MarIus

3.3.2.1 Introduction

A major case on the issue is the Court of Appeal’s decision in Aktieselskabet Reidar v Arcos (henceforth, “Reidar v Arcos”).(9) (1926) 25 Ll L Rep 513; [1927] KB 352. Much of the judicial and academic debate has concentrated upon the interpretation of this decision.

Reidar v Arcos concerned the vessel Sagatind which was chartered to carry a cargo of timber from Archangel, Russia, to Manchester. According to the rules in the Merchant Shipping Act, the vessel would be allowed to carry a full summer deck load of 850 standards only if she arrived at the English port of discharge before 31 October. Otherwise, she could only load the winter deck load – which would mean, less cargo. Together with the obligation to load within the laytime, the charterparty stipulated that the charterers had to load a “full and complete cargo”.

The vessel arrived at the port in Archangel in due time for loading a full and complete cargo of 850 standards. However, due to the charterer’s delay in cargo operations, she missed the deadline of 31 October and was, therefore, forced to limit its cargo to 544 standards instead of 850. The owner thus claimed deadfreight for the loss of 306 standards which arose from the very same delay giving rise to a claim for demurrage for not having completed cargo operations in a timely fashion.

A question then arose: Must the demurrage clause be construed as exhaustive, meaning that no additional damages could be recovered at all, or should it be interpreted as applicable only to damages for detention, leaving damages as deadfreight to be assessed at large?

As in the Eternal Bliss, also in Reidar v Arcos it was the very same delay that gave rise to further losses than the mere detention. The case therefore constitutes a dominant part of both the Commercial Court and the Court of Appeal’s analyses in the Eternal Bliss.

In Reidar v Arcos, the owner won through in both instances, but on the basis of different reasonings. In the first instance, Greer J held that the owner was entitled to recover both demurrage and deadfreight because the charterer had committed multiple breaches, namely of i) the obligation to load at the agreed rate and ii) the obligation to load a full and complete cargo which, in the judge’s view, would have consisted in a complete summer cargo of 850 standards. These breaches gave rise to distinct losses and, therefore, were held to be separately recoverable.(10) (1926) 25 Ll L Rep 513.

3.3.2.2 The Court of Appeal’s decision – An obscure ratio decidendi

In the appeal case,(11) [1927] KB 352. the Court reached the same conclusion, awarding damages in the form of deadfreight in addition to demurrage. However, it has been long debated whether the majority found that damages above demurrage were recoverable in the presence of only one breach, namely the failure to load the cargo within the laytime, or whether deadfreight was recoverable since it originated from a different breach of contract i.e., the failure to load a “full and complete” cargo.

The first judge, Bankes LJ, held that the facts disclosed only one breach of the charterparty, namely a breach of laytime. In his view, the obligation to load a “full and complete cargo” had to be assessed at the time in which the vessel sailed, when she could only lawfully have carried 544 standards. Despite recognising the existence of a single breach of contract, Bankes LJ held that two different claims were allowed since the breach gave rise to two separate heads of damages, one for the loss of use of the vessel and a separate one for the loss of 306 standards. The focus of his speech thus seems to be on the type of loss resulting from the single breach of contract. Of particular importance is a statement where he affirms that

“At one time I was inclined to think that where the parties had agreed a demurrage rate, the contract should be construed as one fixing the rate of damages for any breach of the obligation to load or discharge in a given time. On further consideration, I do not think that such a view is sound. I can find no authority on the point, and it is noticeable that in the Saxon Ship Co. case, sup., it was not suggested that the claim for demurrage excluded the additional claim for special damage arising from the detention of this vessel.”(12)Ibidem, at 516.

Bankes LJ’s approach is highly relevant in relation to the Eternal Bliss, where only one breach of contract occurred. However, as the following will show, it most likely represents a minority judgement, therefore not much weight can be placed on his words.

