To pursue a claim against Charterers for engine damage, Owners must overcome two principal challenges. First, they must establish that the Charterers supplied bunkers that breached contractual obligations concerning bunker quality. Second, Owners must demonstrate that the fuel provided by Charterers directly caused the alleged engine damage.
The burden of proof with respect to this second requirement often poses significant challenges for Owners. In disputes of this nature, the resolution largely hinges on the quality and availability of evidence. It is crucial that, if engine damage is attributed to substandard bunkers, evidence is collected promptly and thoroughly. This includes engaging surveyors to inspect the engine, taking fuel samples, preserving damaged components for analysis, and retaining all relevant documentation—such as logbooks, alarm records, oil record books, and maintenance records—for comprehensive review. The collected evidence, alongside the results of sample analyses, will play a pivotal role in substantiating the claim.
If sample testing fails to identify a contaminant in the fuel supplied by Charterers, Owners may face significant difficulty in satisfying the burden of proof. Specifically, they may struggle to establish (i) that the fuel was non-compliant with specifications and (ii) that it was the proximate cause of the alleged engine damage.
Additionally, Charterers may invoke a defense asserting that Owners should mitigate their losses and must not exacerbate damage by continuing to use potentially contaminated bunkers. Should the vessel continue consuming fuel that Owners suspect to be defective, despite indications of possible engine damage, Charterers may argue that any further harm resulting from such consumption falls within the responsibility of the Owners.
For a more complete discussion on the above, readers may consider reviewing an article published in The ARBITRATOR, SMA Vol 1, January 2020
Underperformance
Typically, the performance clause and other relevant provisions addressing bunker quality (see BIMCO Bunker quality clause etc) stipulate that Owners shall not be held liable for any underperformance arising from the consumption of off-specification bunkers. In certain circumstances, Owners may assert a defense that the vessel's underperformance was attributable to the use of such off-specification bunkers. However, it is important to note that the mere presence of off-specification bunkers does not inherently provide Owners with a valid defense to an underperformance claim. Owners must demonstrate that the consumption of off-specification bunkers directly resulted in the vessel's underperformance. This requires clear evidence establishing a causal link between the quality of the bunkers supplied and the alleged reduction in performance. Without such proof, the defense is unlikely to succeed.
In a recent case that was resolved through settlement, the vessel's performance both before and after consuming the alleged off-specification bunkers was closely examined. It was determined that the vessel had been significantly underperforming prior to the consumption of the bunkers supplied by the Charterers en route to the discharge port. The root cause of this underperformance was identified as pre-existing fouling.
Arbitration Awards
·        London Arbitration 6/21- trivial differences in fuel specification may not bar a claim against the Owners in particular, as there was a significant loss of time; thus, the vessel’s good weather speed was considerably below her warranted speed.
·        Nippon Yusen Khaisa v Alltrans Group of Canada Ltd (1984 LMLN 116 3)- Charterers’ duty is absolute and not merely one to exercise due diligence; modern forms now specify the details of the bunkers required.
·        London Arbitration 1/88 -the Charterers’ obligation to supply bunkers of proper quality is absolute.
·        London Arbitration 8/98 -charterers are liable for delivering contaminated bunkers.
·       London Arbitration 14/84-the cost of cleaning the sludge tanks is for the Owners; unless demonstrated that the fuel was of unusual specification.
·        London Arbitration 20/16 -Owners can recover the cost of surveyors’ attendance on de-bunkering.
·        London Arbitration 15/00-fuel supplied did not meet specification, and Charterers successfully relied on exemption clause deeming bunker firms to be servants of the shipowners.
·        SMA 3885: Owner who failed to prove that bunkers supplied by time charterer were unsuitable for use held liable for time and expenses in debunkering vessel and supplying replacement bunkers.
·        SMA 3740: Time expended to remove and replace non-conforming bunkers is not chargeable to charterer since it was accomplished while vessel was off hire for engine repairs, the need for which was not caused by charterer. Charterer cannot be required to provide bunkers which meet certain specifications that were not included in charter party. Also, performance claim supported based on changes in ETA failed.
Note: The above brief observations are based on the author’s professional experience in handling claims and do not reflect the author’s personal opinions on the matter. These observations are shared solely for informational purposes. Additionally, the list of awards mentioned is not exhaustive.