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Baltic Exchange changing its benchmark vessel impacts hire payment?

If the Baltic Exchange alters the published rate scheme by changing the benchmark vessel during the currency of charter then hire calculation could change which could lead to a dispute between owners & charterers, as in the case of The New Hydra [2021].

The relevant clauses stated “daily hire to be calculated basis avg of the 4 Baltic Cape Size Time Charter routes…..plus 4% for size adjustment”. C/P came into effect in 2013 and in 2015 changes were made to the Baltic Capesize Index as the benchmark ship was increased to 180,000 t (New Hydra's size) from 172k t. Daily published rate for the 172kt would now be derived by applying a dollar differential to 180k rate.


In 2018 owners alleged that they are being underpaid since 2015. As per them hire was payable on the basis of the current benchmark ship, i.e. 180kt ship; whereas charterers said that hire calculation should not change (172kt + 4% size adjustment).


The Court said that the problem with charterers position was that the rate could no longer be considered as ‘…average of 4 capesize TC routes…’ as it was derived from such an average of 180k t ship reduced by a discount calculated by reference to historic average rates. Owners' proposal was more sound and would have made more sense to a reasonable person.




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