Demurrage: Charterparty Law and Practice

Demurrage as agreed compensation for port delay

A voyage charter party allocates port time between the shipowner and the charterer through the mechanism of laytime: the number of days or hours the charterer may occupy the vessel at the loading and discharging ports. If the charterer exhausts that allowance and cargo operations are still incomplete, the shipowner suffers an opportunity loss: the vessel could have been earning freight on its next voyage. Demurrage is the contractually agreed remedy for that loss.

BIMCO defines demurrage in the Laytime Definitions for Charter Parties 2013 (the successor to the 1980 VOYLAYRULES, jointly published with the Baltic Exchange, CMI, FONASBA, and INTERCARGO) as “an agreed amount payable to the owner in respect of delay to the vessel beyond the laytime, for which the owner is not responsible.” The 2013 definitions refined the earlier form to clarify that demurrage is not subject to laytime exceptions unless the charter party expressly says otherwise.

The demurrage rate is set in the charter party itself, typically in a box or special clause, and is denominated as a US dollar amount per day, pro-rated for fractions. That rate is fixed at the time of fixture, independent of what the actual market cost of the vessel’s idle time turns out to be. This matters because it removes any argument about quantum once demurrage is established.

The companion calculator on this site is the laytime and demurrage calculator, which settles used against allowed per port or reversible and prices demurrage and despatch at the charter rates; the laytime-used builder assembles the used figure from port events. The demurrage time bar tracker counts the days remaining to claim submission.

Demurrage as liquidated damages

The characterization of demurrage as liquidated damages is settled in English law and has practical consequences that practitioners must understand.

Lord Guest’s formulation in Union of India v Compania Naviera Aeolus SA (The Spalmatori) [1964] AC 868 remains the canonical statement: “Lay days are the days which parties have stipulated for the loading or discharge of the cargo, and if they are exceeded the charterers are in breach; demurrage is the agreed damages to be paid for delay if the ship is delayed in loading or discharging beyond the agreed period.” Lord Reid added that it makes no difference whether the delay results from the charterer’s fault or is caused by external factors beyond the charterer’s control: the breach is the detention of the vessel beyond laytime, not any particular fault.

The liquidated-damages characterization means the shipowner doesn’t need to prove actual loss. The rate was agreed in advance as the parties’ genuine pre-estimate of the daily cost of delay. This greatly simplifies claim enforcement: the owner presents the laytime calculation, demonstrates that laytime expired, and the debt arises automatically. Courts don’t inquire whether the rate was commercially accurate.

Demurrage vs damages for detention

Demurrage and damages for detention are two different remedies for vessel delay, and the distinction matters when the charter party is silent on rate or duration.

Demurrage applies where the charter party fixes a rate. Where no rate is agreed, or where the charter party’s demurrage period is expressly limited to a fixed number of days after which the vessel is “off demurrage,” the shipowner is entitled to damages for detention at the market rate for the vessel’s actual loss of earnings. Damages for detention require proof of loss; demurrage does not. In practice, almost every voyage charter today contains a demurrage clause, so the damages-for-detention route rarely arises in modern commercial disputes.

The classic distinction was drawn by the Court of Appeal in A/S Reidar v Arcos [1927] 1 KB 352, where the vessel could not load at the contractual rate due to charterer default and missed its contractual arrival window at the discharge port, causing further loss beyond simple detention. Bankes LJ held that the demurrage rate covered the loss of use of the vessel but not the distinct consequential loss caused by the missed window. That principle fed into subsequent debate about whether additional loss requires a separate breach.

The Bonde [1991] and The Eternal Bliss [2021]

For 30 years, the commercial shipping industry operated on the understanding that a shipowner wishing to claim any amount beyond demurrage for a charterer’s failure to load or discharge within laytime had to point to a separate and independent breach of the charter party. That understanding rested on The Bonde [1991] 1 Lloyd’s Rep 136, where the High Court held that an additional breach was required before additional damages could be claimed.

The High Court in [2020] EWHC 2373 (Comm) (the first-instance Eternal Bliss decision) disagreed and held that additional loss of a different character could be claimed without a separate breach. That created uncertainty in the market.

