"Once on demurrage, always on demurrage"

李垒

Case backgroud:

We are a FOB buyer under a sales contract, and the sales contract had a simple demurrage clause and without express reference to the captioned maxim.

The vessel was detained in loading port for nearly a month, and much of this period are bad weather according to SOF after the vessel was on demurrage. The shipper argued that, the captioned maxim, which  was only applied to VC, not applicable here since the sale contract did not make any reference to it, meanwhile, the maxim cannot be regarded as an implied term in sales contract. Therefore, the days of bad weather shall not be calculated as demurrage since it was not WWD and cannot be considered as laytime.

One thing can be sure, this demurrage clause is  independent in nature (not indemnify) under the applicable English law.

Our views

The shipper's arguments soud reasonable since the demurrage clause in sales contract is independent indeed, however, if this view is upheld by the court, this may be considered against commercial sense. However, we have not seen any specific English cases dealing with this topic. If you have the case, please send the case or its quotation of this case to me via marvine@126.com.

Thanks in advance for your kind assistance, all the best!

shirley

What "commercial sense" are you referring to?

艨艟剑客

Several ponits need to be clarified, I think:

1, You are a FOB (Classic) buyer, that means you arrange for the shipment.
2, The shipper mentioned above is the FOB seller. Right?
3, The demurrange clause appears only in the Voyage Charter between you and the carrier, and nothing about demurrage issue nor the indemnity thereof is mentioned in the sales contract between you and the seller. Right?
4, I don't understand the abbreviation of WWD and SOF, and the meaning of maxim mentioned above.
5, Under the Voyage Charter, you have to pay demurrage, without any disputes already, to the carrier. Right?
6, But under the sales contract, when you try to ask for seller's indemnity, the seller refused so on the ground that (1) the demurrage clause is not expressly agreed in the sales contract, and (2) it can neither be implied in the sales contract. Right?
7, You, as the FOB buyer, although agree that the buyer's case is to certain extent convincing, you feel hesitated to accept it because you think it is against the "commercial sense" which, in my guess, means that the FOB seller under this situation shall indemnify the buyer the amount which paid by the buyer to the carrier as demurrage. Right?

李垒

3# 艨艟剑客
Thanks for your reply. For your information, I supplement/clarify some points, I adopt your number.
1.Yes

2.Yes, shipper is the FOB Seller.

3.Please note that sales contract did have demurrage clause, but very simple, it only stipulated the rate for demurrage.

4.WWD is short for “weather working day”, and SOF is short for “Statement of Fact” .

5.Yes, the demurrage amount has been remitted to the owner.

6.The seller’s refusal based on that after the vessel was on demurrage, there were some days marked as bad weather in SOF, so these days cannot be deemed as laytime and also cannot calculated as demurrage, the maxim “Once on demurrage, always on demurrage” was not applied to contract of sale, it only applied to VC.

7.It is convincing because the demurrage clause in the contract of sale is independent in nature, that is to say, the constructions regarding demurrage (including the maxim of Once on demurrage, always on demurrage ) may not applied to the circumstance in contract of sale. As to commercial sense, I mean the well established understanding of “Once on demurrage, always on demurrage” under VC.  

Thanks.

李垒

2# shirley

Thanks for your attention, Shirley.

As regards the "Commercial Sense", I mean that in the circumstance of VC, owners and charterers  all recognised the maxim of "once on demurrage, always on demurrage". However, the Seller under the sales contract firmly held this maxim did not apply to the circumstance of contract of sale, i.e. the bad weather occured after the vessel was on demurrage shall  not counted as demurrage since the sales contract make no reference to such maxim. If the court upheld the views of the Seller, owners and charterers under VC may be surprised by this result.

艨艟剑客

4# 李垒


Thanks!

According to your clarification, I am of the opinion that:
1, Demurrage is a special concept under the contract of carriage, i.e. voyage charter in this case, focusing on the indemnity from the charterer to the shipowner due to the overuse of the ship in the way of paying an agreed amount per day or per hour etc.. In this way, strictly speaking it makes no sense to have a "demurrage" clause in a sales contract. In nature, the seller and the buyer may agree about the secondary indemnity of the same amount of demurrage as either party, i.e. the buyer in this case, paid to the shipowner. In other words, the interpretation of the word "demurrage" must be based on the contract of carriage, rather than a sales contract.

2, Supposing that the above is wrong, and the court agrees to hold that the seller can pay "demurrage" to the buyer under the sales contract regardless whatever has been agreed in the carrigae contract, then the meaning of "demurrage" shall be interpreted in compliance with various maritime cases although in which the disputes are most likely under the voyage charter.

