Short answer. The word demurrage covers two different things. Under a voyage charter it is the sum owed by the charterer for each day beyond the laytime allowed by the charterparty for loading and discharging; French law treats it as an addition to freight, it accrues at the agreed daily rate from the notice of readiness, and claims arising from the charter are time-barred after one year. In container carriage, demurrage and detention are the charges billed by the line when a container stays at the terminal, or off it, beyond the free time; they flow from the bill of lading and the line’s tariff, and are generally subject to the ordinary five-year limitation. In both cases the calculation is won on the documents.
A forty-eight thousand euro demurrage invoice for a bulk carrier that stayed three extra days alongside in Rouen. A twenty-seven thousand dollar demurrage and detention invoice for twelve containers stuck in Le Havre during a strike. In both cases the recipient does not know whether the sum is owed, how it was calculated, or how quickly he must react.
Voyage charter: laytime, demurrage, despatch
Under a voyage charter the owner places a vessel at the charterer’s disposal for one or more voyages (article L. 5423-13 of the French Transport Code), and the charterparty states the time allowed for loading and discharging. Where the charter fixes a separate period for each operation, those periods are not reversible and run separately (article R. 5423-21). Laytime, the days allowed, starts and is computed according to the custom of the port and, failing that, to maritime usage (article R. 5423-22). For each day beyond laytime the charterer owes demurrage, treated as an addition to freight (article R. 5423-23). These provisions are default rules (article L. 5423-1): the charterparty, almost always on an English form such as Gencon, Synacomex or Norgrain, sets the actual regime.
The mechanism is a time account. The owner wants the ship away quickly; he sells the charterer a loading and discharging period included in the freight, and charges beyond it. Three concepts drive the calculation. Laytime: the allowance, expressed in days, hours or a rate in tonnes per day, with exclusions for Sundays and holidays or weather, depending on the SHEX, SHINC and WWD clauses. Demurrage: the agreed daily rate, pro rata, without the laytime exclusions where the charter so provides, on the principle that once on demurrage, always on demurrage. Despatch: a bonus paid by the owner where operations were quicker than the laytime, often half the demurrage rate. A charter which does not say clearly whether load and discharge laytime are reversible, or whether time counts from the notice of readiness or from berthing, is a guaranteed dispute.
The calculation in practice: notice of readiness, statement of facts, time sheet
The time account starts with the notice of readiness, by which the master informs the charterer or his agent that the vessel has arrived at the agreed place and is ready to load or discharge. The validity of that notice is the first battleground: a vessel not arrived at the contractual place, whether port, berth or roads according to the charter; holds not ready; sanitary or customs formalities not completed; notice tendered outside the office hours stipulated. An invalid notice does not start time, and the owner loses the corresponding hours or days. The charter then usually allows a turn time, commonly six or twelve hours, before time begins to count.
Events are recorded in the statement of facts, signed by the master and the agent, which logs hour by hour the arrival, the tender of notice, berthing, the start and end of operations, and every interruption with its cause: rain, crane breakdown, waiting for cargo, waiting for documents, public holidays. From it the owner produces a time sheet applying the charter clauses and arriving at the demurrage figure. A charterer receiving that calculation must check it line by line: every interruption must be tied to an exclusion clause, and any interruption attributable to the vessel, whether breakdown, shifting of holds or a decision of the master, must be deducted. On a bulk carrier at twenty-five thousand dollars a day, a twelve-hour error is worth twelve and a half thousand dollars.
An order of magnitude, and the time bar that decides the claim
To fix ideas: a charter allowing five reversible days of laytime at a demurrage rate of twenty thousand dollars a day, with seven and a half days actually used, produces two and a half days of demurrage, fifty thousand dollars, subject to the exclusions. The arithmetic is simple; the characterisation of each interruption is not.
Charters also contain time bar clauses requiring the owner to present his claim, with supporting documents, within a short period after discharge, sometimes thirty or ninety days, failing which the claim is lost. That is the charterer’s first line of defence, and it is regularly decisive: a well-founded demurrage claim presented without the complete set of documents the clause lists is simply extinguished.
Challenging charterparty demurrage
Five grounds recur. Invalidity of the notice of readiness, which moves the starting point. Application of the charter’s exclusions to interruptions, particularly weather and port holidays. Attribution of interruptions to the vessel or the owner, who cannot charge for time lost through his own doing. Contractual time bar, where the claim was presented late or without the documents the clause requires. And the owner’s own breach in performing the voyage, which gives the charterer a damages claim capable of being set off against the demurrage.
Because demurrage is an addition to freight, the owner has a lien on the cargo for its recovery (article L. 5423-3) and, under many charters, a right to withhold delivery. The charterer, or the receiver where the charter is incorporated into the bill of lading, therefore has every interest in objecting quickly and in writing. Claims arising from a charterparty are time-barred after one year under article L. 5423-4 of the Transport Code. The period is short, it runs from the end of operations, and it cuts both ways: an owner who lets the year pass loses his demurrage, and a charterer who paid under protest loses his claim for repayment. Where the charter is governed by English law, as most forms are, limitation is six years but contractual time bars are applied strictly and the forum is usually London arbitration, which shapes strategy from the moment the calculation arrives.