Another judge, Sargant LJ, held in fact that there clearly were two breaches of the charterparty, from which two separate losses arose. Even if Sargant LJ concluded differently from Bankes LJ on the number of breaches, it is interesting to consider what he says in relation to demurrage. He affirms that the demurrage clause “[…] fixes the damages for the detention of the ship at £25 a day” and then he goes on to ask himself:

“does the payment of a sum calculated on this basis form an agreed compensation for the loss which the owners have sustained in the circumstances of this case? I cannot think so. The loss inflicted on the owners and claimed by them is loss of another character, namely, loss of freight caused by the breach by the charterers of their contract to load a full and complete cargo as prescribed by Clause 1 of the charter-party.

[…]

The object of the second sentence of Clause 3 is to provide compensation for a detention of the vessel in the course of fulfilling this primary obligation, not to give compensation for the breach of the primary obligation itself. No doubt the same delay in loading, which might give to a claim for detention, also resulted in a breach of the obligation to load a full cargo, but the breach of this latter obligation caused a definite separate loss independent of and largely exceeding any loss arising from mere detention; […]”(13)Ibidem, at 518. (emphasis added)

Sargant J thus stresses that the breach of laytime caused a “definite separate loss” independent from the detention. In the view of this writer, the fact that the two judges reached the same conclusion, even if with different views on the number of breaches, indicates that what really matters for the recoverability of damages above demurrage is not the number of breaches; rather, what is decisive is whether there has incurred a separate type of loss from the one covered by the demurrage rate, which at its heart compensates the loss of fruitful use of the ship during its detention.

Nonetheless, the judgement of the third judge, Atkin LJ, has been the most controversial. Although he awards the owner damages for deadfreight in addition to demurrage, it is unclear whether, in his view, there was only one breach of the charterparty, whether two breaches happened or, indeed, if he considered it to be a breach of a composite obligation.

In his judgement, he affirms that

“The provisions as to demurrage quantify the damages not for the complete breach, but only such damages as arise from the detention of the vessel.”(14)Ibidem, at 516.

In this statement it is not entirely clear what is meant by “complete breach” and “only such damages as arise from the detention of the vessel”. However, if indeed Atkin LJ were to be interpreted as holding that only one breach had occurred, he would side with Bankes LJ and thus form a majority for the view that damages above demurrage can be recovered even when several heads of damages arise in the presence of a single breach of the charterparty, namely the breach of laytime.

This, in turn, would be conclusive in relation to the outcome of the Eternal Bliss. Reidar v Arcos, then, would constitute a binding precedent for the proposition that demurrage is not an exclusive remedy for all the damages arising out from the breach of the laytime provision and that additional damages may be recovered also in the absence of a separate breach of contract.

3.3.2.3 Reidar v Arcos as understood in later case law

Both later case law and legal literature have spilled a great deal of ink on Atkin’s judgement. Nonetheless, the ratio decidendi of Reidar v Arcos remains unclear.

On the one hand, some authorities have held that Reidar v Arcos represents a precedent for the proposition that damages above demurrage may be claimed only in the presence of an additional breach of charterparty. This conclusion relies on the interpretation of the majority as if there were two breaches of the charterparty. One interpretation of the kind is to be found in Suisse Atlantique.(15) See section 3.3.3 below. In dismissing the possibility to recover damages above demurrage, the judges in all three instances provided an analysis of Reidar v Arcos.

In the first instance of Suisse Atlantique, Mocatta J refers to Reidar v Arcos, without taking a clear position. It is submitted here that, in his view, Atkin LJ should be construed as seeing two breaches in the case at hand or, alternatively, a breach of a composite obligation. He indeed states that

[…] the difference between freight on 850 and 544 standards […] can be concisely stated to have been held recoverable by Lord Justice Bankes as damages for failure to load in the agreed time; by Lord Justice Atkin as damages for failure to load a full and complete cargo in the agreed time; and by Lord Justice Sargant as damages for failure to load a full and complete cargo.”(16) [1965] 1 Lloyd's Rep 166, at 176. (emphasis added)

In the Court of Appeal decision, however, the majority of the judges interpret Reidar v Arcos as a precedent for the proposition that where several breaches of contract occur, giving rise to independent losses, then demurrage will not be an exclusive remedy. Sellers LJ states that “the damages recovered for dead freight were for a separate breach of contract” and thus were independent from the detention, although arising from the same delay. This separate breach of contract gave rise to deadfreight as “an additional and independent loss unrelated to the loss of use”.(17)[1965] 1 Lloyd's Rep 533 at 539. Consequently, he deems that the case is one of several breaches giving rise to independent losses (the second scenario described in section 3.2.1 above). Again, the focus appears to be on the type of loss rather than the number of breaches.