3, It must be clear that, although the maxim "once demurrage always demurrage" is so well known, it is incorrect. The clock of laytime and of demurrage is separate, and both can be suspended even after being started.

4, The real problem in this case is that,
(1) How wide is the "demurrage" clause specified in your sales contract?
(2) When has the demurrage clock under the sales contract, if any, started running?
(3) If the demurrage clock started running, whether it has been suspended or even stopped later?

Only for your reference.

admin

关于滞期费（demurrage），这是一个议定赔偿，而议定赔偿就表示必须有违约在先才需要赔偿。换言之，装卸时间一旦用尽（装卸时间是以运费为对价的合约权利），承租人（租约下）或卖方（FOB买卖合约下）就已经是违约。
"once on demurrage always on demurrage" 的说法实际上是根据英国法律默示地位之"you cannot benefit from your own wrong doing"（请见《合约的解释》一书）。这表示因为承租人或卖方的违约或过错，导致了滞期的产生，他就不能去享有任何合约或者法律赋予的利益。如果租约或买卖合约规定下雨天不计算装卸时间，也不能适用滞期期间。但如果租约或买卖合约规定下雨天不计算装卸时间与滞期时间，这就另当别论了，因为明示条文可以超越默示地位。

总结说， "once on demurrage always on demurrage"   这一个英国法律的默示地位是适用在所有有关的合约，不论是租约、买卖合约、提单或岸上的运输合约。从来没听说不同的合约各自有一套不同的法律地位。

以你说的“commercial sense”为例，如果没有卖方的违约造成船舶滞期，在装货时间内装完货物，船舶早就已经开航。装港就算是下雨也与船舶毫无关系，那时船舶应该关心的只是风浪，估计能够造成 船舶延误也只是海上的风险而不是装港的坏天气。

所以，你的卖方根本是在胡说。如果卖方不支付在买卖合约下的装港滞期费，应该毫不犹豫的开始仲裁去执行你的权利。只要仲裁员水平好，应该是败诉不了。

杨良宜/司嘉

醉青云2012

7# admin


晚生有些疑问，这个案子争议的地方不是在于FOB卖方宣称其不应承担滞期费么，在买卖合同下卖方似乎没这项义务吧？还有 请教司老师，captioned maxim 是什么条款？

李垒

6# 艨艟剑客
Thanks for your input which is very heplful.

李垒

7# admin

Dear Mr. Yang and Si Jia, thanks for your advice, it is very helpful to our decision.

李垒

8# 醉青云2012

Thanks for your interest in this topic.

Under this contract, there is a demurrage clause, so that the FOB Seller is obliged to pay demurrage when there is a delay beyond the laytime. As to "captioned maxim", I must say it is my fault that I have not written a full titile (due to limitation of words in the title), FYI, it refers to the well estabilshed principle "Once on demurrage, always on demurrage".

艨艟剑客

9# 李垒


Some supplement:

As I mentioned, once on demurrage, it is not always on demurrage, because the demurrage clock can be suspended by certain reasons even after the commencement of demurrage. In detail, the situations are:

1, If there is a very clear worded exception clause regarding suspending the demurrage, then the demurrage can be stopped. But this is very difficult and usually court will be very cautious on this.

2, If the delay is caused by fault of shipowner, well, I discuss this issue still under voyage charter, the charterer can argue that the demurrage has been suspended and it is the charterer's onus of proof to show how much delay is caused by the shipowner. This, comparatively, is not that difficult so long as the charterer has fulfilled his proof.

According to the above, if the rules can be applied also in a sales contract, I think if the seller as in this case can prove that it is your fault that caused the detention, you will be in trouble in asking them for demurrage. Otherwise, you will have a strong position. Of course, all these analyze must be subject to the wording of your demurrage clause itself, because in my view the real problem is always the interpretation of contract.

Reference: Julian Cooke, Voyage Charters, 3rd Edition (2007), Chaptrer 16, Para 16.2 - 16.5

醉青云2012

11# 李垒


thanks for your explanation which is helpful to me .and 李垒 isyour Real name?because ikown a person here named lilei.

gany001

关于滞期费（demurrage），这是一个议定赔偿，而议定赔偿就表示必须有违约在先才需要赔偿。换言之，装卸时间一旦用尽（装卸时间是以运费为对价的合约权利），承租人（租约下）或卖方（FOB买卖合约下）就已经是违约。 ...
admin 发表于 2013-3-27 20:26

杨老师的回复清楚明了，掷地有声，学习了，很是敬佩。