Detention damages. At net or gross demurrage rate?

In London Arbitration 17/17 the tribunal had to decide on what compensation the owners were available in respect of detention at the discharge port. The vessel was chartered for a voyage from Rotterdam to 1-2 safe berths, Iskenderun.  NOR was tendered outside Iskenderun and was therefore invalid. The vessel was unable to enter the port because charterers, who were the owners of the cargo, had been unable to complete their on-sale of the cargo. Six weeks later the charterers ordered the vessel to proceed to another port in Turkey, Mersin.

 

Owners had agreed to the direction to discharge at Mersin and were entitled to compensation by way of detention from the time laytime would have commenced, had the Iskenderun NOR been valid,to completion of discharge at Mersin. The usual method of calculating damages for detention would be the applicable net demurrage rate plus the cost of bunkers for periods the vessel was underway. Here owners claimed only damages for detention, but at the gross demurrage rate.

 

The tribunal held charterers could offset their allowed laytime at the discharge port against their liability in detention once the vessel reached Mersin, even though Mersin was not a permitted discharge port under the charter. The owners were entitled to compensation for their actual loss and if that was based on the demurrage rate, it would be based on the net rate, after deduction of 4% brokers’ commission, and not the gross rate, as owners had claimed. This was so even though the charter did not provide for commission on detention claims.

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