The view that the majority in Reidar v Arcos had held that there were two breaches is also expressed, somehow hesitantly, by Diplock LJ, which states that

“Mr. Justice Greer, certainly Lord Justice Sargant, and, I think, Lord Justice Atkin, took the view that that constituted a breach of two obligations […]”(18)Ibidem, at 541. (emphasis added)

In the third instance of the Suisse Atlantique, the view that Reidar v Arcos represented a two-breach case is once again affirmed.(19) See [1966] 1 Lloyd's Rep 529 respectively at 549 and 555 (Upjohn LJ). This interpretation has been adopted also in certain later judgements. In 1991, in the Bonde,(20) [1991] 1 Lloyd's Rep 136. Potter J, whilst acknowledging the obscurity of the ratio decidendi of Reidar v Arcos, eventually concludes that Atkin LJ determined that there were two breaches.(21)Ibidem, at 141.

On the other hand, other judges have construed Reidar v Arcos differently, stating that Atkin LJ was to be understood as if there were only one breach of contract and that demurrage was not an exhaustive remedy for that single breach. According to this interpretation, the rationale behind Reidar v Arcos could be that separate damages are recoverable when they are of a different nature to the loss for detention.

In an obiter dictum in Chandris, discussed in section 3.3.1 above, Devlin J holds that the ratio decidendi of Reidar v Arcos is to be found in the speeches of Bankes and Atkin LJ.(22) [1949] 83 Ll L Rep 385, at 398. In his opinion, demurrage was not considered an exhaustive remedy in Reidar v Arcos. Like Bankes LJ in Reidar v Arcos, he was then prepared to accept that damages could be recoverable in addition to demurrage where the owner can demonstrate a separate ‘head of damages’, irrespective of the existence of a breach of a separate obligation.(23) This view is also observed by Schofield, 2021, at 453, para 6.52. He points out that

“That case decided a point up to then left undetermined. Inverkip Steamship Company, Ltd. V. Bunge & Co., sup., had decided that damages for detention for breach of the obligation to provide a cargo were covered by the demurrage clause. But supposing that the breach of such an obligation gave rise to damages of a different character, not for detention at all. The demurrage clause could not then provide the measure. Ought the clause to be construed as exhaustive, so that no damages which could not be measured by it could be recovered at all, or ought it to be construed merely as applying to damages for detention, leaving damages of any other character to be assessed at large? The Court of Appeal decided the latter.”(24)Ibidem, at 397-398. (emphasis added)

What the authority seems to suggest is that demurrage covers the detention of the vessel in the form of inability to use it and this will entail that “damages of a different character, not for detention at all”, as arguably is the case for cargo damages, are to be assessed at large.

Devlin J goes on to establish what is, in his view, the ratio decidendi of the Court of Appeal’s decision in Reidar v Arcos. He states that

“[…] there has been a breach of contract causing dead freight as damage and that dead freight is not excluded by the demurrage clause, which is not exhaustive; […]”(25)Ibidem, at 398.

This construction of the judgement of Devlin J was, however, not embraced by Potter J in the Bonde. Here, Potter J held that the correct interpretation of Devlin J’s view is that he deemed that the breach which Reidar v Arcos was concerned with was a breach of the obligation to provide a cargo, distinct from the obligation to load a cargo at the stipulated rate.(26) [1991] 1 Lloyd's Rep 136, at 141.

