In voyage charter parties, the shipowner is not obligated to keep the ship in port for loading or unloading beyond the agreed laytime, or beyond the “demurrage” period. However, if the shipowner continues to wait, any damages arising from this delay must be compensated under certain conditions. After the laytime (at loading or unloading ports) ends, or after the agreed demurrage period has elapsed, if the ship is forced to wait longer without a valid reason, all damages incurred by the shipowner are entitled to compensation under the term “detention damages “.
It should be noted that the right to claim compensation for detention damages is not considered a liquidated claim, unlike demurrage claims. Therefore, in compensation claims arising from detention damages, the shipowner must prove both the duration of the delay and the damages incurred during this period.
Since the events leading to detention damages may occur in various ways, it is challenging to classify and address all possible scenarios in advance. Therefore, this article will provide examples of detention damages that may occur specifically in the context of loading and unloading ports.
I) Detention Damages at the Loading Port
a. Damages Related to Waiting Time
If the laytime has started at the loading port, but loading has not commenced by the end of this period or the agreed demurrage period, the shipowner has two options. The shipowner may consider that the contract could have been terminated or continue to wait for loading to occur. If the shipowner chooses the latter option and continues to wait for loading, it has the right to claim all damages resulting from the waiting time that exceeds the loading and agreed demurrage period.
Moreover, the shipowner is not obligated to commence the voyage without the payment of the demurrage accrued at the loading port or without adequate security. Provided that the shipowner acts reasonably, they may continue to wait and claim compensation for the entire duration of the additional waiting period caused by this delay.
Lastly, if the shipowner, following the instructions of the shipper, continues to wait even after the laytime or agreed demurrage period, it is entitled to claim compensation for the expenses and damages incurred during this extended waiting period.
b. Damages Related to the Loss of Goods
In some cases, where the goods are lost before the ship sets sail from the loading port to commence the voyage, the shipowner may also be entitled to claim compensation for detention damages. However, evaluations on this matter should be conducted differently, depending on whether the goods are individually specified. There is a distinction between individually specified goods (“concretely determined”) and goods specified only by type and kind (“generally determined”) concerning the rights granted to the shipowner in the event of loss.
If the contract specifies that the goods are individually determined and a portion is lost at the loading port due to unforeseen circumstances, the shipper, provided it does not worsen the shipowner’s situation, may be authorised to load other goods onto the ship. In this case, the shipper is obligated to complete the loading as soon as possible, bear the costs, and compensate for any damages resulting from this choice. Hence, the shipowner may claim damages for detention if the laytime (loading period) or agreed demurrage period is exceeded.
In cases where the generally determined goods, which are identified only by type and kind, are lost entirely after being loaded onto the ship or received by the captain for loading before the waiting period expires, the shipper must notify the shipowner without delay that they are prepared to deliver other goods to replace the lost ones and commence delivery within the same waiting period. Under these circumstances, the shipper is legally required to cover the additional expenses incurred due to this loading and compensate the shipowner for damages caused by the extended waiting time.
c. Damages Related to the Provision of Transport Documents
One of the most significant issues in commercial practice is the delay in providing the necessary documents for the cargo, even though the loading process has been completed. Moreover, if these documents are not accurate or sufficient, it can cause delays in various stages of the shipping process.
In all types of charter contracts, the shipper must provide the shipowner with the necessary documents (such as a copy of the bill of lading, customs documents) for the transportation of the goods within the time frame for receiving the goods. However, unless otherwise agreed upon, the laytime is considered a free time granted to the shipper to ensure the goods are loaded onto the ship. Therefore, as a principle, if the necessary documents for the voyage are provided within the laytime, there will be no delay. Nevertheless, as a general legal principle, the right to use the documents maliciously is not protected by the legal system. No one is allowed to act in bad faith while exercising their rights. In this regard, if the shipper intentionally delays providing the documents or prevents the ship from starting the voyage without a reasonable cause to leave the shipowner in a difficult situation, the shipowner may claim damages for the delay caused by the postponement of the voyage, even if the laytime has not yet ended.
On the other hand, if there is a delay in providing the necessary documents after the laytime or the agreed demurrage period has elapsed, the shipowner is naturally entitled to claim compensation for the damages caused by the delay, provided it may prove them. If the contracts include provisions for the shipowner to wait for a specific time (e.g., two or three hours) to obtain the necessary documents or complete other formalities after loading, the shipowner may also seek compensation for damages when these periods are exceeded.