Container demurrage and detention: a different regime altogether
In container carriage under a bill of lading, the line makes a container available to the shipper and recovers it at the destination terminal. It allows free time of a few days, varying by port and contract, then charges demurrage for each day the full container stays at the terminal beyond that free time, and detention for each day the container stays off the terminal, at the receiver’s premises, beyond the return allowance. These charges are not governed by the charterparty articles: they flow from the contract of carriage, the bill of lading conditions and the line’s published tariff, and are billed to the shipper, the receiver or the freight forwarder according to the bill and to who took delivery.
The figures escalate quickly, because the scales are progressive, for instance fifty euros a day for the first five days, then a hundred, then a hundred and fifty, and because blockages are rarely short: a customs inspection, a port strike, cargo refused by the consignee, a freight dispute, missing documents. Ten containers held for three weeks routinely exceed thirty thousand euros. The line then makes release of the containers or issue of the delivery order conditional on payment, which compounds the blockage.
Challenging container charges
The argument runs on four points. Free time: the number of days allowed, its starting point, whether discharge of the container, availability or arrival of the vessel, and whether it counts in calendar or working days, must match the contract of carriage and the tariff in force at the date of shipment, which the line must produce. Attribution: the receiver does not owe days lost through the line’s own doing, such as a container not made available, a terminal congested by the carrier, or a documentary error of the line, nor, depending on the clauses, days lost to force majeure; strikes and administrative closures produce varying outcomes and lines often grant extensions that must be requested in writing without delay.
Capacity as debtor: a receiver who has not taken delivery and is not party to the contract of carriage is not necessarily liable, whereas a forwarder who signed the bill of lading as shipper may well be. And the amount: the scales must have been brought to the other party’s notice, and a manifestly disproportionate charge can be argued as a penalty clause under article 1231-5 of the Civil Code where French law applies.
Limitation, and why it differs
A distinction has to be drawn. A claim against the carrier for loss or damage is time-barred after one year under article L. 5422-18 of the Transport Code. But the carrier’s own claim for container demurrage and detention is not covered by that provision; absent a contrary clause or a foreign law governing the bill, it falls under the ordinary five-year commercial limitation of article L. 110-4 of the Commercial Code.
Bills of lading issued by the major lines are usually subject to a foreign law and forum, which must be checked before any court challenge. In practice most container demurrage disputes settle by negotiation, the line preferring a rebate to litigation in a third country, which is precisely why a documented, reasoned objection sent within days is worth more than a writ sent months later.
Prevention: what to put in the contract
For a charterer, negotiation of the charterparty should cover the loading rate and the laytime exclusions, reversibility, the conditions of validity of the notice of readiness, the demurrage and despatch rates, the time bar clause and the governing law. For a shipper or receiver of containers, free time should be negotiated in the carriage contract or the annual service contract, with suspension of charges in the event of administrative blockage or strike, and the logistics of returning empty containers organised in advance.
For a forwarder, these charges should be passed on contractually to the client, and he should avoid appearing as shipper on the bill of lading without an express mandate. None of these clauses is expensive to negotiate, and together they prevent most of the invoices that end up disputed.
How the firm works
The firm acts for charterers and owners in laytime and demurrage disputes: verification of the time sheet against the charter and the statement of facts, challenge or recovery, negotiation, and proceedings before the commercial courts of the French ports, the Chambre arbitrale maritime de Paris or, with solicitors, London arbitration.
It acts for shippers, receivers and forwarders facing container demurrage and detention invoices: analysis of the bill of lading and the tariff, reasoned challenge to the line, negotiation of a rebate, obtaining release of the containers, and recourse against whoever caused the blockage. Based in Paris, the firm works across the French ports, from Le Havre to Marseille and from Dunkirk to Bordeaux, and in English with owners and lines.
Are you challenging or recovering demurrage, or are your containers held at the terminal? A consultation checks the calculation and sets the response to be made within the time limits.
Frequently asked questions
What is demurrage?
Under a voyage charter, the sum owed by the charterer for each day beyond the laytime allowed by the charterparty for loading and discharging, treated as an addition to freight (article R. 5423-23 of the Transport Code). In container carriage, the charge billed by the line when a container stays at the terminal beyond the free time, as distinct from detention off the terminal.
How is a vessel’s demurrage calculated?
From the notice of readiness and the statement of facts: time used is counted applying the charter’s exclusions for holidays, weather and interruptions attributable to the vessel, compared with the laytime allowed, and the excess is charged at the agreed daily rate, pro rata.
What are the time limits?
Claims arising from a charterparty are time-barred after one year (article L. 5423-4 of the Transport Code), and charterparties often impose shorter contractual time bars for presenting the claim. For container charges, the line’s claim is in principle subject to the five-year limitation, depending on the law governing the bill of lading.
Can container detention charges be challenged?
Yes: on the free time and its starting point, on whether the delay is attributable to the line or to force majeure, on whether the receiver or forwarder is truly the debtor, and on the amount of the tariff, which must have been brought to the other party’s notice.
Can the carrier hold the containers until demurrage is paid?
Under a charter, the owner has a lien on the cargo for freight, of which demurrage is an addition (article L. 5423-3). In container carriage, bills of lading generally provide a right of retention, so any challenge must be made quickly and, if necessary, backed by security to obtain release.
Further reading: ship arrest in France, maritime contracts and which regime applies, maritime litigation.
Written by Hervé Guyader, avocat at the Paris Bar, doctor of law. This content is general information and is no substitute for advice on your own matter.