In the first instance judgement in the Altus,(27)[1985] 1 Lloyd’s Rep 423 at 435 “[…] I must treat the ratio decidendi of the case as being that where a charterer commits any breach, even if it is only one breach, […] the owner is entitled not only to the liquidated damages directly recoverable for the breach of the obligation to load (dead freight) or for the breach of the obligation with regard to detention (demurrage), but also for, in the first case, to the damages flowing indirectly or consequentially from any failure to load a complete cargo if there is such a failure.” Webster J again suggested that Atkin LJ decided that damages above demurrage are recoverable even when they arise from the single breach of laytime.

In later case law, however, not much weight seems to be placed on Webster J’s interpretation of Reidar v Arcos. In the Commercial Court’s decision in the Eternal Bliss, at paras 117 and 119, Webster J was held to be unreliable on the basis that he, in the court’s opinion, had relied on a faulty interpretation which he felt bound to follow. Scepticism towards the weight of his interpretation is also found in Potter J’s judgement in the Bonde.(28)[1991] 1 Lloyd's Rep 136, at 142. Therefore, not much weight seems to be placed on Webster J’s interpretation.

3.3.2.4 Reidar v Arcos as understood in legal theory

The uncertainty as to the correct interpretation of the judgment is also apparent in legal theory.

In Scrutton on Charterparties and Bills of Lading, the authors refer to Reidar v Arcos as authority for the proposition that if there is more than one breach, damages above demurrage may be recovered. The authors further state that in cases where there is no further breach of the charter beyond failure to load/discharge within laytime, but there nonetheless are losses in addition to the detention of the vessel, “the position is not clear”. However, they submit that “the better interpretation of Aktieselskabet Reidar v Arcos is that these losses can be recovered in addition to demurrage”,(29) Eder B. et al., (15-006), p. 383. clearly indicating in footnote 27 that Atkin, together with Bankes, is authority for this proposition.

In Voyage Charterers the authors express the view that the reasoning of the members of the Court in Reidar v Arcos “left in doubt” whether both a separate breach and a separate loss are needed for additional damages to be recoverable.(30) Cooke, Young et al., para 16.14, p. 450.

Carver on Charterparties refers to Reidar v Arcos (together with Suisse Atlantique) when stating that the demurrage clause benefits the charterer in the sense that he knows that he will not be exposed to greater liability in amount than the daily demurrage rate.(31)Bennet, H., para 9-175 p. 914, footnote 520. This in turn means that he interprets Reidar v Arcos as limiting the damages recoverable by the owner. He refers to Reidar v Arcos presenting the Court of Appeal’s judgement with Bankes LJ on the one hand and Atkin and Sargant LJJ on the other hand, endorsing the view that there were two breaches in the case at hand.(32)Ibidem, para 12-171, p. 1342.

3.3.2.5 Conclusion

In conclusion, the ratio decidendi of Reidar v Arcos is obscure and does not give a clear answer to the question of what demurrage liquidates. This uncertainty was also observed in the Eternal Bliss.

In the first instance decision in the Eternal Bliss, Baker J affirms that the majority in Reidar v Arcos had decided that there were two breaches of the charterparty. However, he goes further and raises what, in the view of this writer, constitutes an important point about the judgement; Baker J states that the conclusion that there were in fact two breaches does not imply that Reidar v Arcos decided that

“an additional and different breach [is] in law required before damages for a separate and different head of loss may be recovered.”(33)[2020] EWHC 2373 (Comm.), para 125.

In fact, he affirms that

“[d]isagreeing with Bankes LJ, as the majority did, that there was only one breach does not amount to or imply disagreement with his conclusion that the owner’s claim was sound if there were only one breach.”(34)Ibidem, para 37.

Reidar v Arcos does therefore, in his view, not entail that a separate breach is always required for recovering separate losses when the additional loss originates from the failure to complete cargo operations within the lay days.

Moreover, Baker J notes that the heated debate around Reidar v Arcos, although significant, has “distracted from the underlying arguments of principle that ought to drive the answer”.(35)Ibidem, para 5.

