The recent case of K Line Pte v Priminds Shipping (HK) Co. Ltd [2020] EWHC 2373 (Comm) (The Eternal Bliss) clarifies years of uncertainty and divided opinion over a shipowner’s right to damages in addition to demurrage where the charterer fails to load and discharge within the agreed laytime, reports a Gard release.
Background
The dispute arose in relation to the carriage of a cargo of soybeans from Brazil to China. At the discharge port, the vessel was kept at anchorage for 31 days due to port congestion and a lack of storage space ashore for the cargo.
As a result of the delay, the cargo suffered significant moulding and caking and the receivers brought a claim against the Owners which the Owners subsequently settled for US$1.1 million. The Owners then commenced arbitration proceedings against the Charterers seeking damages or an indemnity in respect of that cost.
It was agreed between the parties that the following question of law be referred to the High Court (the “Court”) for determination pursuant to section 45 of the Arbitration Act 1996: Where a vessel has been delayed at the discharge port beyond the agreed laytime and such delay has caused damage to the cargo and led to the owners suffering loss and damage in respect thereof, is demurrage the owners’ exclusive remedy or are the owners entitled to recover, in addition to demurrage, damages for the charterers’ breach in failing to discharge within the agreed laytime and/or an indemnity in respect of the consequences of complying with the charterers’ orders? Is it necessary to show breach of a separate obligation in order for damages in addition to demurrage to be recoverable?
It was common ground between the parties that the only breach committed by the Charterers was the breach of its obligation to discharge within the agreed laytime.
Owners argued that where the charterer’s breach causes damage in addition to the detention of the ship, such losses can be recovered in addition to demurrage. The Charterers argued however that demurrage was the exclusive remedy for the breach.
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Source: Gard