The Court of Appeal resolved it decisively in K Line PTE Ltd v Priminds Shipping (HK) Co Ltd (The Eternal Bliss) [2021] EWCA Civ 1712. Males LJ, delivering the judgment of the court, reinstated The Bonde, held that demurrage is the exclusive remedy for all loss arising from detention beyond laytime, and confirmed that there is no additional right to damages for a different type of loss unless the owner can prove a separate breach of a distinct obligation. The court reasoned that the parties’ agreement on a demurrage rate reflected their intention to deal exhaustively with the financial consequences of overrun: “it does not matter what kinds of loss the delay causes.” The authority of The Bonde, which had stood without challenge for three decades, was vindicated.

The practical result is clear: a shipowner carrying cargo that deteriorates during an extended port stay cannot recover for that cargo deterioration by claiming it is a “different kind of loss” from the loss of use for which demurrage compensates. The demurrage rate was the parties’ exclusive pre-agreed remedy.

The once-on-demurrage-always-on-demurrage rule

Origin and scope

The maxim “once on demurrage, always on demurrage” (OODAOOD) establishes that once laytime expires and the vessel goes on demurrage, time runs continuously. The laytime exceptions that protected the charterer during the loading or discharging period, whether weather exclusions, Sunday and holiday exclusions (SHEX), or other agreed carve-outs, cease to apply during demurrage unless the charter party expressly preserves them.

The authoritative English statement of the rule is in Dias Compania Naviera SA v Louis Dreyfus Corporation [1978] 1 WLR 261, where the House of Lords held: “When once a vessel is on demurrage no exceptions will operate to prevent demurrage continuing to be payable unless the exceptions clause is clearly worded so as to have that effect.” The Dias involved a fumigation clause allowing the charterer to treat the ship’s cargo “at their expense” with time “not to count”: the court held that clause applied during laytime but not during demurrage, because it did not expressly say so.

The Spalmatori confirmed the same principle in the context of a strike clause, holding that a strike that suspended laytime did not automatically suspend demurrage unless the strike clause was clearly drafted to cover the demurrage period.

Commercial rationale

The commercial logic is sound. The charterer has breached its obligation to complete cargo operations within the agreed time. It sits in continuing breach for as long as the vessel is detained beyond laytime. The shipowner’s opportunity cost runs every hour, regardless of whether it rains or falls on a Sunday. The exceptions protected the charterer from bearing the cost of time that genuinely could not be used productively. Once the charterer is in default, that protection falls away unless the parties deliberately preserved it.

Exceptions to the rule itself

The OODAOOD rule is not absolute. Several circumstances interrupt the continuous running of demurrage even in the absence of express charter party language.

Owner-caused delays break the chain. If the vessel goes off hire, loses its fitness for purpose, or the master takes the vessel away from the charterer’s disposal for the owner’s own purposes, demurrage stops running for the duration of the owner’s default. The Stolt Spur [2002] 1 Lloyd’s Rep 786 confirmed that demurrage cannot run when the owner has removed the vessel from the charterer’s disposal. The Agios Dimitrios case (Alphapoint Shipping Ltd v Rotem Amfert Negev Ltd) established that a vessel in breach of its charter-party warranty of cleanliness could not claim demurrage for the period taken to clean its holds, because the owner’s own breach was the operative cause.

Port congestion that prevents the vessel from berthing while on demurrage is normally the charterer’s risk unless the charter party allocates it differently. A WIBON ("whether in berth or not") clause means laytime and demurrage both run from the time the vessel arrives at the port, whether or not a berth is available.

Some charter party forms expressly preserve specific exceptions during demurrage. Asbatankvoy Clause 8 halves the demurrage rate (rather than suspending it entirely) during delays caused by breakdown of shore machinery or equipment. A few Asian grain trades preserve weather exclusions during demurrage: the clause must be read carefully.

