By Prokopios Krikris FCIArb, consultant and arbitrator

Published September 2025

Introduction

Disputes concerning speed and performance warranties have long featured prominently in maritime arbitration, contributing to a consistent caseload that sustains the demand of legal professionals and arbitrators with subject-matter expertise. Prior to 1970 several key awards from the Society of Maritime Arbitrators (SMA) were cited, shaping the development of maritime arbitration in New York. These early decisions laid the groundwork for subsequent SMA awards and established key principles that influenced the broader development of arbitral practice. Although not expressly cited, the reasoning underpinning these SMA awards appears to correspond closely with the approach adopted in certain English cases and arbitrations.

Comparative overview of SMA and LMAA awards

Since 1963 the SMA has published more than 4,500 full-text awards. These awards include detailed findings of fact and reasoning, providing unparalleled insight into maritime arbitration in New York. The London Maritime Arbitrators Association (LMAA) has published around 950 award summaries in Lloyd's Maritime Law Newsletter since 1979, each of which describes the tribunal's decision while preserving the parties' anonymity. Despite differences in procedural rules, formatting, and publication practices, the underlying reasoning and outcomes in SMA and LMAA awards often exhibit substantial consistency.

Core issues in speed and performance claims

Hire deductions

The finality of maritime arbitration awards in New York is grounded in statutory law, the SMA Rules, and the practice since 1963 of SMA arbitrators issuing partial final awards. In SMA panels, they have consistently upheld that deductions from hire for performance-related claims are not allowed unless explicitly stated in the charterparty (eg, The Nagousena SMA 2964, The Uranus (1977 AMC 586), and The Don Antonio Botelho, SMA 1775). Hire must be paid in full unless deductions meet the strict requirements of clauses 5 and 15 of the NYPE form.

English law allows early applications for partial final awards, as recognised in SL Sethia Liners Ltd v Naviagro Maritime Corporation (The Kostas Melas) [1981] 1 Lloyd’s Rep 18, under section 47 of the Arbitration Act 1996. A tribunal's decision to issue a partial final award is a matter of discretion. Moreover, the burden of defeating this application is light; admitted sums may be considered an exemplary situation where it would be fair and appropriate to render such an award.

The nature of the warranty

SMA panels generally interpret speed and consumption warranties as continuing warranties, applicable throughout the charter period and not just at delivery. This was affirmed in The Mount Athos (SMA 1576) and The MV Spray Cap (SMA 1706).

English law has taken a different approach, but it is pretty aligned in short-period charters where London tribunals have held that in the context of the time charter trip, the owners’ submission that there was no continuing warranty was less than convincing (eg, London Arbitration 4/18 (2018) 995 LMLN 2 and London Arbitration 1/14 (2014) 891 LMLN 2).

Without guarantee

The position differs between US law and English law on this topic. Under English law, the words “without guarantee”, often shortened to “WOG”, mean that there is no liability for a statement so qualified without fraud or bad faith (see Losinjska Plovidba Brodarstovo DD v Valfracht Maritime Co Ltd (The Lipa) [2001] 2 Lloyd’s Rep 17). In an article in 2006 Charles Measter, a practising member of SMA for over 30 years (as he was then), expressed the view that The Lipa had caused debate within the shipping industry, and some professionals disagreed with this decision. In US cases, bad faith has been found in cases where the vessel has been purposely misrepresented. As the author further said, in cases of “without guarantee” descriptions, SMA arbitrators would likely apply the usual margins and some may rule as the arbitrators did in The Lipa. The chances of these awards being upheld on appeal would be high as US arbitration awards can only be vacated if they violate section 10 of the US Arbitration Act.

In The Bavaria (SMA 3929), a sole arbitrator (Austin Dooley) found that WOG may offer some protection for “unforeseeable events” beyond the control of the initiating party but does not provide for any special umbrella from speed and fuel performance claims.

Evidence

Under SMA Rule 23 and LMAA Terms 2021 (section 15), arbitrators have broad authority to determine the admissibility and weight of evidence. London tribunals frequently scrutinise the methodologies used in weather and performance reports, and adverse cost orders have been issued where flawed methodologies wasted time. Equally, a panel rejected a speed claim supported by a weather analysis company’s report in the absence of an explanation of the methodology used.

