Defence Guides Detention in a nutshell

If a vessel is delayed or detained because of a breach by the charterers, the owners should have a claim in damages for the time lost.

A claim in damages for detention Charterers’ failure to provide cargo meant that the owners could not can arise: tender an NOR. The court held that the If the charterers fail to provide cargo owners were entitled to claim damages Before the vessel is in position and the vessel is delayed, the owners for the delay to the vessel (The Boral to tender a notice of readiness may have a claim in damages for Gas [1988] 1 Lloyd’s Rep 342). (“NOR”); detention. For example, if under a berth or charter, a vessel was denied access to In The Mass Glory, the charterers After the end of laytime, demurrage the berth because the charterers did not ordered the vessel not to proceed to or on completion of cargo operations have a full cargo available for loading, the berth due to issues with the cargo charterers would be liable for detention documents. As a result, an NOR could Can an owner or disponent (Owners of Panaghis Vergottis v not be tendered and laytime could not owner claim damages against William Cory & Sons (1926) 25 Ll L start to run. The charterers were found charterers for delays suffered Rep 64; Samuel Crawford Hogarth and to be liable for damages for the delay before the vessel is in position others v Cory Brothers & Co Ltd (1926) to the vessel (The Mass Glory [2002] 25 Ll L Rep 464). 2 Lloyd’s Rep 244). to tender an NOR? Charterers’ failure to organise Charterers’ failure to nominate General pre-loading procedures a port within sufficient time

In a voyage charterparty scenario, Other examples of damages for Delays can also arise in a charter demurrage will usually compensate detention can be found in the cases of with multiple discharge ports where an owner for any delay. However, The Boral Gas and The Mass Glory. the charterers do not nominate a before demurrage can accrue, an NOR In The Boral Gas, the vessel loaded subsequent discharge port within must be tendered so that laytime can anhydrous ammonia. The shippers sufficient time. In The Timna, a ship commence. If the vessel is delayed were to supply ammonia for the purging chartered to carry grain to multiple before the NOR is tendered then the and pre-cooling of the cargo. The NOR discharge ports did not receive owner may have a claim for damages could only be tendered after purging instructions for the second discharge for detention. and pre-cooling was done. There was port after unloading at the first If not expressly stated in the a delay in supplying the ammonia due discharge port. charterparty, it would be an implied to a mistake by the charterers, which term that the charterers will do whatever is reasonable to enable the ship to reach the place at which she becomes an arrived ship so that the Master may tender an NOR. Defence Guides

The vessel tendered a notice of Likewise, in a case where there were cargo is placed on a vessel such that readiness at a further discharge delays caused by a new law requiring the vessel can proceed on her voyage port upriver and claimed for both charterers to apply for an export in safety (The Argobec (1948) 82 Ll. demurrage and detention. licence, the court dismissed owners’ L. Rep 223). Therefore, time taken for claim for detention even though the securing and bagging the cargo, even Although the demurrage claim failed, licence was obtained 15 days after if done outside of the berth, would the court found that owners were loading was completed because the still be part of cargo operations and entitled to damages for the delay. charterers and their agents proved that may be counted as demurrage, but The court held that in circumstances they had utilised their best efforts to other operations which do not relate to where the charterers had failed procure the licence without any delay safety, e.g. fumigation or draft surveys to nominate a discharge port, (Owners of the Spanish Steamship to calculate the quantity of cargo, they would be prima facie liable Sebastian v Sociedad Altos Hornos would not be part of cargo operations for damages for detention (The Timna de Vizcaya (1919) 1 Ll L Rep 500). and delays caused may result in [1971] 2 Lloyd’s Rep 91). a claim for damages for detention. The recurring question which should For example, in London Arbitration Can an owner or disponent owner determine whether a claim in detention 33/04, fumigation which took place claim damages against charterers will succeed is whether charterers have two hours after the completion of taken all reasonable steps to enable for delays suffered after the end loading was held to be detention. the ship to sail as soon as possible. of laytime, demurrage or cargo Similarly, in London Arbitration 6/92, The court is likely to look at whether operations? delays for a draft survey to calculate charterers have exercised reasonable the quantity of cargo which was carried General diligence but will not impose a high out after the completion of loading was standard upon charterers (The Atlantic The principle of making a claim in held to be detention and damages for Sunbeam [1973] 1 Lloyd’s Rep 482). detention where the delay occurs such delays were borne by charterers. after the end of laytime, demurrage When does laytime or demurrage end? or cargo operations is similar to a When does detention start? claim in detention for delays which occur before the notice of readiness One potential problem faced by is tendered. A claim for detention can owners is that it may be difficult to be made if owners can show that the determine when demurrage ends delay arises out of the breach or fault and when detention starts because of the charterers. it is difficult to determine precisely when cargo operations end. Cargo Not all delays lead to a valid claim operations are only completed (and in detention demurrage will only end) when the Again, an important factor for owners to prove is that there was a fault or breach, in the absence of which the claim for detention would fail. For example, in a case where delays arose because a railway company engaged by receivers to transport cargo was operating at an over capacity, it was held that there was no default on the receivers and that the delay was reasonably foreseeable given the circumstances of the port at that point in time (Lyle Shipping Co Ltd v Corporation of Cardiff (1900) 5 CC 397 (CA)). Defence Guides

