by reliance on a rider clause rather than the standard off hire clause (The Kitsa).
What about the implied indemnity by charterer attached to cl 8? Courts have again held this not to favor the shipowner because long waiting in ports and consequent bottom fouling is something foreseeable at the time of the fixture (The Kitsa).
In mitigation of the predicament, shipowners frequently add a rider clause to shift the bottom fouling losses to the charterer. That may be in the form of BIMCO Bottom Fouling Clause for Time Charter Parties 2013 (or less often the 2019 version) or a custom-crafted clause.
The scheme of NYPE 2015 form is that the warranty is a continuing one, unlike the one in the NYPE form. It places on the charterer the responsibility for underperformance as well as the cost of and time involved in cleaning consequent upon bottom fouling from charterer’s order for idling exceeding 15 days or such other periods as parties may specify. There is an option for specifying different periods for idling in tropical/seasonal tropical waters and non-tropical waters.
SHELLTIME 4 form
There is no clause to deal with bottom fouling in the SHELLTIME 4 form. Performance warranty is a continuing one (cl 24) and the maintenance obligation (cll 1 and 3(a)) parks on the shipowner the liability for underperformance by bottom fouling developed during service. The redelivery obligation does not specify the condition required at redelivery (cl 8). There is no obligation on the charterer to clean a fouled bottom when redelivering.
The shipowner is to comply with the employment orders of the charterer, in return for which the charterer gives an express indemnity (cl 13). For reasons stated in The Kitsa, the indemnity will not be of avail to the shipowner here (The Coral Seas). A vessel may go off-hire for the time actually lost where speed is reduced by breach of the maintenance obligation (cl 3(b)) but not for the time of cleaning (cl 21).
Bottom fouling triggers the issues of underperformance by lesser speed and higher fuel consumption and of the cost of cleaning. In the absence of a charterparty provision to the contrary, ordinarily the shipowner will be liable for these costs. This is primarily because of the maintenance obligation of the shipowner. However, under the standard off-hire clauses, it is likely that the vessel will not go off-hire for the time of cleaning.
Dr. Arun Kasi is an advocate and solicitor in Malaysia. He specializes in charter disputes arbitration under the terms of LMAA and SCMA, and he is the author of The Law of Carriage of Goods by Sea (Springer: 2021).
Dr. Kasi extends his thanks to Mr. Prokopis Krikris, Claims Manager at Meadway Bulkers Athens, and Mr. Themistoklis Karvounidis, Demurrage Analyst at Stolt Tankers Rotterdam, for reviewing this article.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.