Charter party OODAOOD variations

GENCON 2022 Clause 12 codifies a nuanced version: demurrage accrues continuously except “to the extent that time is actually lost to the Charterers by the Vessel not being available to perform the service immediately required” and that unavailability is not caused by the charterer or its servants or agents. This is a more refined formulation than the traditional OODAOOD maxim: it focuses on actual operational unavailability attributable to the owner, not on the historical category of “laytime exceptions.”

Parties regularly negotiate bespoke demurrage exceptions: Saturdays or half-Saturdays excluded even during demurrage in certain grain trades, noon-to-noon counting conventions, agreed pumping deductions. Every departure from the default OODAOOD position requires clear drafting.

The demurrage rate

How the rate is fixed

The demurrage rate is negotiated at fixture. It is expressed as a US dollar amount per day and is pro-rated for fractions. The rate is inserted into the charter party’s box section: Box 19 in GENCON 2022, Part I of Asbatankvoy.

The rate reflects the vessel’s daily time charter equivalent (TCE) earning capacity at the time of fixture, plus a margin for the shipowner’s administrative costs and the commercial incentive to keep the rate meaningful. An owner who sets demurrage below the market TCE creates an incentive for charterers to deliberately run over laytime when it is commercially convenient. In practice, demurrage rates track the freight market: they rise in tight markets and fall in soft ones.

The demurrage and despatch calculator applies the agreed rate pro-rata once the laytime overrun is determined from the Statement of Facts (SOF).

Indicative 2024 market rates

The table below shows illustrative demurrage rates for full-laden voyage charters as of mid-2024. Rates at the cyclical peaks (late 2021 Capesize dry bulk market, 2022 VLCC market) ran two to three times these levels.

Pro-rata calculation

Demurrage is pro-rated to the hour (or, in some forms, to the nearest 30 minutes). The formula is:

If a voyage produces multiple port calls with separate demurrage exposures, the amounts are added. Where the charter party provides for reversible laytime, time saved at one port offsets overrun at another before any demurrage liability crystallizes: see reversible laytime and despatch and the reversible laytime calculator.

Demurrage under tanker charter parties

The pumping warranty

Tanker demurrage calculation has a feature absent from dry-bulk fixtures: the pumping warranty. Asbatankvoy Clause 9 (the standard tanker form published by BIMCO and the Association of Ship Brokers and Agents) requires the vessel to be capable of discharging its entire cargo within 24 hours or maintaining 100 psi back pressure at the ship’s manifold, provided shore facilities can receive at that rate. Where the vessel fails to maintain the warranted pumping rate, the excess time at the discharge port attributable to slow pumping does not count as laytime used or demurrage.

The warranty shifts the burden of proof: the owner must demonstrate that any pumping-rate shortfall was caused by shore-side equipment limitations, not by the vessel’s own pumping capacity. The pumping log becomes the critical document for both sides. Disputes about whether a slow discharge resulted from restricted shore receiving capacity or from the vessel’s pump performance generate a significant proportion of tanker demurrage arbitrations.

GENCON 2022 does not include a pumping warranty because it’s a dry-cargo form, but its handling of weather causation (requiring weather to be “the operative cause of delay”) similarly shifts analytical attention to the proximate cause of any interruption.

Tanker laytime: berth, port, and WIBON

In tanker charterparties the distinction between port charters and berth charters is commercially significant. Under a berth charter, laytime doesn’t begin until the vessel arrives at and moors to the berth. Under a port charter, laytime begins when the vessel arrives at the port limits, regardless of whether a berth is available. Many tanker charters include the qualifier “whether in berth or not” (WIBON), converting a berth charter into a port charter for laytime purposes and placing the congestion risk on the charterer.

Asbatankvoy provides that laytime commences on “expiration of six hours after receipt of NOR,” or on arrival at berth, whichever first occurs. The six-hour grace period applies only if the vessel tenders NOR at the pilot station or other agreed arrival point. An NOR tendered before the vessel is an arrived ship (ready to load, at the agreed destination, at the master’s disposal) is ineffective: it doesn’t start the laytime clock.

Demurrage time bar clauses

Function and standard periods

A demurrage time bar is a contractual condition precedent: the shipowner must submit its documented demurrage claim within the agreed period, or the claim is extinguished. Time bars serve the commercial need for prompt accounting; owners and charterers both want to close out voyages and move on.

