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

8.2 It is, however, quite common for the parties to agree that even where unliquidated damages are payable, these should be assessed at the demurrage rate, plus, if the delay occurs whilst the vessel is under way, the cost of additional bunkers consumed.3 In The Boral Gas Evans J commented:4

The agreed demurrage figure nevertheless may be regarded as the appropriate amount to award as unliquidated damages – this is a question of fact for the arbitrators to consider and decide.

Commenting on how the arbitrators had approached the problem in that case, he continued:

… they appear to reflect three possible but distinct approaches to the assessment of loss. The first … is to consider whether the vessel would have earned more demurrage than she in fact did if she had … proceeded … without delay … Secondly the shipowners may say that if the first voyage had not been extended by the period of delay … the vessel would have completed all … voyages sooner, and the shipowners therefore lost eight days earnings after the charter was complete … Thirdly the arbitrators could be invited to assess the actual loss caused by the delay which in fact occurred …

If the arbitrators are invited to follow the second or third of the above approaches, that may involve an assessment of market rates at wherever the delay occurred or wherever the vessel ended up on redelivery at the end of the charter. Furthermore, the period of delay may only be a few days or something even shorter. In those circumstances, there may be no fixtures of a comparable vessel by which the market rate for such a vessel can be ascertained, which would leave the tribunal with no option but to base their assessment of damages on the demurrage rate in the charter in question. However, there are some charters, often known as “despatch business”, where there is a relatively high demurrage rate, which the parties know will never become payable, because it is probable that despatch will be earned, probably at half the demurrage rate. Whilst this will result in relatively generous despatch becoming payable to the charterers, it might be unfair for them to be asked to pay damages for detention at the enhanced demurrage rate in the charter. In those circumstances, it is suggested that it would be open to the tribunal to apply a reduction in the demurrage rate to more truly reflect the losses suffered by the owners for the detention of the vessel.

8.3 It sometimes happens, particularly in the tanker trade, that a charterer asks a shipowner to interrupt the carrying voyage, either because there has been some obstacle in completing the contract or contracts of sale, or because he anticipates a more advantageous sale because the price of that commodity is rising, and agrees damages for the detention of the vessel thereby caused. Where this possibility is anticipated before the charter is executed, there may well be included an additional provision allowing, say, for the vessel to be detained for up to 30 days as floating storage. In such circumstances, payment for this period is usually made on the basis of a daily rate of hire, either inclusive or exclusive of additional bunkers consumed. In effect, the clause therefore turns the charter from a voyage charter into a time charter for the period of detention. This, however, is an exception to the normal unforeseen situation, where damages for detention are broadly comparable with demurrage.

8.4 In London Arbitration 12/905 the question arose as to whether a clause providing for compensation for delay and/or deviation resulting from the charterers giving late orders or changing orders, to be paid for at the demurrage rate, was sufficient to cover a situation where, having loaded a cargo, the vessel was instructed to wait first ten days before charterers nominated the discharge port and then a further 11 days before being instructed to proceed. In these circumstances the owners argued that they should be entitled to compensation reflecting the vessel’s market rate which was twice the demurrage rate. However, the tribunal held that the clause was sufficient to cover the circumstances.

8.5 In London Arbitration 11/066 the tribunal were prepared to hold that, where bills of lading incorporated charter clauses setting out clear obligations as to the time within which the cargo was to be loaded and discharged and those clauses had equally plainly been breached, the shipowners had a claim for damages for detention (which they assessed at the demurrage rate) against the receivers even if the provisions relating to liability for demurrage in the charterparty were not incorporated into the bills of lading.

8.6 In Harris and Dixon v Marcus Jacobs & Co,7 Brett LJ described damages for detention as a payment “in the nature of demurrage”. This description indicates the similarity in function of the two payments, which are both intended to compensate the shipowner for the delay suffered by his vessel.

8.7 Like demurrage, damages for detention are calculated on a running day basis, i.e. the laytime exceptions do not apply;8 and neither normally will demur-rage exceptions. For convenience, consideration of this topic will be divided up into delays occurring during the following periods:

  1. before the vessel reaches its specified destination;
  2. during the running of laytime;
  3. during the running of demurrage (where provided for);
  4. after the end of laytime and/or demurrage;
  5. delay by agreement.

Delay before the vessel reaches its specified destination

8.8 Such delays may occur on the approach or carrying voyage or, in the case of a berth or dock charter, prior to the vessel’s arrival in berth or dock, as the case may be. However, most delays occur after the vessel has ceased to be underway, as the following cases show.

