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Quality

Where the engine maker specified a maximum specific gravity it was incumbent upon the owners to make the requirement clear when ordering bunkers and the owners ought to have known; that the fuel delivered was outside the limit specified by the engine makers and insufficient bunkers were ordered

The Evje No 2 [1976] 2 Lloyd’s Rep 714

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Owner could not defeat time charterer’s performance claim by arguing that inferior quality bunkers had been delivered to the vessel while operating under a prior charter; if vessel’s alleged underperformance/overconsumption was caused by a bunker quality problem, that was an issue for Owner to raise with the vessel’s prior charterers

SMA 3341

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The vessel suffered damages and deviated for repairs due to IFO supplied by Charterers. Whether the Charterers' obligation to supply bunkers of proper quality was absolute. The Charterers' obligation was absolute. It was implied that bunkers to be reasonably fit for use in main engine. The owners have a remedy against the charterers and the charterers against the suppliers. The Charterers were liable.

London Arbitration 1/88

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Basis an analysis of the bunker sample at the ship's manifold, the bunkers were found being contaminated. The tribunal considered the bunker samples used for testing, evidential issues and sample analysis after removal of bunkers. The tribunal found in favor of the Owners. Note: this case reflects the common issues that arise in such cases.

London Arbitration 8/98

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The master requested higher quality of bunkers with density 0.87 and lower viscocity. Viewing the contract as a whole, it was held by implication that there was warranty of marine diesel oil, not something else.

London Arbitration 10/92

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Who will bear the expenses of cleaning the sludge tanks? The cost of cleaning the sludge tanks is for the Owners unless it is demonstrated that the fuel was of unusual specification,etc.

London Arbitration 14/84

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Whether the fuel supplied should meet certain specification; who will sustain the loss if not; whether the bunker firms are the Owners' servants- seeking to limit liability. The density of the fuel exceeeded the limits. Debunker and damages were considered. Based on the terms of the contract, the bunker firms were the Owners' servants; hence the Charterers were not responsible.

London Arbitration 15/00

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Off- spec bunkers and replacement of same are the Charterers' responsibility. Cost of surveyor attended during de-bunkering. It was reasonable to appoint a local surveyor and the cost is recoverable.

London Arbitration 20/16

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One of the arguments presented was that the low qualitity of bunkers caused the vessel's underperformance. The difference was not significant or relevant and could not have affected the vessel's performance. Note: the facts are silent on what was the issue ; was it an increased TSP or any other element- what the lab analysis showed? -thus assisting for other cases. But the time loss was significant; hence it might be unusual for any slight 'off spec' to cause such significant time loss rather than a slight increase in bunker consumption.

London Arbitration 6/21

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Even if a time charterer did not have an implicit right to inspect bunkers, owner waived the right to object to charterer's sampling of bunkers by consenting without protest to charterer's sampling of bunkers at earlier ports.

SMA 1851

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Owner failed to meet its burden of establishing by a preponderance of the evidence that the bunkers supplied by charterer were the cause of the damage of the vessel's main diesel engine. Owner was not entitled to recover for the damage repair costs or for hire withheld by charterer for time lost as a result of damage to the vessel's engine.

SMA 1771

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Buyer did not follow proper sampling procedures specified in the Charter to support its claim that Seller's fuel oil damaged the vessel's engine

SMA 4134

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Owner could not defeat time charterer's performance claim by arguing that inferior quality bunkers had been delivered to the vessel while operating under a prior charter; if vessel's alleged underperformance/overconsumption was caused by a bunker quality problem, that was an issue for Owner to raise with the vessel's prior charterers.

SMA 3341

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Since our logbook review indicates that the insufficient engine performance existed throughout the review period, we presume that the inherent problems the Chief Engineer referred to could include the deplorable dirty state of the engine room with the numerous leaks, dirty filters, absent fuel treatment, defective injectors, improper valve management program without the necessary proper tools in working order and improper use of fuel separators. fuel supplied was within the contracted specifications and thus did not breach the charter nor cause the engine room problems and performance difficulties

SMA 3606

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The ideal, water-tight evidentiary box is rarely realized and arbitrators must decide close and often vexatious factual questions by applying well-established burdens of proof to the best evidence counsel can muster. Samples taken from the vessel were tested and analyzed on two occasions by two firms well-known in the world of international shipping. Due to its low flashpoint, bunker fuel was off-spec when delivered to the vessel. Buyer was awarded damages against Seller for the cost of debunkering, lost vessel time, and value of sound fuel which was contaminated when the off-spec fuel was comingled.

SMA 3955

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Owners bear the burden of demonstrating by a preponderance of credible evidence that the bunkers supplied by the time charterer were defective and that these bunkers were the proximate cause of the engine damage. As stated at the outset, it is Owner's burden to establish that the bunkers were faulty and the use of those bunkers caused the engine damage. Owner has not come anywhere close to satisfying that burden. The engine logs also note repeated scavenge fires and scavenge alarms on at least four occasions during early August, before the vessel began consuming the bunkers. Clearly this is an arbitration which should never have been pursued. Owner's claims are dismissed.