Standard time bars vary by form:

Where no contractual time bar applies, English law’s Limitation Act 1980 provides a six-year period for contract claims, running from the date the cause of action accrued (typically the date the demurrage debt crystallized, i.e. when operations completed and demurrage was quantifiable).

Documentary requirements and strict compliance

The time bar is not merely a deadline for sending a notice: it is a deadline for providing a complete, documented claim. Asbatankvoy and Shellvoy require the claim to be submitted “with all supporting calculations and documents.” Courts have construed this strictly.

In The Amalie Essberger (heard in the English Commercial Court), the owners submitted their demurrage claim within the 90-day period under an amended Asbatankvoy but initially omitted the pumping log and master’s letter of protest for one port. The court held that where a named document (one expressly listed in the clause) had not been provided within the 90-day period, the entire demurrage claim was time-barred, not merely the portion relating to that port. The documents did not all have to arrive simultaneously with the initial claim letter, but all had to be in the charterer’s hands before the deadline expired.

The earlier case law included conflicting decisions: The Sabrewing applied strict compliance; The Eternity and The Abqaiq took a more commercial approach requiring only “reasonable documentation.” The Amalie Essberger brought the pendulum back toward strict compliance for named documents.

The practical implication is that a demurrage department that submits a claim three days before the deadline with a note saying “pumping logs to follow” takes a serious risk if the logs arrive after day 90. The entire claim, not just the pumping element, may be extinguished.

What counts as a complete submission

Within the time bar, a fully documented demurrage claim under Asbatankvoy requires:

• The charter party fixture recap or signed charter party
• The Notice of Readiness (NOR) for each port, with confirmation of tender and receipt
• The Statement of Facts (SOF) for each port, signed by vessel’s officer and shore terminal representative
• The laytime calculation worksheet showing allowed laytime, time used, exclusions applied, and net demurrage
• Pumping logs (tankers): covering the full discharging period, signed by ship and shore
• Letters of protest for any disputed events
• Weather records where weather exclusions are claimed
• Any port authority documentation of strike or equipment failure

For dry-bulk fixtures the pumping log requirement drops, but vessel and terminal time records and weather records remain necessary where those are the basis for exclusion claims. The SOF builder calculator provides a structured format for assembling port event records.

Time bar and the despatch claim

Despatch claims by the charterer are equally subject to time bars, typically on a symmetrical basis. A charterer that completes loading or discharge ahead of laytime must submit its documented despatch claim within the agreed period or the right is lost.

Calculation methodology

The standard five-step method

Every demurrage calculation follows the same logical sequence regardless of vessel type or charter form. The Statement of Facts is the primary input document.

Step 1: Determine when laytime commenced. Under Asbatankvoy, laytime starts on receipt of the NOR, or on berthing, whichever is earlier, subject to the six-hour grace. Under GENCON 2022, Clause 10 sets the rules: for a berth charter, laytime runs from when the vessel is all-fast at berth; for a port charter, from tender of a valid NOR. An NOR is valid only if the vessel is an arrived ship, meaning it has reached the contractual destination and is ready in all respects to load or discharge. An NOR tendered while the vessel is awaiting customs clearance, while cargo gear is defective, or while holds fail an inspection is legally premature and doesn’t start the clock.

Step 2: Calculate allowed laytime. This comes from the charter party. A fixed-day allowance is straightforward. A rate-based allowance (e.g. 30,000 tonnes per weather working day) requires dividing the cargo quantity by the agreed rate, applying any rounding rule in the charter party.

Step 3: Walk through the SOF and deduct excluded time. For each event recorded in the SOF, determine whether that time counts as laytime used or is excluded under the agreed qualifiers. SHEX excludes Sundays and holidays entirely. WWD (weather working days) requires the vessel to have been prevented from working by weather, not merely that weather occurred. SHINC (Sundays and holidays included) means all days count.

Step 4: Determine whether demurrage or despatch applies. If laytime used exceeds laytime allowed, demurrage runs from the moment of expiry. If laytime used is less than laytime allowed, despatch runs at half the demurrage rate on all time saved (DATTS) or on working time saved (DWTS), depending on the clause.

