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The case centered on who, between Owners and Charterers, would bear a USD1 million cargo claim brought by receivers when their cargo of soya beans deteriorated aboard the vessel during a period of over a month while she was delayed by port congestion.

Owners had satisfied the claim in the first instance and sought to recover it from Charterers. The issue was whether all losses caused by Charterers exceeding the time allowed for discharging were compensated for by the fixed sum of demurrage, such that Charterers could not be compelled to pay anything more than demurrage.

Owners argued that demurrage was only fixed compensation for loss of use of the vessel as an earning asset, and that losses of another “nature” (like a cargo claim) could be recovered in addition, even where the only breach of contract was exceeding the allowed discharge time.

Court of Appeal Ruling

The Court of Appeal has ruled that where there is no separate, distinct breach of charter, and the only breach is exceeding the permitted time for cargo operations (which may be a fixed number of days of “laytime,” or time quantified by reference to a rate of performance or similar) then Owners are restricted to recovering demurrage only. They cannot recover a loss such as a cargo claim on the grounds that it is of a different “nature” to deprivation of use of the vessel. To recover for losses of a different nature going forward Owners will need to show a separate breach of charter

As a Court of Appeal decision, unless the point is taken to the Supreme Court, lower courts and arbitral tribunals determining cases under English law will be bound, and hence Charterers in similar cases can be confident that, where they exceed laytime, their liability is “demurrage only.”

It should be stressed that this is “general rule” demurrage, and many standard forms of voyage charter (where unamended) would be construed accordingly. However, Charterers may still be exposed to paying further damages beyond demurrage in certain situations. This may be where their charter was specifically amended to provide for this (either in clear words or by limiting time on demurrage to a certain number of days, with general damages to be due after that), or where Owners can establish a separate breach of charter causing distinct separate loss, or where Charterers committed a repudiatory breach of the charterparty. However, we expect the “general rule” will cover most disputes as these additional factors do not arise so often.


In summary, the current position in English voyage charter law is that where Charterers’ only breach is exceeding permitted time for cargo operations then a simple demurrage provision will limit their liability to demurrage only, unless the contract clearly provides otherwise. This will normally mean such matters as extra port, wharfage or watchmen costs or indeed cleaning costs if the hull becomes fouled during a lengthy stay in port, arising during the overrun are not recoverable outside the demurrage.

Only where there is a separate breach causing loss not being of the nature of deprivation of use of the vessel can Owners potentially claim further damages. Parties standing in the position of Charterers under future voyage charters should thus be vigilant for attempts by Owners to introduce specific clauses seeking to impose a contrary position.


The Charterers Club

January 2022

The MECO Group