SMA 3528

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Off-hire, by definition, is the period of time during which the vessel is not performing the services for which she had been hired or chartered and during which, therefore, the payment of time charter hire is being suspended. The burden of proof to establish that payment of hire should be suspended because of vessel's failure to perform initially rests with Charterer. However, since the record clearly establishes that the time losses/breakdown by vessel which gave rise to Charterer's claim were caused through the breakdown of vessel's machinery, the burden of coming forward now shifts to the Owner. By a preponderance of credible evidence, he has to show that the responsibility does not lie with the Owner. To do that, he had to prove that the engine breakdown on the vessel indeed was not caused by Owner's breach of the time charter, but by an act or actions of the Charterer, in this particular case, by the supply of off-spec or contaminated bunker fuels. Where the breakdown of the vessel was due 85% to manning and mechanical deficiencies for which owner was responsible, and 15% due to defective bunkers supplied by charterer, charterer was entitled to an 85% allowance of offhire.

SMA 2679

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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 3885

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Cost of removing and replacing bunkers supplied by charterer, which did not conform to charter party bunker specifications, is chargeable to charterer. Charterer cannot be required to provide bunkers which meet certain specifications that were not included in charter party.

SMA 3740

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Owners were not liable for the fire which damaged time Charterers' bunkers since time Charterers' failed to prove personal design or neglect of Owners under the fire clause in the charter. With respect to the contamination of the vessel's bunkers, the panel is unanimous in finding from the evidence that the explosion and fire on July 12 was an Act of God, and was not due to negligence on the part of Owner. It also finds that the bunkers in the forward tanks of the vessel were contaminated that day due to firefighting efforts, and finds no negligence by Owner for this contamination. The evidence presented in relation to bunker quality sampling was found to be sketchy and confusing, and failed to deal at all with the quality of the diesel fuel.

SMA 4002

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There is no question that a time charterer is responsible for supplying all bunkers for the vessel during the period of the charter and that he retains title to these bunkers after they are supplied. To the extent that sampling of cargo is implicit in the charter party, so then is sampling of bunkers. The evidence before us gives some indication that Charterers' personnel did act in an insensitive or arrogant manner on occasion for which they are to be criticized. It is important that Charterers not abuse their position by neglecting to notify the Master of the intended samplings or by not inviting Owners to participate in the samplings wherever possible. Such discourtesy is inconsistent with the application of fundamental concepts of fairness and cooperation expected of parties to a contract. The evidence concerning the methods of sampling employed is conflicting and, therefore, not sufficiently clear to enable us to properly allocate responsibility for their choice. Charterer was not entitled to place the vessel off-hire for owner's refusal to permit the sampling of bunkers, because the off-hire clause in the charter party included only situations in which a breach of orders or neglect of duty by owner resulted in a loss of time to charterer. Owner's refusal to permit further sampling of bunkers did not result in a loss of time. The panel stated that, instead of putting the vessel off-hire, charterer should have resorted to immediate arbitration under the arbitration clause, which authorized the granting of equitable relief including specific performance. But charterer's placing of the vessel off-hire was not an anticipatory repudiation entitling owner to “withdraw.”

SMA 1851

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Charterer failed to prove that the contamination of Charterer's diesel cargo was attributable to Owner's negligence. Evidence that samples of the cargo were on-spec when tested on shore and off-spec after loading is insufficient. Owner exercised the necessary care in its tank cleaning procedure. Charterer, however, loaded further cargo notwithstanding its awareness that the first foot sample was off-spec. The costs of all subsequent inspections were therefore, avoidable damages.

SMA 4075

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Charterer failed to prove that the cargo was found to be off spec for flashpoint after discharge, in the face of tests during discharge which indicated that the cargo was on spec for flashpoint.

SMA 4093

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Purchaser contends that the fuel provided to the Vessel did not meet the Contract quality specifications and could not be used by the Vessel without potential damage to the machinery and/or increasing the safety risks. His submissions include the laboratory test results of allegedly continuous samples taken independently by the Vessel at the Vessel's fuel loading manifold, as well as tank samples of the fuel loaded on board the Vessel . Owners isolated and refused to use the fuel supplied.

Avoiding the “conclusive and binding” term, however, is not sufficient to prove that the fuel delivered to the Vessel was off-spec. Purschaser has the burden, as the claimant, to prove that the fuel delivered to the Vessel was in fact off-spec at the time it passed into the Vessel's receiving manifold. In deciding this issue, we have had to consider and evaluate the results of testing of numerous samples at various times and various laboratories. To simplify a complex record as to these samples, samples were submitted from three times: the “Shore Samples” , the “Vessel Manifold Sample” taken by the Vessel at the Vessel's manifold, and the “Vessel Tank Samples” taken by the Vessel from the tanks onboard the Vessel.