Step 5: Apply the OODAOOD rule to the demurrage period. Time exclusions that applied during laytime stop applying. Run the clock continuously from the moment laytime expired to the moment operations completed, subject only to any express demurrage exceptions in the charter party (owner delays, Clause 8 half-rate events).

Reversible laytime and multi-port voyages

Where a charter party provides for reversible laytime, the allowed laytime at loading and discharging ports is pooled: time saved at one port absorbs overrun at another before demurrage crystallizes. The reversible laytime calculator handles this aggregation. Full discussion of reversibility and the all-purposes provision appears in the reversible laytime and despatch article.

Worked numerical example

A Panamax bulk carrier loads 75,000 t of coal at Richards Bay, South Africa, for discharge at Krishnapatnam, India. Charter party terms:

• Loading: 25,000 t/day WWDSHEX EIU (even if used). Discharging: 18,000 t/day WWDSHEX EIU.
• Demurrage: USD 20,000/day pro rata. Despatch: half demurrage on all time saved.
• Non-reversible. NOR: laytime commences 6 hours after tender, WIBON.

Loading port (Richards Bay):

Allowed laytime: 75,000 / 25,000 = 3.000 days = 72.00 hours.

NOR tendered Monday 06:00. Laytime commences Monday 12:00. Operations complete Thursday 07:00. Elapsed: 67 hours. SHEX exclusion: one Sunday (Monday 12:00 to Thursday 07:00 spans one full Sunday of 24 hours = 24 hours excluded). Laytime used: 67 - 24 = 43 hours. Laytime saved: 72 - 43 = 29 hours.

Discharging port (Krishnapatnam):

Allowed laytime: 75,000 / 18,000 = 4.167 days = 100.00 hours.

NOR tendered Tuesday 09:00. Laytime commences Tuesday 15:00. Operations interrupted: weather Thursday 14:00 to Friday 08:00 (18 hours, WWDSHEX excluded). Equipment delay (shore conveyor breakdown) Friday 08:00 to Friday 14:00 (6 hours, charterer’s account, not excluded). Sunday excluded (24 hours). Operations complete Monday 11:00. Elapsed: 116 hours. Excluded: 18 hours (weather) + 24 hours (Sunday) = 42 hours. Laytime used: 74 hours. Laytime allowed: 100 hours. Laytime saved: 26 hours.

Non-reversible result: Each port is calculated independently. Loading produces 29 hours saved = despatch. Discharging produces 26 hours saved = despatch.

Despatch payable (loading): 29/24 × USD 10,000/day = USD 12,083. Despatch payable (discharging): 26/24 × USD 10,000/day = USD 10,833. Total despatch: USD 22,917 payable by the owner to the charterer.

If the same port events had produced demurrage at the discharging port instead (e.g. if the coal quantity had been 82,000 t), the non-reversible rule would have prohibited the loading-port time-saved from offsetting the discharge-port overrun.

Common calculation disputes

The most frequently contested issues in demurrage arbitrations:

NOR validity. Was the vessel an arrived ship when the NOR was tendered? A berth charter requires arrival at the berth. A port charter requires arrival within the commercial area of the port. The distinction between an “arrived ship” and a vessel anchored outside the port limits can shift the laytime start by days.

Weather causation. WWDSHEX requires weather to have actually prevented operations, not merely to have been present. If a crane breaks down during a rain storm, the downtime is charterer’s equipment failure account (not a weather exclusion) unless the rain independently prevented operations.

Equipment fault attribution. Vessel-side equipment failure (ship’s gear, hatches, pumps below warranty) is the owner’s account. Shore-side equipment failure (cranes, conveyors, shore pumps) is the charterer’s account. Each side documents what it can; the SOF becomes the battleground.

SHEX EIU vs SHEX UUIE. “Even if used” means Sundays and holidays are always excluded even if operations run continuously through them. “Unless used” means they count if actually used. The difference is three to five additional hours of excluded time per Sunday in an active loading port.