Furthermore, if there are legal or factual inconsistencies in the documents, depending on the specific circumstances, the shipowner may seek compensation for any damages incurred. If these discrepancies cause delays, it would again be possible to claim compensation under detention damages. Accordingly, the shipowner and the shipper may be liable to the shipowner due to delays that may occur not only before the journey at the loading port but also during the journey or after the ship reaches the discharge port, due to failure to provide the documents related to the goods in a proper or correct manner. For example, if the ship has arrived at the unloading port, but irregularities or inaccuracies in the documents provided by the shipper or consignor at the loading port cause delays in completing customs, health, or port authority formalities before unloading, the shipowner may seek compensation for detention damages.
II) Detention Damages at the Unloading Port
a. Damages Related to the Receipt of Goods
At the unloading port, if the consignee fails to take delivery of the goods within the laytime or the agreed demurrage period after the shipowner issues a notice of readiness, the consignee will be in default. If the consignee does not take delivery of the goods within the laytime or the agreed demurrage period, the shipowner may discharge the goods after notifying the consignee, thereby discharging its obligation to deliver.
In some cases, it may not be possible to deliver the goods to the consignee. Three scenarios are foreseen in the legal provisions regarding this:
* Despite the notice of readiness, the consignee refuses to take delivery of the goods.
* Despite the notice of readiness, the consignee makes no statement regarding whether they will take delivery.
* The consignee cannot be found at the unloading port.
In the first scenario, the consignee, who is the addressee of the notice of readiness at the unloading port, either declares that they will not take delivery or, despite requesting delivery, fails to fulfill their obligations related to unloading and receiving the goods. As a result, unloading and delivery cannot begin. However, in this scenario, the laytime will start on the agreed date, or if not agreed upon, on the first calendar day following the receipt of the notice of readiness by the addressee, and it will continue uninterrupted according to the calendar, despite the consignee’s refusal to take delivery.
In the second scenario, similar to the first, the consignee is the addressee of the notice, and the laytime will commence on the agreed date or, if no specific date is agreed upon, on the first calendar day after the consignee receives the notice of readiness. However, in this scenario, the consignee does not show any intention regarding whether to take delivery. Despite this, the consignee has the right to use the waiting period, so the consignee who remains silent must be awaited, and the laytime will continue uninterrupted according to the calendar.
In the third scenario, unlike the first two, there is no consignee present to receive the goods. In this case, if a date is specified in the contract, the laytime will begin on the agreed date. If no clear provision is found in the contract, the shipowner must inform the shipper that the consignee cannot be found at the unloading port to give the notice of readiness. A critical principle for the shipowner, who has difficulty finding the consignee, is that, provided this situation is communicated to the shipper, the notice of readiness is deemed given on the date the attempt is made, and the laytime will start on the first calendar day following this date and will continue uninterrupted as a rule.
If any of these three scenarios listed above exist, the unloading and delivery operations cannot be performed at all. This will have negative consequences for the shipowner. Since the shipowner has brought the goods to the unloading port, failure to deliver them will prevent the shipowner from fulfilling the final stage of its obligation to transport goods by sea, as committed by the freight contract.
Furthermore, the undelivered goods remaining on board will prevent the shipowner from using the ship to generate income through other contracts. Additionally, in cases where the goods are perishable or their maintenance or preservation is costly, keeping them on the ship for a long time may pose significant burdens and risks.
To quickly resolve this adverse situation faced by the shipowner, if one of these three scenarios exists, the shipowner could notify the shipper that delivery could not be made for the specified reasons and to initiate judicial proceedings to deposit the goods. A critical point here is that the shipowner may claim detention damages for losses caused by the reasons and delays in taking delivery of the goods at the unloading port.
b. Damages Arising from the Prevention of the Ship from Leaving the Port Despite the Completion of Unloading
Even though unloading is completed, if obstacles arise that force the ship to continue waiting at the unloading port, the shipowner will have to bear the expenses related to the ship and personnel during the additional waiting period. Furthermore, as the delay will effectively result in the ship being detained at the unloading port, this situation will also prevent the ship from being subject to another freight contract or may cause significant economic loss and burdens for the shipowner due to the delay in the ship’s next voyage under an existing contract.
In such cases, it will be possible for the shipowner to claim compensation for damages incurred due to delays.
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