Can an owner or disponent Owners may therefore be entitled Can damages for detention be owner claim damages against to a higher compensation than the claimed in addition to demurrage? charterers where there has been demurrage rate if the running costs of the vessel during the delay are As the saying “once on demurrage an agreement regarding always on demurrage” goes, demurrage delays suffered? higher than the demurrage rate and if the delay occurs outside of laytime continues to be payable until the There may be instances where both or the running time of demurrage. cargo operations are completed and owners and charterers agree to delay is not replaced by damages at large. the voyage. The dispute that typically Is the calculation of the rate of Hence detention cannot be claimed when demurrage is being incurred. ensues is the determination of the rate detention different from that For example, in a situation where a of compensation payable to owners. of demurrage? disponent owner’s demurrage rates In The Saronikos [1986] 2 Lloyd’s Rep Detention is classified as unliquidated are only half of the charter rates which 277, there was an agreement between damages and one of the main issues he has to pay to the headowner, any owners and charterers to wait outside faced in a detention claim is calculating delays would result in the disponent the discharge port for about nine days the quantum of the claim. It is common owner suffering a loss because the in order to resolve problems over the for parties to agree that damages demurrage earned would not be sale of the cargo. The demurrage rate for detention be calculated at the enough to bear the full charter rates. was less than the running costs of demurrage rate. However, this will Unfortunately, the disponent owner the vessel and if the vessel had not not always be the case and there will is unable to claim additional damages been delayed, the vessel could have be instances where the owner is able in detention against his charterer completed her discharge before laytime to show that his loss is greater than because the demurrage incurred is expired. Under such circumstances, the agreed demurrage rate. A good a form of liquidated damages which the court held that owners were example would be the case of is meant to be his relief for any delays. entitled to their running costs, extra The Saronikos, which was discussed bunker costs and the profit margin in the preceding section. owners would have received, were owners able to have traded the vessel at that time. Defence Guides

About the Author

Eugene Cheng Claims Executive T +65 6416 4895 E [email protected]

Eugene is a claims executive in West of England’s Singapore office, handling both P&I and FDD matters.Prior to joining the Club, he practised law at a boutique shipping law firm for close to five years. Apart from his contributions to the Club’s defence guides, he has contributed to Halsbury’s Laws of Singapore (Shipping) and his articles have also been published This article was written by Eugene Can an owner or disponent owner in the Singapore Academy of Law Journal. exercise a lien for detention? Cheng in the Singapore office with additional input from Chris Metcalf Get in touch A clause entitling owners to exercise a of Clyde & Co. West of England Insurance Services lien for demurrage would not extend to (Luxembourg) S.A. a claim for detention (Clink v Radford & Co [1891] 1 QB 625) unless the Singapore Office charterparty expressly states that the 77 Robinson Road owners are entitled to exercise a lien Level 15-01, Robinson 77 Singapore 068896 for damages due to detention. T +(65) 6403 3885 Conclusion London Office In conclusion, owners’ claim for One Creechurch Place detention is very much dependent on Creechurch Lane London EC3A 5AF the facts of the case. However, a useful indicator as to whether T +44 20 7716 6000 a claim for detention exists is to E [email protected] W www.westpandi.com identify the potential fault or breach by charterers. Where this fault or breach is the cause of the delay © West of England Insurance Services. suffered by owners, a claim for All rights reserved. The opinions expressed detention may arise. However, in this publication are those of the authors. owners should note that a claim This note is intended for general guidance in damages for detention is unlikely to only and should not be relied upon as legal advice. Should you require specific advice succeed where the delay occurs during on a situation please contact us. the running of laytime or demurrage – see paragraph 6) above.

October 2018

The West of England Ship Owners Mutual Insurance Association (Luxembourg) UK office One Creechurch Place, Creechurch Lane, London EC3A 5AF Tel +44 20 7716 6000 Email [email protected] www.westpandi.com Follow us on