Office hours qualification. Some charter parties provide that NOR can only be tendered during office hours or NAABSA (not always afloat but safely aground). An NOR tendered at 17:00 on a Friday may not start laytime until 08:00 Monday.

Despatch

The mirror image of demurrage

Despatch is the payment by the shipowner to the charterer for completing cargo operations in less than the allowed laytime. Where demurrage compensates the owner for delay, despatch rewards the charterer for efficiency. The commercial rationale is that early completion frees the vessel sooner, allowing the owner to begin its next voyage: the owner shares that benefit with the charterer.

Despatch is virtually universal in dry-bulk fixtures. It is less common in tanker charterparties (many major oil company forms omit it) and rare in liner and container contracts.

The conventional rate is half the demurrage rate: “D/2” or “DHD” (despatch half demurrage). There is no legal requirement for this ratio; it is a market convention that reflects the asymmetry between the parties’ interests.

All time saved vs working time saved

The charter party must specify which version of despatch applies.

Despatch on all time saved (DATTS or ATS): the despatch calculation covers all the laytime not used, including any Sundays, holidays, and weather days that were excluded from the laytime count. The charterer gets credit for those excluded periods even though they would not have counted against laytime anyway.

Despatch on working time saved (DWTS or WTS): only the productive working time saved attracts despatch. Sundays, holidays, and other excluded periods are not credited, even if operations finished before those days arrived. This is less generous to the charterer and is typical in dry-bulk grain and coal charters.

The despatch ATS vs AWTS calculator quantifies the financial difference between the two conventions for any given laytime scenario. The gap can be substantial on multi-day operations with heavy weekend and holiday exclusions.

Demurrage and the bill of lading

The cesser clause problem

In many voyage charters, the charterer is not the shipper of the goods: the cargo is shipped under bills of lading issued to third-party receivers. A cesser clause in the charter party releases the charterer from further liability once the cargo is shipped, in exchange for the owner taking a lien on the cargo for unpaid demurrage, freight, and deadfreight.

The interaction is a known problem area. The cesser clause operates only to the extent that the owner’s lien is effective. Lien effectiveness depends on the law of the discharge port: some jurisdictions do not recognize contractual cargo liens, and in those ports the cesser clause leaves the owner without either charterer liability or cargo lien. Courts have consistently held that the cesser clause is co-extensive with the lien: where the lien fails, the cesser clause fails, and the charterer remains personally liable.

GENCON 2022 (like GENCON 1994) does not contain a cesser clause. Instead, it grants the owner a contractual lien on cargo and sub-freights for all amounts due, including demurrage. The shipper’s receiver can become directly liable for demurrage if the bill of lading expressly incorporates the charter party terms, using language clearly identifying which terms are incorporated.

Demurrage in bills of lading

The bill of lading is the contract of carriage between the shipowner and the consignee. Demurrage liability transfers to the consignee only if the bill of lading expressly incorporates the charter party demurrage clause with sufficiently clear language. General incorporation clauses (“all terms and conditions of the charterparty”) do not always incorporate demurrage: courts have required that the demurrage clause be clearly identified as one of the incorporated terms.

This matters most in commodity trading chains, where the original charterer may have sold the cargo multiple times by the time the vessel arrives at the discharge port. The party actually directing discharge operations at the discharging terminal may have no direct knowledge of the charter party terms and discovers the demurrage exposure only when the demand arrives.

Standard charter party forms

GENCON 2022

BIMCO GENCON 2022 is the current version of the General Charter, the most widely used general-purpose voyage charter form worldwide. It replaced GENCON 1994.

The demurrage provision (Clause 13) states: “Demurrage shall be payable by the Charterers at the rate stated in Box 19 and despatch shall be payable by the Owners at half the demurrage rate on all laytime saved.” Clause 13 then addresses continuity: demurrage accrues without interruption except where the vessel is not available to perform the service required through no fault of the charterer.

The weather exclusion in GENCON 2022 was tightened from the 1994 version: bad weather must be the “operative cause” of any operational stoppage, not merely contemporaneous with it. This reduces the charterer’s ability to claim weather exclusions where multiple causes operate simultaneously.