Deck and engine logs remain crucial sources of evidence but are often scrutinised for reliability. In The Bertina, a SMA panel emphasised the evidentiary value of logs. Similarly, in The Silver Palm 94 F.2d 754 (9th Cir 1937), the court condemned alterations in logbooks as undermining a vessel’s entire defence. Moreover, SMA decisions like The Myrina (SMA 3846) have further reinforced that logbooks must be contemporaneous and duly maintained to be considered valid evidence. In that case, the arbitrator found the owners breached clause 11; a similar view expressed in several recent London arbitrations (eg London Arbitration 23/21 (2021) 1094 LMLN 1, London Arbitration 32/22 (2022) 1120 LMLN 2, and London Arbitration 15/23 (2023) 1145 LMLN 2).

Loss calculation

Arbitration tribunals, both under SMA and LMAA frameworks, have explored diverse methodologies for calculating losses in speed and performance disputes. There are instances where the panels arrived at a loss calculation that would be “just and equitable” (section 30, SMA Rules). In London Arbitration 2/00 (2000) 538 LMLN 2, the tribunal awarded its “best estimate” of loss caused by the vessel’s inefficiency in making headway against bad weather.

US jurisprudence also supports this discretionary latitude, as seen in Gardner v M/V Calvert, 1958 AMC 800 (3rd Cir 1958), which affirms that fact-finders may base damage awards on reasonable estimates using available data. Moreover, it has been said that “the ways compensatory damages may be proven are many” (Palmer v Connecticut Ry & Lighting Co 311 US 544, 560 (1941)). The injured party should not be barred from a fair recovery by impossible requirements. The wrongdoer should not be mulcted, neither should he be permitted to escape under cover of a demand for non-existent certainty. This is a similar observation made by the author of this article (P Krikris, “Reflections on Speed and Performance Claims” September 2023).

Both SMA and LMAA awards indicate that tribunals may reject both parties’ expert reports when flawed, choosing instead to recalculate based on their own judgment (see eg The Astro Energy, SMA 2771; London Arbitration 23/21 (2021) 1094 LMLN 1 and London Arbitration 15/23 (2023) 1145 LMLN 2.

Techniques such as the “extrapolation” method were applied in cases like The Astro Energy (SMA 2771) and The Syra (SMA 1278) well before being recognised in English case law like Didymi Corporation v Atlantic Lines and Navigation Co Inc (The Didymi) [1987] 2 Lloyd’s Rep 166. Panels have also examined speed–power curves for performance assessment, such as in The Panagiotis Xilas (SMA 1035), and revealed methodological flaws. Notably, speed–power curves in performance analysis is not a new topic. Reported SMA awards reflect its usage even by weather routing companies in the early days, something that was abandoned later.

Arbitrator Dudley B Donald's 1960 dissent (The Brookhurst, SMA 87) offers a notable historical perspective. In it he asserted that if the speed deficiency was not due to the weather, then it was defect in or breakdown of any part of the vessel’s hull, machinery or equipment, or failure of the captain under clause 8 to “prosecute his voyages with the utmost dispatch”, or misrepresentation. These ideas were later echoed in the English High Court in Bulk Ship Union SA v Clipper Bulk Shipping Ltd (The Pearl C) [2012] 2 Lloyd’s Rep 533 – save for the point of misrepresentation.

Consequently, a proper review of the arbitration decisions in both New York and London corroborate that several methods have been used to calculate losses in arbitration for decades (The Grace V, SMA 1760; The Areti S, SMA 16 (Bunkers on departure and arrival, all-weather); The Astro Energy, SMA 2771; London Arbitration 23/21 (2021) 1094 LMLN 1; London Arbitration 12/14 (2014) 900 LMLN 3; London Arbitration 15/23 (2023) 1145 LMLN 2; London Arbitration 15/05 (2005) 670 LMLN 1). The decisions corroborate that tribunals examined different methods and not “one” method prevails. Even The Didymi has been applied differently by companies and practitioners in the market, causing industry debate for decades. The “percentage” deficiency was applied by the arbitrator in London Arbitration 12/14 in testing two different methodologies, and if properly applied can yield to similar results as in London Arbitration 15/23 . Yet, even legal practitioners today struggle to understand these simple methodologies and seek to disqualify it due to their lack of knowledge.

Conclusion

Disputes over speed and performance remain fact-dependent, often requiring a balanced evaluation of contractual obligations, evidentiary sufficiency and practical realities. Both SMA and LMAA decisions demonstrate a pragmatic and commercially sensitive approach, reinforcing arbitration's role as the preferred mechanism for resolving maritime disputes fairly and cost-effectively.