Late submission of demurrage payments

The most common claims against tanker brokers involve demurrage statements which have been received by the ship broker, but allegedly, not passed on to the charterers within the time limit set out in the charterparty.  ITIC has seen a whole range of reasons for the non-delivery, from the broker overlooking a message saying that the charterers had moved, to the far less avoidable sudden liquidation of the courier company responsible for delivering the statement to the charterers. 

The effect is the same - a demurrage claim of thousands of dollars is rejected by the charterers and the owners then claim against the ship broker.

Although the events leading up to these claims vary, some simple steps would have prevented many of them.  Firstly, it is important to have a proper system to note and monitor demurrage claims. There are many avoidable cases where the claim has been lost under a pile of paperwork. This may be the result of overstretched resources but it is still clear that the broker has been negligent.  This situation will apply whether or not you take the view that these post fixture services are undertaken free of charge or as part of the package of services for which commission is paid. 

Secondly, try to avoid the use of temporary support staff who do not appreciate the need to promptly pass on demurrage statements. There have been a number of cases where claims received have been put into filing cabinets to lie unactioned until the time limit has expired. The forwarding of documentation may appear to be a routine clerical task, but the effect of getting it wrong can be a claim of tens of thousands of dollars.

In addition to containing a time limit for making claims, some charterparty clauses have separate notice provisions that must be complied with.

A good example is Shellvoy 5, which provides that the owners shall notify the charterers within sixty days after completion of discharge if demurrage has been incurred.  A second and separate provision is that any demurrage claims, together with supporting documentation, shall be submitted within ninety days.  The second sentence of the clause makes it clear that both limits need to be complied with for the claim to be valid. If forwarding the notice is overlooked then it does not matter that the demurrage claim and documents are passed on to the charterers within the ninety day period.  The claim is already time barred. 

It is important to remember that it is advisable to be able to produce evidence that the demurrage statement was actually presented or submitted as set out in the clause.  Charterers may allege that they have no record of receiving a claim.  Always use a postal or courier service that will provide you with a receipt.  When the receipt is received, keep a copy in the file.

It is usual practice to send important documents by courier.  This raises the question as to what the position is if the courier company and not the ship broker is at fault.  In practice the courier service will have been ordered by the broker and will therefore be responsible to the broker and not the owner.  The shipment will be subject to the terms of the courier's air waybill.  These will limit the amount of compensation payable to the value of the physical packages, excluding any consequential loss, such as the demurrage claim becoming time barred. 

Entrusting the documents to a specialist courier company is a prudent step but the ship broker will have difficulty avoiding liability if he does not independently check to see that the package was delivered in time.  It is not enough to post it and forget it.  You must check that the demurrage claim has been delivered.

It is not uncommon for demurrage claims to be for considerable sums of money and adoption of these three rules will help you to avoid them:

  • Implement proper systems to note and monitor demurrage claims.
  • Use a courier service that records delivery.
  • Check the claim has been delivered.
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