4 Final remarks
The impact of the Eternal Bliss is primarily felt by the market actors, who has awaited clarity on whether cargo recourse claims can be brought against charterers under a voyage charterer where delays in discharge causes damage.
The decision directly impacts the dry bulk market, where cargo damages represent a regular occurrence, especially in agricultural trades or in case of soybeans. As for the latter, cargo claims are frequent due to their high moisture content and especially when transported the long way from the US and Brazil – which are important exporters – to China, the world’s largest importer. Moreover, certain liquid cargoes can produce sediments over time, resulting in reduced cargo quality. This could for instance be an issue in the shipping market for oil and gas.
In practice, recourse cargo claims are generally brought by the owners’ P&I insurer. The Court of Appeal’s decision in the Eternal Bliss is therefore detrimental to owners and their P&I clubs. Generally, however, P&I clubs may insure both owners and charterers for cargo liability and each P&I club may therefore take a slightly different view on the case. While a decision like in the first instance will be popular with owners and P&I clubs whose membership is predominantly owner-based, charterers and any P&I insurer who primarily focuses on charterers, will take the opposite view. If the Supreme Court had overturned the appellate decision, the P&I clubs would, in a second instance, likely have charged higher premiums on insurance to charterers for cargo damage.
Moreover, it has been pointed out that the dispute could have been avoided if the parties had expressly defined “demurrage” in the charterparty.(1) See [2020] EWHC 2373 (Comm), para 28; [2021] EWCA Civ 1712, para 18. A change in how standard clauses are worded, with specific indication of which losses are liquidated by demurrage, should ultimately benefit the industry. In commercial practice, the parties do not frequently modify the wording of demurrage clauses found in standard forms, cf. section 2.3 above.
If demurrage must be construed as an all-damages clause, as held by the Court of Appeal, then standard forms may favour other formulations to avoid uncertainties, as for instance:
“Demurrage … has to be paid by charterers at the rate … and cover all the consequences of the delay” or “[…] The parties agree that demurrage shall be an exclusive remedy upon any breach of laytime”.
On the contrary, if demurrage were to be intended to cover only loss for detention, it could be specified that
“Demurrage … has to be paid by charterers at the rate … and cover the loss of use of the vessel and all the consequences of detention of the vessel in port”.