8.9 In a case called Owners of the Breynton v Theodoridi & Co9 the delay occurred after the carrying voyage had commenced. What happened was that the Breynton had been chartered on a Chamber of Commerce Danube berth contract, which provided for her to load at “one or two safe places in the Danube not above Braila”. The cargo so loaded was for carriage to London.

8.10 Having loaded at Braila and Tulcea, the Breynton proceeded over the bar of the River Danube to Constantza, where further cargo was loaded from lighters, taking some six days so to do, and it was for this period that the owners claimed the vessel had been detained. Under the charter, the master had the option, which he exercised, of asking for part of the cargo to be loaded outside the bar of the river from lighters because for her to have been loaded at the upriver ports would have meant that the vessel’s draught would have been too much for her to get over the bar. The cost of lighterage was to be for the owners’ account. However, the owners argued that, because the cargo loaded by lighters came from Constantza, and not from the upriver ports, this was not what was intended in the charter. The Master of the Rolls, Sir Ernest Pollock, rejected this argument, however, saying of the meaning of lighterage:10

8.11 In Mikkelsen v Arcos Ltd,11 a vessel was ordered from Leningrad to Yarmouth with a cargo of timber. After arriving at Yarmouth, the vessel was instructed to proceed to Boston, Lincs., which she did. The owners claimed, inter alia, for the time the vessel was detained at Yarmouth. Holding that the owners were justified, MacKinnon J said that in addition to payment for the voyage from Yarmouth to Boston for which reasonable remuneration should be made:12

I think that in that reasonable remuneration he is entitled to such payment as is reasonable for the service of keeping the goods in the ship while the arrangements for her going to Boston were being made.

Presumably, what was reasonable was the loss suffered by the shipowners, i.e. unliquidated damages.

8.12 In the days before instant communication with ships at sea became the norm, it was common for charters to include a provision that the vessel concerned should call at some intermediate port for further orders. It was usual for such a provision to provide that further orders should be given within 24 hours of receipt by the charterers of a cable from the master advising of arrival at the intermediate port. Failure to provide orders timeously meant the owners were entitled to claim damages for detention at a specified rate. In the Ethel Radcliffe Steamship Co Ltd v W R Barnett Ltd,13 the charter concerned had such a provision. However, the charterers had not completed their arrangements for the sale of the cargo and they deliberately detained the vessel, accepting that they had to pay liquidated damages for the delay. The shipowners challenged this and sought damages at large.

8.13 In his judgment, Rowlatt J held that the charterers were not entitled to act as they did but nevertheless held that liquidated damages were payable. The significance of the fact that the charterers’ breach was deliberate lay in that, if it continued, it would evince an intention by the charterers not to be bound by the charter, which repudiation the shipowners could accept. However, if the shipowners chose not to so act, then liquidated damages continued to be payable.

8.14 The case of the Owners of Panaghis Vergottis v William Cory & Son14 concerned a vessel under charter to load at Barry Dock under a dock charter. The vessel anchored at Barry Roads but was unable to gain admittance to the dock because the shipper failed to have one-third of the cargo available for loading, as required by the dock authority. Greer J held that the charterers were liable for the detention of the vessel because:15

8.15 A similar conclusion was reached in the Privy Council case of Samuel Crawford Hogarth and others v Cory Brothers & Co Ltd.16 There, the Baron Ardrossan, the ship concerned, was delayed getting into berth at Calcutta for a month and a half. The charter was a berth charter and the owners claimed the delay was because the charterers were not ready to load but the charterers claimed the delay was occasioned by causes for which they were not responsible. The Privy Council, however, held that the delay was due to a failure to furnish a cargo. Had cargo been available, the port authorities would have been able to furnish a berth.

8.16 Giving the judgment of the Judicial Committee, Lord Phillimore said:17

If a ship is prevented from getting to a loading berth owing to an obstacle created by the charterer, or owing to the default of the charterer in performing his duty, then it is well established that the shipowner has done all that is needful to bring the ship to the loading place, and that the charterer must pay for the subsequent delay.

Lord Phillimore also commented18 that it did not appear to have been decided in previous cases whether the shipowner should receive damages for the delay or whether the lay days should be ante-dated, but the point did not arise for decision in this case because both sides accepted the decision of the appellate court in Bengal, from which the appeal came, which treated the question as one of damages. It is respectfully submitted that this approach is correct.

