Laytime and Demurrage

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Other laytime matters

Completion of Laytime

5.1 Laytime normally ends in one of two ways. It may either end upon the expiry of the laytime allowed and the commencement of demurrage, or upon the completion of cargo operations if these are concluded within the laytime allowed. 5.2 There is, however, a third alternative, which will be dealt with first, and that is where a ship arrives at a port and presents a valid notice of readiness triggering the commencement of laytime, but for some reason cargo operations never begin. This may be in relation to either loading or discharging. Laytime may even expire and demurrage begin. In that eventuality what happens is probably the same, whether or not laytime has expired. 5.3 The first question to be asked is whether the charter allows the vessel to be sent to a further load or discharge port, as the case may be. If it does, it probably provides for additional freight to be payable. If it doesn’t and the parties fail to agree the compensation payable for proceeding to a further port, what then? A case with some relevance is Ricargo Trading SA v Spliethoff’s Bevrachtingskntoor BV (The Tassos N) 1 In that case, the carrying voyage had been completed so the parties had no right to send the vessel to an additional port but the parties agreed she should so proceed. The parties also agreed payment of a lump sum but, in addition, the High Court held that demurrage was payable for the transit between ports, applying the maxim “once on demurrage, always on demurrage”. The difficulty with this case is that the parties agreed payment of a lump sum in addition, in effect a freight supplement, for calling at an additional port. Had they not done so, it would be easier to justify demurrage continuing between ports. It might be unwise to assume, pending further judicial clarification, that demurrage will always run between ports, particularly where additional freight is agreed. If it doesn’t, then laytime if that has not expired, or demurrage if it has, will probably cease on sailing from the first port. It is with the second alternative that this chapter is concerned. It is important to remember, however, that what constitutes loading and discharging for the purpose of apportioning responsibility for cargo, e.g. under the Hague Rules and similar enactments, will not necessarily be decisive of when cargo operations are complete for the purpose of deciding when laytime ends.

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5.4 What constitutes the end of cargo operations will be considered first in relation to dry cargo and secondly in relation to liquid cargoes, since different problems arise between the dry cargo and tanker trades. 5.5 Before discussing these, however, there are a number of general points to be considered to bring the subject into context. 5.6 The laytime allowed is allowed for the benefit of the Charterers. As Lord Denning MR said in Shipping Developments Corporation SA v V/O Sojuzneftexport:2

… they have bought their laytime and paid for it in the freight, and are entitled to use it in the way which suits them best …

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