The panel believes that the Manifold Vessel samples, drawn by the crew at the Vessel manifold, and tested by Intertek , most closely complies with the appropriate sampling procedures. In light of the evidence, the panel unanimously finds and concludes that the fuel delivered to the Vessel was more likely than not “off-spec. Finally, we have taken into account that the Vessel owner refused to use the fuel and incurred the expense and inconvenience of de-bunkering the Vessel. This is further evidence, circumstantial to be sure, that the fuel was off-spec and a hazard to the Vessel's machinery and crew.

SMA 4459

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Damages for wrongful cancellation are based on difference between daily charter party rate and the market rate for remainder of charter period, adjusted for owner's earnings on mitigation voyages and for circumstances surrounding sale of vessel. Charterer was liable for items of damage relating to grounding of vessel and off-specification bunkers only where owner showed sufficient causal connection between the item in question and charterer's wrongful conduct.

SMA 1586

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Owners alleged that the main engine breakdown was the consequence of consumption of off-specification fuel supplied by charterers. As found, Charterers were responsible for damage caused to the vessel by inferior fuel which they supplied.

SMA 1341

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Owner claims that Charterer breached the Charter by supplying “off-specification” fuel to the Ship during the course of the Charter. Charterer claims that if the fuel was “off-specification”, it has a claim against Supplier against the Sale Contract. The fact that the time bar defense that Seller says it intends to assert arises under the Sale Contract does not negate the evidently undisputed fact that the fuel that is the subject Owner's claim under the Charter is the same fuel that Seller sold Charterer under the Sale Contract. Given the absence of any stated dispute among the parties on this point, common factual questions as to the characteristics and quality of the fuel at the time of its supply will require consideration in determining the merits of Owner's claim against Charterer and, in turn, of Charterer's claim against Seller. Therefore given it will promote efficiency in time and legal fees and expenses to have factual evidence on the quality and characteristics of the fuel supplied presented to the same panel of arbitrators in a consolidated proceeding, I find that this is a case to which Section 2 of the SMA Rules applies.

SMA 4409

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Vessel manager was not negligent and hence not liable for damage to vessel caused by high viscosity fuel, care and maintenance in accordance with standard industry practices of auxiliary machinery, operating expenses that went above budget, or loss of value on sale by Owner to new buyers.

SMA 3870

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The panel accepts the fact that the vessel sustained machinery damage during the charter period and that the damage generally consisted of excessively worn or fractured pistons, piston rings and grooves, piston skirts, rings and grooves injectors, fuel pumps and fouling of the turbo charger. However, the real question is whether there is a relationship between the above problems and the fuel which Charterer supplied at Baltimore.

Clearly, it is the Charterer and not the fuel merchant who bears the responsibility of furnishing bunkers which meet charter party standards. Essentially, the Charterer orders and pays for the fuel and it is its obligation vis-a-vis the shipowner. The fuel merchant undertakes to supply fuel in accordance with industry standards and its instructions, without guaranty that it will be suitable for that particular vessel's machinery. In addition to meeting the viscosity standard stated in the fuel purchase order, the bunkers should also meet current standards for compatability and freedom from excessive levels of harmful contaminants. It is Owner's burden to prove that this is so by a preponderance of the credible evidence. It is not for Charterers to bear the burden of proving the machinery damage was caused by a defect for which it is not responsible.

SMA 2533

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SMA 3528

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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 3885

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Where the ship was redelivered with fewer bunkers than required under the charterer and owners arranged for bunkering, charterers were obligated to reimburse owners for the difference between the charter price for bunkers and the price actually paid, but only up to the minimum amount of redelivery bunkers provided in the charter

SMA 2646

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Charterers' claim for the cost of re-bunkering was denied. It was time charterers' responsibility to furnish vessel with bunkers of a proper grade. Owners were within their rights in insisting on new bunkers and rejecting the improper bunkers.

SMA 240

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Damages caused by using contaminated fuel were divided between the parties.

SMA 252

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Although there were no fuel quality specs in the time charter, it was implied that the charterer would not bunker the ship with fuel which would damage her engines. Samples of the fuel, which later were analyzed to be of high quality, were collected prior to bunkering without the attendance of the Chief Engineer that was expressly required by the charter. Charterer was liable for damage to the ship’s engines caused by silica alumina in the fuel it supplied. Tokyo Arbitration, 8/29/ 05, JSEB No. 54 (March 2009)- SMA A111

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Heavy weather, as recorded in ship's logs cleaning operations and charterer's supply of bunkers with lower API than that contracted for, all of which caused reduction of speed and lost efficiency, did not amount to breach of ship's speed warranty.

SMA 1074

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The ship improvidently consumed charterer's bunkers before receiving the results of a laboratory test, required by the time charter. The fuel was off-spec and damaged the engine. Charterer was liable for owner's damages incurred in replacing the bad fuel including tank cleaning and time lost. Charterer was not liable, however, for the cost of repairing the damage to the engine from use of the bad fuel.

SMA 4145