Underperformance results in risk assumption

Catherine Baddeley, of Clyde & Co LLP, reports on the Coral Seas case in which owners were liable for underperformance despite compliance with charterers’ orders


The English Commercial Court has upheld on appeal (in Imperator I Maritime Co v Bunge SA (The Coral Seas) [2016] 2 Lloyd’s Rep 293) an LMAA arbitration finding that owners had assumed the risk of a fall-off in vessel performance as a result of marine fouling constituting fair wear and tear under a continuing performance warranty. An indemnity for compliance with charterers’ orders had no application.