The BIMCO Laytime Definitions for Charter Parties 2013 are incorporated by reference into GENCON 2022, providing a common definitional baseline for terms like “weather working day,” “running days,” and “expiry of laytime.”

Asbatankvoy

Asbatankvoy (the Association of Ship Brokers and Agents Tanker Voyage Charter Party, maintained by BIMCO) is the most widely used tanker voyage form in the spot tanker market, particularly for crude oil fixtures in the Atlantic basin.

Key demurrage features: Laytime commences six hours after NOR receipt or on arrival at berth, whichever is earlier (Clause 6). The demurrage rate is set in Part I and accrues on a running-hour basis (Clause 7). Clause 8 halves the demurrage rate for delays caused by breakdown of shore machinery or equipment, or by explosion, fire, or strike. Clause 9 provides the pumping warranty (24-hour discharge or 100 psi manifold pressure). The time bar (typically rider clause or Clause 7 amendment) requires claim submission within 90 days of completion of last discharge.

Shellvoy 6

Shellvoy 6, the Shell voyage charter party (Shell Vetting 2014 with subsequent updates), is used for Shell-group crude and products fixtures. It incorporates BIMCO LAYTIMEDEFS 2013, sets a 90-day time bar, and contains a detailed pumping clause with a performance warranty and a retroactive laytime deduction mechanism for pumping failures.

BPVOY 5

BPVOY 5 (BP Shipping voyage charter party, 2008 with updates) uses a 60-day time bar from completion of discharge, the shortest of the major forms. This creates a tighter administrative requirement for owners chartering to BP entities.

Dispute resolution

LMAA, SCMA, and SMA arbitration

Demurrage claims are the single highest-volume category of dispute in London maritime arbitration. The London Maritime Arbitrators Association (LMAA) reports that laytime and demurrage disputes consistently represent 40 to 50 percent of all LMAA references by number. Claims are concentrated in the USD 50,000 to USD 500,000 range, making arbitration commercially sensible; litigation in the Commercial Court is rarely cost-efficient at those amounts.

The Small Claims Procedure of the LMAA (for claims below USD 100,000) and the Intermediate Claims Procedure (for claims below USD 400,000) allow expedited determinations by a sole arbitrator on documents alone, without oral hearings. This gives shipowners an economically viable enforcement route even for modest claims.

The Singapore Chamber of Maritime Arbitration (SCMA) handles demurrage disputes in the Asian markets, particularly for fixtures involving Singapore charterers and Far Eastern loadings or discharges. The Society of Maritime Arbitrators in New York (SMA) serves the US and Americas markets.

Governing law and jurisdiction

Most standard charter party forms specify English law and London arbitration. GENCON 2022 Box 23 defaults to English law and LMAA arbitration. Asbatankvoy is drafted to accommodate either English or New York law; the form’s rider clauses typically specify one.

Where English law governs, the key textbooks are John Schofield’s Laytime and Demurrage (8th edition, 2021, Informa Law) and Cooke, Young, Taylor, Kimball, Martowski, Lambert and Sturley, Voyage Charters (5th edition, 2022, Informa Law). These are the standard references cited in LMAA awards. The 8th edition of Schofield incorporates The Eternal Bliss Court of Appeal decision and its impact on the demurrage-as-exclusive-remedy doctrine.

Common arbitration issues

Cases that regularly appear in LMAA awards, SCMA determinations, and SMA awards:

NOR invalidity challenges: the charterer challenges the timing of NOR as premature (vessel not arrived or not ready) to push the laytime start forward.

Weather classification disputes: contested weather logs, disputed meteorological records, arguments about whether a rain shower prevented operations or merely made them less efficient.

Equipment failure attribution: owner claims shore conveyor breakdown is charterer’s account; charterer claims vessel’s discharge pump underperformance is owner’s account.

Time bar defects: missing documents, late submission, inadequate laytime calculation, incomplete signing of SOF.

Shifting time: time spent shifting the vessel between loading berths or between anchorage and berth, and whether it counts as laytime used.

Simultaneous operations: whether bunkering during cargo operations counts as laytime used or whether it runs concurrently and is therefore not counted.

