To demur is human: Court of Appeal holds that demurrage liquidates all damages for delay, absent an additional breach

Some questions of law remain for a long time undecided by higher authority, despite their importance. For example:

• If, under a voyage charter:
  • a charterer breaches its obligation to complete the discharge of cargo within the agreed laytime,
  • the charterer commits no further breach, but
  • the charterer's breach causes the shipowner loss and damage in addition to the detention of the ship,
• Then, can the shipowner recover damages for the additional loss over and above the amount stipulated in the contract as demurrage?

In K Line Pte Ltd v Priminds Shipping (HK) Co Ltd (Eternal Bliss), the High Court[1] (Andrew Baker J) held that such additional loss was recoverable. The Court of Appeal reversed this decision, in a judgment[2] handed down on 18 November 2021, holding that demurrage is "liquidated damages for all the consequences of the charterer's failure to load or unload within the laytime."[3]

 

You can read the full post on our Commercial, Construction & International Arbitration Blog here.