8.17 Notwithstanding the principle enunciated in paragraph 8.14 above, there is no obligation on a charterer, in the absence of an express provision or agreement, to berth a vessel under a berth charter in strict order of her arrival at the port and that, where they choose to give preference to another vessel, this must give rise to a claim for detention.19

8.18 Another case concerning a delay arising out of a failure to give notice of the first load port was Società Ligure di Armamento v Joint Danube & Black Sea Shipping Agencies of Braila,20 a decision of MacKinnon J. The delay was some four days 17 hours and the question was whether the charterers were entitled to use some of their allowed laytime against the time lost. In holding that the charterers were right and they were allowed to count the delay against laytime, the judge said that the deciding factor was the demurrage clause, which referred to demurrage being payable if the vessel was detained beyond the stipulated time. Since various times had been stipulated, including the time allowed for waiting for orders, it must mean the waiting time could be offset against laytime. The decision, however, is perhaps best seen as an interpretation of a particular charter, rather than establishing any general principle.

8.19 In The Timna,21 the dispute concerned a delay arising from a failure by the charterers to nominate a discharge port in sufficient time to avoid the delay. The ship concerned was chartered on a Baltimore form C charterparty to carry grain from Norfolk, Virginia, to European ports. Part of the cargo was soya-bean meal for delivery at Bremen and part maize for an unspecified destination. It was common ground that Bremen was intended as the second discharge port on approaching Land’s End. At that time, the charterers instructed the vessel to proceed to the River Weser and said they would name which port later. On reaching the Weser light-vessel, at the mouth of the river, firm orders had still not been given. The following day, therefore, the master took the vessel upriver to Bremerhaven, but the charterers refused to accept the notice of readiness tendered there by the master, saying the vessel was intended for Brake, further upriver. However, the owners did not regard this as an order to proceed to Brake and the vessel remained at Bremerhaven waiting for orders, which were not received until some 16 days later. The owners claimed demurrage and/or detention. In the High Court Donaldson J held22 that the demurrage claim failed. The vessel was never an Arrived ship at Bremerhaven and there was no room for an implied term that, if the charterers failed to nominate the port of discharge within the time provided in the charter, or some further period thereafter, the master could himself make the nomination. However, he also held that the detention claim succeeded, a finding upheld by the Court of Appeal,23 who held that to constitute a valid order to proceed to a port of discharge, the order must be a firm one. They also held that where a charterer fails to nominate a port of discharge, he is prima facie liable in damages and the shipowner does not have to prove that if the charterer had nominated that port the vessel could not get there.24

8.20 If a charterer delays in nominating the discharge port, the vessel concerned may have to reverse its track or otherwise alter course when the orders are received. In such a case, the shipowner is entitled to compensation for the extra distance steamed and time taken. The usual way of calculating this is to compare the actual route with the direct one, measure the additional mileage and, using the vessel’s passage speed, ascertain the additional time taken. Although, strictly speaking, actual losses should be established, it is nevertheless common in practice to simply apply the additional time to the vessel’s daily sea bunker consumption (giving allowance for harbour consumption, which is included in the demurrage rate) to find the additional bunkers consumed, and apply the additional time to the demur-rage rate to calculate the cost of the delay.

8.21 The vessel may be further delayed at the port of discharge because of the late nomination. For example, at Milford Haven, 48 hours’ notice is required of the arrival of a VLCC. This is so that an appropriate number of tugs can be provided. A vessel coming north from Gibraltar heading towards Rotterdam might not be able to give this notice if nomination of Milford Haven was left to the last minute, with the result that the vessel might have to wait off Milford Haven. Whether such delay would give rise to a claim for damages for detention will, it is suggested, depend on whether the charter is a port or berth charter. If the latter, then a claim will lie, but if the former, then the charterer is entitled to offset any unused laytime or, if the vessel is on demurrage, then demurrage will be payable during the delay.

8.22 In The Delian Spirit,25 which concerned a “reachable on arrival” provision, where it was held that the vessel was an arrived ship when she anchored in the roads to await a berth, Sir Gordon Willmer said:26

… I prefer to say no more upon the difficult question which might have arisen if the vessel had not been found to be an arrived ship at the time when she was lying in the Roads. But I certainly do not wish to be taken as accepting that, even in that situation, the owners would necessarily be entitled to prosecute an independent claim for damages, without giving credit for the laytime to which the charterers were entitled, and for which, as we have been reminded, they paid when they paid the freight.

