Law4u - Made in India

What Are Demurrage Disputes And How Are They Resolved?

Answer By law4u team

Demurrage disputes arise when a charterer or cargo receiver delays the loading or unloading of a vessel beyond the agreed free time, causing financial loss to the shipowner. Resolving these disputes requires understanding of contractual terms and applicable legal frameworks.

What Are Demurrage Disputes?

Definition:

Demurrage refers to the charges payable to a shipowner for delays caused by the charterer or consignee beyond the agreed laytime (free time for loading/unloading). Disputes arise when parties disagree on the liability or amount of demurrage.

Common Causes:

  • Delays in cargo readiness or customs clearance.
  • Port congestion or labor strikes.
  • Disagreements over calculation of laytime or exceptions.
  • Damage or shortage claims affecting unloading.

Legal and Contractual Framework

Charterparty Agreements

The contract between shipowner and charterer usually defines demurrage terms and conditions.

Indian Arbitration and Conciliation Act, 1996

Most demurrage disputes are resolved through arbitration as per arbitration clauses in shipping contracts.

The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017

Provides for court jurisdiction over maritime claims including demurrage disputes.

International Conventions and Practices

Disputes may also be resolved following internationally accepted rules such as the Hague-Visby Rules.

Dispute Resolution Methods

Negotiation:

Parties often attempt to settle disputes amicably to avoid litigation costs.

Mediation/Conciliation:

Neutral third parties may assist in reaching a settlement.

Arbitration:

A common and preferred method for demurrage disputes; arbitrators decide based on contract terms and evidence.

Court Litigation:

Used when arbitration is not an option or parties seek interim relief, like vessel arrest.

Example

A shipping company charters a vessel to load cargo at a Mumbai port. Due to delayed customs clearance, unloading exceeds the agreed laytime. The shipowner claims demurrage charges, but the charterer disputes the delay reason. Both parties resolve the dispute through arbitration, where the claim is partially upheld based on contract terms.

Our Verified Advocates

Get expert legal advice instantly.

Advocate Aakash Kumar Mishra

Advocate Aakash Kumar Mishra

Anticipatory Bail, Bankruptcy & Insolvency, Cheque Bounce, Child Custody, Consumer Court, Criminal, Divorce, Domestic Violence, Family, Labour & Service, Motor Accident, Property, Recovery, Arbitration, Armed Forces Tribunal, Banking & Finance, Breach of Contract, Civil, Court Marriage, Corporate, Customs & Central Excise, Cyber Crime, Documentation, High Court, Immigration, Insurance, International Law, Landlord & Tenant, Media and Entertainment, Medical Negligence, NCLT, Patent, Startup, RERA, Supreme Court, Succession Certificate, Trademark & Copyright, Wills Trusts, Revenue, R.T.I

Get Advice
Advocate Nagendra Shukla

Advocate Nagendra Shukla

Anticipatory Bail, Court Marriage, Criminal, Cyber Crime, Divorce, Domestic Violence, Family, Muslim Law, Wills Trusts, Motor Accident, R.T.I

Get Advice
Advocate Madhur Maheshwari

Advocate Madhur Maheshwari

Anticipatory Bail, Civil, Court Marriage, Criminal, Cyber Crime, Divorce, Domestic Violence, Family, High Court, Supreme Court, Armed Forces Tribunal, Banking & Finance, Child Custody, Consumer Court, R.T.I, Recovery, Muslim Law, Breach of Contract, Immigration, Insurance, International Law, Landlord & Tenant, Revenue, Wills Trusts, Motor Accident, Labour & Service, Arbitration, RERA, Succession Certificate

Get Advice
Advocate Sambasivarao Velpuri

Advocate Sambasivarao Velpuri

Anticipatory Bail, Cheque Bounce, Criminal, Divorce, Domestic Violence, Motor Accident

Get Advice
Advocate Rahul Singh Shekhawat

Advocate Rahul Singh Shekhawat

Criminal, Anticipatory Bail, Divorce, Civil, Cheque Bounce, Domestic Violence, Family, Motor Accident, Revenue

Get Advice
Advocate Chandra Prakash Nagal

Advocate Chandra Prakash Nagal

Anticipatory Bail, Arbitration, Bankruptcy & Insolvency, Banking & Finance, Civil, Consumer Court, Court Marriage, Criminal, Cyber Crime, Divorce, Domestic Violence, Family, Insurance, Labour & Service, Landlord & Tenant, Motor Accident, Property, R.T.I, Cheque Bounce

Get Advice
Advocate Azhar Khan

Advocate Azhar Khan

Anticipatory Bail,Cheque Bounce,Child Custody,Criminal,Documentation,High Court,Insurance,

Get Advice
Advocate Navin Jaiswal

Advocate Navin Jaiswal

Cheque Bounce, Consumer Court, Documentation, Labour & Service, Recovery, Corporate, Breach of Contract

Get Advice

public international law Related Questions

Discover clear and detailed answers to common questions about public international law. Learn about procedures and more in straightforward language.