2.3 Brief overview of demurrage standard clauses
Under English law, demurrage is always a contractual creation(1) In other systems demurrage may be prescribed by law or customs. For further discussions, see Tiberg, p. 512 and ff. and may, in practice, present various formulations.
As a starting point, the period for claiming demurrage therefore depends on what the parties have agreed in the contract. For instance, they may agree on a specific number of days to count as demurrage, i.e., “ten working days”.(2) This formulation can be found in Gencon 1976, where demurrage is defined in clause no. 7 as “ten running days on demurrage at the rate stated in Box 18 per day or pro rata for any part of a day, payable day by day, to be allowed Merchants altogether at ports of loading and discharging”, see https://www.bimco.org/-/media/BIMCO/Contracts-and-Clauses/Contracts/Sample-copies/Sample-copy-GENCON-76.ashx. This wording has been abandoned in the revised version of Gencon 1994 and in the latest 2022 version. This wording has recently given way to a more open formulation which only provides for a rate for demurrage, leaving the period unspecified. This formulation is frequently encountered in standard forms used in the shipping business.
The use of standard forms carries the advantage of rendering commercial transactions faster and reducing costs. The parties will, therefore, unlikely modify substantially the formulation of the clauses as provided for in standard forms.
A relatively standard example of a demurrage clause can be found, for instance, in the tanker voyage charterparty Asbatankvoy – a standard charterparty for the gas tanker trade. Here, the demurrage clause is formulated as follows:
“Charterer shall pay demurrage per running hour and pro rata for a part thereof at the rate specified in Part I for all time that loading and discharging and used laytime as elsewhere herein provided exceeds the allowed laytime elsewhere herein specified. […]”.(3) See http://www.petrogas.es/transporteatk/pdf/asbatankvoy.pdf. (emphasis added)
Similar clauses can be found e.g., in Gencon (2022), which is used in a variety of trades, and Shellvoy 5 (1996).
As it appears, demurrage clauses tend to define how demurrage is calculated ― or its duration in case the parties agree on a limited number of days on demurrage. However, the wording will seldom provide direct guidance on what losses demurrage is supposed to cover. Thus, the demurrage clause quoted above does not clarify whether demurrage is an exclusive remedy for the entirety of the consequences arising from the detention of the vessel after laytime has expired, or whether additional damages can be claimed when delays in loading and/or discharging have caused further consequences.
As the parties do not usually modify the standard formulation, except by indicating the amount payable in the specific contract, reading demurrage clauses inserted in a particular charterparty may often be of little help in construing the provision. This aspect appears evident also in the Eternal Bliss, cf. Chapter 3 below.
To understand what demurrage indeed liquidates, it is therefore of the essence to supplement the demurrage clause on the basis of other sources of law, the broader risk allocation between the parties to the charterparty and the commercial understanding of demurrage.