8.23 However, in the other “reachable on arrival” cases which preceded The Delian Spirit, The Angelos Lusis27 and The President Brand,28 Megaw J and Roskill J held that that was precisely what the owners were entitled to do, and despite the caveat entered by Sir Gordon Willmer, it is submitted that the puisne judges were indeed right. If laytime could be used to offset delays during the voyage stages of the charter, in the absence of any specific term so providing, then it would tend to erode the boundary between the voyage stages of the adventure and the loading/discharging operations,29 which was something the House of Lords refused to allow in The Maratha Envoy,30 when the Court of Appeal31 sought to suggest that a vessel reached its specified destination under a port charter when it arrived at the usual waiting anchorage for that port, whether this was inside or outside the limits of the port.32

However, as was held in London Arbitration 15/01,33 an owner cannot artificially engineer a claim for detention by serving a notice of arrival rather than a notice of readiness, where the vessel has reached a position from which a notice of readiness could be served and any steps that needed to be taken to procure a berth were not within the owner’s responsibilities.

8.24 In The Boral Gas,34 the owners let their vessel for eight consecutive voyages carrying anhydrous ammonia. Under the terms of the charter, the shippers were to supply ammonia for purging and pre-cooling. Three days after the vessel arrived, the charterers advised they had made arrangements with the shippers for purging and loading but it subsequently transpired they only made a contract to supply ammonia eight days after the vessel arrived. The vessel was kept waiting for a total of nine days. Under the terms of the charter notice of readiness could not be tendered until after purging and pre-cooling, so technically the delay occurred during the approach voyage stage of the charter.

8.25 In arbitration, a majority of the arbitrators held that the charterers were in breach by virtue of a failure by the shippers to provide ammonia for purging and pre-cooling and awarded eight days’ damages for detention at the demurrage rate. On appeal, Evans J held that the charterers had undertaken to procure delivery by the shippers of the quantity of ammonia required within a reasonable time of receiving notice of the vessel’s requirements. As he found this arose from the express terms of the charter, he declined to comment on a finding by a majority of the arbitrators for an alternative approach leading to the same conclusion by reference to an implied duty upon the charterers to co-operate in enabling the vessel to become an arrived ship, based on the principles set out in The Atlantic Sunbeam.35

8.26 Having held the charterers liable, the judge remitted the matter back to the arbitrators to give further consideration to the amount to be awarded. In similar circumstances, it would seem prudent for the vessel to give notice of its requirements prior to arrival since the obligation on the charterers may well only be to procure pre-coolant within a reasonable period.

8.27 In London Arbitration 11/03,36 the owners failed in their claim for detention where they refused to allow the ship to enter the port (the charter was a berth charter) because original bills of lading were unavailable. The tribunal held there was no need to keep the vessel outside the port.

It would, however, have been different had it been the charterers who ordered the vessel not to proceed to the specified destination because of problems over cargo documents. Thus, in The Mass Glory,37 (again a berth charter), where the charterers, who were also the sellers, ordered the vessel not to proceed to berth, the owners were entitled to claim damages for detention, although in this case there was also a dispute about the quantum of damages and whether the owners were liable for further losses up the chartering chain.

8.28 In London Arbitration 13/8738 the question arose as to whether the owners could claim their vessel was detained by the charterers where they had interrupted the voyage purporting to exercise a lien for unpaid freight. The charter in question related to the carriage of coal to Turkey and provided for 90 per cent freight to be paid within seven days of release of the bills of lading. Some 12 days after that period had expired, at which time the vessel was off Port Said, having passed through the Suez Canal, freight had still not been received and the owners ordered the vessel to anchor. They had previously been advised that exercise of their lien in Turkey was legally possible but not practical or commercially advisable. In fact had the vessel proceeded direct to Turkey and exercised a lien there of the same duration, the vessel would still have berthed at the same time. The arbitrators were, however, prepared to hold that the failure by the charterers to pay freight did amount to a detention of the vessel by them, although the orders to interrupt the voyage came from the owners, and that a lien for freight could be exercised short of the discharge port.

8.29 There have been a number of decisions as to whether the exercise by owners of a lien resulting in delay to the vessel during the carrying voyage can give rise to a claim for detention during the period of delay.

8.30 These appear to show that a lien can be exercised prior to arrival at the port where the cargo on which it is sought to exercise a lien is to be discharged if it can be shown that exercise of the lien at the discharge port would not be practical or commercially advisable, even though legally possible. However, the owners must show an actual loss as the result of the delay.

8.31 In The Chrysovalandou Dyo,39 a case involving a time charter, Mocatta J rejected an assertion by charterers that for a lien to be exercised, there had to be a demand for possession of the cargo and therefore a lien could only be exercised when the vessel had reached the actual place of discharge. This, he said, would seriously limit the commercial value of any lien granted in a charter. The same principle would of course apply to a voyage charter.

8.32 In London Arbitration 12/91,40

Only gold members can continue reading. Log In or Register to continue