Implications for owners, charterers, and trading houses

Owner operations

Shipowners active in the voyage charter market maintain dedicated demurrage departments. The demurrage receivable ledger can be substantial: for a fleet of 20 Capesize vessels making 16 voyages each per year with average demurrage income of USD 80,000 per voyage, the annual demurrage receivable is USD 25.6 million, with collection cycles of 60 to 180 days. Working-capital management of the demurrage book is a meaningful treasury function.

The department’s core disciplines are: constructing laytime statements within 30 days of each port call while memories are fresh; filing claims well ahead of time-bar deadlines; negotiating disputed claims to avoid arbitration costs; and escalating unresolved claims through to LMAA (or SCMA/SMA) within the statutory limitation period.

Charterer and trader operations

For commodity traders who voyage-charter vessels to transport physical cargo (refined oil products, iron ore, coal, grain, fertilizer), demurrage is a cost-centre that directly affects voyage profitability. A trader running 200 voyages per year with average demurrage exposure of USD 60,000 per voyage carries a USD 12 million annual demurrage liability.

The commercial control levers are: selection of efficient port/terminal combinations; pre-fixture analysis of historical port performance data; close monitoring of vessel arrival and NOR timing; rapid and proactive involvement with the terminal operator to minimize berth delays; vigorous review of each laytime calculation before settlement; and despatch recovery from efficient cargo operations.

Major commodity trading houses (Trafigura, Glencore, Vitol, Cargill, Bunge, COFCO International) each maintain substantial in-house demurrage teams. These teams function as specialist legal and commercial units, combining knowledge of charter party law, physical port operations, and financial settlement processes.

Insurance overlap

Charterers’ liability insurance (available through the P&I clubs’ charterers’ liability sections and in the specialist market) can cover some demurrage exposure, but the cover is typically for demurrage arising from the insured’s own breach, not from normal commercial risk. Owners should not assume P&I will cover demurrage claims: demurrage is a contractual debt, not an insured liability.

Limitations

This article addresses demurrage in the voyage charterparty context under English law, which governs the majority of international tramp shipping fixtures. Several important qualifications apply.

Non-English governing laws. French, US, Singapore, and Greek maritime law each have different approaches to laytime exceptions, demurrage characterization, and time bar construction. A claim governed by US law in SMA arbitration may be decided differently on the same facts than an English-law LMAA claim.

Container demurrage and detention. The term “demurrage” has a distinct meaning in liner and container shipping, referring to the charge assessed by the container line for failure to return an empty container to the terminal within the free time allowed. This is not related to voyage-charter laytime and is not covered here.

Time charter positions. Demurrage under a voyage sub-charter can affect the voyage charterer’s position under a head time charter, but the two contracts operate independently. The time-charterer who sub-charters a vessel on voyage terms is exposed to voyage-charter demurrage from the sub-charter but cannot pass that through to the disponent owner except under the terms of the time charter hire arrangement.

Electronic SOF developments. Several major ports (including Singapore MPA, Rotterdam, and ARA range terminals) are moving toward electronic statement of facts systems that capture port events with machine-verified timestamps. These systems reduce (but do not eliminate) SOF disputes. The legal status of eSOF records in arbitration is still developing; parties should verify whether their charter party language accommodates electronically authenticated port records.

Disputed NOR cases. Complex multi-berth and anchorage scenarios generate fact-intensive disputes that resist simple analysis. This article states the general legal framework; the specific facts of any NOR dispute require advice from a maritime lawyer familiar with the relevant charter party form and the port’s commercial customs.

See also

Charter party documents and tools

• Laytime
• Notice of Readiness
• Statement of Facts
• Reversible laytime and despatch
• Voyage charter party
• Time charter party
• Bill of lading

Calculators

• Demurrage and despatch calculator
• Demurrage time bar tracker
• Laytime calculator
• Reversible laytime calculator
• Despatch ATS vs AWTS calculator
• Statement of Facts builder
• Commercial laytime notice calculator
• Laytime / Demurrage days and USD
• Charter freight / demurrage deposit