Later on, the Court of Appeal in the Eternal Bliss case pointed out that, despite several attempts to discern it, “the ratio of the case on this issue is obscure. It is better to recognise that fact than to continue to search for a clarity which does not exist.”(36) [2021] EWCA Civ 1712 at para 30.

Against this background, Reidar v Arcos does not represent clear authority for the proposition that a separate breach of the charterparty is always needed for recovering a separate loss. Even interpreting the judgement of Atkin LJ as taking the view that there were two breaches of contract giving rise to two separate losses, a conclusion on whether a separate breach is in each and every case needed in order to recover damages above demurrage cannot be derived from it.

What must be stressed is that even with different views on the number of breaches at least between Bankes LJ (one breach – two losses) and Sargant LJ (two breaches – two losses), all the judges arrive at the same conclusion that damages above demurrage were recoverable. This suggests, in the view of this writer, that what matters is the type of loss, rather than the number of breaches of contract.

The speeches of the different judges are, therefore, useful in understanding where the focus should be when investigating what demurrage covers and if damages above it may be recovered, namely on the type of loss rather than on other factors.

3.3.3.1 The first instance – demurrage as exhaustive remedy

In the first instance, the owner argued both that a) the charterer had committed a separate breach and b) that the breach of laytime had caused the owner losses additional to the detention of the vessel and, consequently, demurrage did not provide the correct measure of the owner’s damages.(39) The owner’s arguments are presented in [1965] 1 Lloyd's Rep 166, at 172. In relation to the latter argument, the owner relied on Bankes LJ’s judgement in Reidar v Arcos and argued that the loss of earnings on subsequent fixtures was equivalent to the deadfreight held recoverable in Reidar v Arcos.

Both arguments were rejected. As for the first one, Mocatta J held that there was no separate obligation that was breached. As for the second argument, i.e., the existence of a separate type of loss, Mocatta J concluded that the shipowner was prevented from establishing that their claim was other than one for ‘detention’. He held that Reidar v Arcos had the special feature that the delay in cargo operations affected the quantity of the cargo which could have been carried on the very same voyage in which the delay arose. There, the claim was for “loss of earnings under the charter” and “not for the detention”.(40)Ibidem, at 176. This feature was absent in Suisse Atlantique. Here, the loss suffered by the owner was indistinguishable, in principle, from the loss suffered by a shipowner under a single voyage charter when his ship is detained beyond laytime. The owner was thus not entitled to recover damages in addition to demurrage for the fact that the vessel was rendered less profitable to him as a consequence of the delay. The case is thus an example of scenario a) as described under section 3.2.1 above.

In Mocatta J’s view, in the case at hand there only was one obligation, namely to complete cargo operations within laytime, and one loss, i.e., the loss of prospective freight.(41)Ibidem, at 173. He holds that “for a claim for detention by a shipowner due to the laytime provisions in a charter being exceeded, the demurrage provisions quantify the damages recoverable”.(42) Ibidem, at 178. (emphasis added)

In his judgement, Mocatta J is inevitably confronted with the nature of demurrage. In this respect, he refers to Devlin J in Chandris and, by quoting his definition of demurrage, seems to embrace the same view as to what demurrage represents, i.e., “presumably the parties’ estimate of the loss of prospective freight which the owner is likely to suffer if his ship is detained beyond the lay days”, focusing on the concepts of “detention” and “loss of prospective freight” as the decisive factors in determining what demurrage covers. Quoting Scrutton on Charterparties, for which Mocatta J himself was responsible, he then affirms that “demurrage in its strict meaning is a sum agreed by the charterer to be paid as liquidated damages for delay beyond a stipulated time for loading or unloading”.(43)Ibidem, at 175.

In the first instance of the Eternal Bliss, Baker J argues that what is striking in the judgement is that Mocatta J’s focus is on “the type of loss for which the owner was claiming and on the demurrage rate being, and being only, a liquidation of an owner’s loss of freight caused by delay to the ship after expiry of laytime”.(44) [2020] EWHC 2373 (Comm.), para 74.

