Chapter 1

General Principles

7
1.33 If loading or discharging are not completed within the time allowed, then the shipowner is entitled to be compensated for the extra time taken. This may take the form of liquidated damages, demurrage or unliquidated damages, where the claim is one for detention. Demurrage is usually specified in the charter as a daily rate and the parties may agree either for a limited period on demurrage or, more commonly, for an unlimited period. It is now generally accepted that failure by the Charterer to complete loading (or discharging) within the time allowed is a breach of contract.

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1.36 A phrase much used with regard to demurrage is “once on demurrage, always on demurrage”. What this is intended to signify is that demurrage is payable on a running day basis, and that laytime exceptions do not apply once demurrage commences. It will take very clear words to convince a court that the parties intended a particular exception to apply once the vessel is on demurrage. In The Spalmatori,14 in discussing whether the Centrocon strike clause applied to strikes commencing after the vessel was on demurrage, Lord Reid said:15
. . . if it occurs after demurrage has begun to accrue the owner might well say: “True your breach of contract in detaining my ship after the end of the laytime did not cause the strike, but if you had fulfilled your contract the strike would have caused no loss because my ship would have been on the high seas before it began: so it is more rea-sonable that you should bear the loss than that I should.”
The same reasoning, of course, applies to any exception. Likewise, laytime exceptions and even demurrage exceptions do not normally apply to claims for detention.

1.38 If loading or discharging is completed within the laytime allowed, then, if so provided for in the charter, despatch will be payable either in respect of all time saved or, less commonly, for all working time saved.

1.39 As Devlin J said in Compania de Navigación Zita SA v Louis Dreyfus & Cie:17
The shipowner’s desire is to achieve a quick turn-round; time is money for him. The object of fixing lay days and providing for demurrage and despatch money is to penal-ize dilatoriness in loading and to reward promptitude.
Where despatch money is payable, it is almost always at half the demurrage rate.

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1.40 A claim for detention will arise where a vessel is delayed by default of the Charterer, or those for whom he is responsible, during the currency of a charter. Unliquidated damages are recoverable for such delay, except where it occurs after the vessel has reached its specified destination and loading or discharging, as the case may be, has not been completed, when any remaining laytime may be offset against the delay, or if the vessel is on demurrage then demurrage will be payable.

[...]

439

Chapter 6

Demurrage

Meaning and nature

6.1 The Laytime Definitions for Charterparties 2013 define demurrage as follows:1

“DEMURRAGE” shall mean an agreed amount payable to the Owner in respect of delay to the vessel beyond the laytime for which the Owner is not responsible. Demurrage shall not be subject to laytime exceptions unless specifically stated in the Charter Party.

The final phrase was added to that in The Voyage Rules 1993 to avoid conflict with the position in many charter parties.

6.2 However, this definition avoids what at one time was unclear, namely whether a failure to complete loading and discharging in the allowed laytime of itself con-stituted a breach of charter. The current view is that demurrage is liquidated damages for such a breach.........

537

Chapter 7

Despatch

7.4 The most common interpretation given to despatch clauses is to say that the clause provides for the shipowner to pay for all time saved to the ship, rather than working time saved, calculated in the way in which demurrage would be calculated, namely without taking any account of the laytime exceptions. The alternative, but less common, meaning is to allow for such exceptions.

7.7 A useful summary of the principles involved in construing despatch clauses was given by Bailhache J in Mawson Steamship Co v Beyer, where he said:7

Accepting, however, as I must and do, the authorities as they stand, I think I may safely say that the conclusions to be drawn from them are: 1. Prima facie the presump-tion is that the object and intention of these despatch clauses is that the shipowner shall pay to the charterer for all time saved to the ship, calculated in the way in which, in the converse case, demurrage would be calculated: that is taking no account of the lay day exceptions . . . 2. This prima facie presumption may be displaced, and it is displaced where either (a) lay days and time saved by despatch are dealt with in one clause and demurrage in another clause; or (b) lay days, time saved by despatch and demurrage are dealt with in the same clause, but upon the construction of that clause the court is of opin-ion, from the collocation of the words, or other reason, that the days saved are referable to and used in the same sense as the lay days as described in the clause, and are not referable to or used in the same sense as days lost by demurrage.
[...]

549

Chapter 8

Detention

8.1 A claim for detention will arise where a vessel is delayed by default of the Charterer, or those for whom he is responsible, either on the approach voyage or carrying voyage, or at the port of loading or discharge, including delays after the completion of cargo operations. However, the delay for which the Charterer will be responsible will not extend to delays which would have arisen in any event, irrespective of any fault of the Charterer.1 Unliquidated damages are recoverable for such delay, except where it occurs after the vessel has reached its specified destination and loading and/or discharging have not been completed, when any remaining laytime may be offset against the delay, or if the vessel is on demurrage, when demurrage will be payable.2

14Union of India v Compania Naviera Aeolus SA (The Spalmatori) [1962] 2 Lloyd’s Rep 175.
15Ibid., at p. 180.
17Compania de Navigación Zita SA v Louis Dreyfus & Cie [1953] 2 Lloyd’s Rep 472, at p. 475.
1See Appendix. A similar definition appears in Baltic Code 2007.
7Mawson Steamship Co v Beyer (1913) 19 CC 59, at p. 67. See also London Arbitration 12/98 – LMLN 488, 21 July 1998.
1For an illustration of the point see London Arbitration 9/05 – LMLN 664, 27 April 2005.
2For detention in relation to lightening, see ante at para. 4.544.

Referring Principles

Trans-Lex Principle: X.1 - Laytime, demurrage, detention and despatch in sea transport

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