3.3.3.2 The Court of Appeal – some important statements regarding the nature of demurrage

The appeal brought by the owner was unanimously dismissed by Sellers, Harman and Diplock LJJ.

Sellers LJ holds that, in the case at stake, the only breach of contract was a breach of laytime. As to the “type of loss”, he further expresses agreement with the first-instance judge in finding that the owner could only put forward a claim for delay and detention of the vessel as no separate head of losses arose.

He states that demurrage represents the assessment

“of what was to be paid in the event of circumstances arising such as arose here”(45)[1965] 1 Lloyd's Rep 533(CA) at 539., i.e., “an agreed sum to be paid for the detention of vessels over the lay days. No doubt demurrage is based on a rough and agreed estimation of the owner’s loss through the vessel not being able to earn freight elsewhere”(46)Ibidem. (emphasis added)

Once again, the focus is on the type of loss.

Harman LJ, on his part, argues that in the case at hand there was only one breach, namely a breach of the obligation to complete cargo operations in a fixed time, which is “a breach of detention”(47)Ibidem, at 540. and “for breaches of that kind” the parties have established demurrage to apply.

Lastly, Diplock LJ reaches the same conclusion, stating that the quantum the parties have estimated in the demurrage clause is that “during the period of detention the vessel is unable to earn freight”(48)Ibidem. and since the claim in the case at hand is one for the inability to earn freight on subsequent fixtures, “that head of damages” was covered by the demurrage rate (emphasis added).

In drawing their conclusions, the judges express valuable views on the nature of demurrages clauses. In their opinion, demurrage is strictly tied to the detention of the vessel and its inability to earn freight elsewhere while detained, and it is precisely that kind of loss that demurrage covers. Nothing more seems to be included in the concept of demurrage by the judges in the case at hand.

3.3.3.3 The House of Lords

Eventually, the case was brought before the then-House of Lords. The judges unanimously confirmed the conclusion reached in the previous instances. Although the focus in the House of Lords’ judgement was shifted to the existence or not of a fundamental breach, the issue of the nature of demurrage was nonetheless touched upon.

Once again, demurrage is defined as the whole damages “for the detention of the vessel”.(49) [1966] 1 Lloyd's Rep 529, at 539 as per Lord Dilhorne. If a separate breach of a different obligation had been established, then Reidar v Arcos would have been authority for the proposition that damages were not limited to demurrage payments. In Suisse Atlantique, however, no separate breach was established, and Reidar v Arcos was thus not applicable.

3.3.3.4 Conclusion

In conclusion, Suisse Atlantique represents authority for the proposition that demurrage will be an exclusive remedy for the owner when there is neither a separate breach of charterparty nor a different kind of loss from the detention of the vessel and the consequent loss of earnings on future voyages.

The scenario is slightly different from the one in the Eternal Bliss: In the latter case, the cargo damage is clearly a different type of loss than the loss of earnings on future fixtures, which is intuitively the first loss that the owner anticipates and for what demurrage is agreed on. Therefore, the judgement cannot be seen as providing a clear answer to the issue of separate head of losses arising from a single breach of the charter.

Suisse Atlantique was referred to in both the High Court and the Court of Appeal in the Eternal Bliss. Baker J, upon conducting a detailed analysis of the three judgements, ultimately affirms that

“What was said about the nature of demurrage and what it covers does not amount to any conclusion, even obiter, that a separate and different breach of contract is required before unliquidated damages may be recovered for loss additional to and different in kind than the loss of the use of the ship for earning freight.”(50) [2020] EWHC 2373 (Comm.), para 85.

This view is also supported by Evans J in the Adelfa, where it is stated that the view expressed in Suisse Atlantique does not preclude that a different head of damages may be recovered upon certain circumstances.(51) [1988] 2 Lloyd’s Rep 466, at 472.

The Court of Appeal in the Eternal Bliss finds that not much weight can be placed on Suisse Atlantique since the only damage considered was the loss of freight earnings and nothing more.(52) [2021] EWCA Civ 1712, para 38. In that context, “[t]here was […] no need to consider what the position would have been if the delay had caused “a different kind” of loss”.(53)Ibidem, para 35.

It is difficult to conclude if the judges in the case at hand were referring to demurrage as covering the ‘detention of the vessel’ and her loss of profitability only because they were looking at demurrage through the lens of the facts of the specific case, in which no further losses arose, or whether they were trying to uncover the ultimate nature of demurrage giving a description which could apply in every single context. It is affirmed that demurrage is a sum paid for the detention of the vessel and her inability to earn freight while detained, but at any point it is stated that demurrage has exclusively this function and could not be doing something more.

Nonetheless, what is striking in the judgement is that all the speeches focus on the ‘type of loss’, as also stressed by Baker J in the Eternal Bliss, again suggesting that what is determinative in understanding whether a certain situation is covered or not by demurrage is the nature of the loss.

3.3.4.1 Damages above demurrage not recoverable: The Bonde

The only judgement that specifically addresses the question of law presented in the Eternal Bliss is the 1991 first-instance decision known as the Bonde.(60)[1991] 1 Lloyd's Rep 136.

The case concerned a sales contract on f.o.b. terms, which incorporated the terms of a charterparty concluded by the seller. An issue arose as to whether carrying charges, which had become payable by the buyer as a result of the seller’s delay in cargo operations, could be recovered separately or whether the demurrage clause covered all the consequences of the delay, thus representing an exclusive remedy for the buyer.

As there were multiple losses arising out of the delay, the scenario is precisely the same that arose in the Eternal Bliss, cf. scenario d) in section 3.2.1 above.

Potter J examines most of the decisions considered above. By examining the decisions in Reidar v Arcos (Court of Appeal) and Suisse Atlantique, he draws the conclusion that the payment of demurrage precludes a claim for additional damages.

Potter J also analyses the decision in the Adelfa and holds that even though Evans J reached a different conclusion on this point, his view was an obiter. As such it did not change his view, which can be summarised as follows:

“[…] where a charter-party contains a demurrage clause, then in order to recover damages in addition to demurrage for breach of the charterers’ obligation to complete loading within the lay days, it is a requirement that the plaintiff demonstrate that such additional loss is not only different in character from loss of use but stems from breach of an additional and/or independent obligation.”.(61)Ibidem, at 142. He went on to conclude that the same conclusion applied to an f.o.b. contract in which laytime and demurrage provisions are incorporated.(emphasis added)

In the opinion of this writer, neither the Bonde does, however, provide a conclusive answer on the issue.

Firstly, as a matter of the doctrine of precedent, the decision is a first-instance judgement, and as such non-binding on the Courts in the Eternal Bliss.(62) See [2021] EWCA Civ 1712, para 23.

Secondly, the Court of Appeal in the Eternal Bliss, while recognising that the Bonde was not binding on the Court, held that the decision had stood unchallenged for 30 years, and thus seemed to settle a position which market operators were satisfied with. This was seen as a “powerful reason” not to overturn it.

After the Bonde, there does not seem to exist further judicial comment on the issue, apart from a small commentary in the Luxmar in 2006.(63) [2006] Ll l Rep 543, vol.2, at 550 where Langley J, by limiting damages recoverable to demurrage, relied on the Bonde, stating that in order to recover additional damages there has to be a separate breach. The judgement, however, was deemed not persuasive by Baker J in the Commercial Court’s judgement in the Eternal Bliss, see [2020] EWHC 2373 (Comm.), para 138. This may lead to affirm that the position set out in the Bonde has stood unchanged since 1991 to this day, therefore representing the settled position in the view of shipping operators. This argument is highlighted in the Court of Appeal’s decision on the matter, where the judges see this as a strong reason not to overturn the decision.

However, in the view of this writer, the mere fact that the decision has not been challenged over the last thirty years does not amount to the conclusion that it was seen as the settled position. There may also be other reasons why there are no other commentaries. For instance, a potential reason is that cases like the Eternal Bliss and the Bonde are brought in arbitration and settled without being challenged before the Courts.