CONTAINER DEMURRAGE AND DETENTION UNDER DUTCH LAW
The terms of the Bill of Lading usually contain a broadly formulated Merchant Clause, such as:
Merchant: includes the Shipper, Consignee, holder of this Bill of Lading, the receiver of the Goods and any Person owning, entitled to or claiming the possession of the Goods or of this Bill of Lading or anyone acting on behalf of this Person.
Carriers often appeal to the Merchant Clause to (attempt to) recover costs from a party that qualifies as a Merchant. These costs are usually included in the bill of lading. The freight and container storage costs (and the actual costs involved in their recovery) are practically always included.
Carriers tend to charge high rates, e.g. for their container parking fees, which are a welcome addition to the pressure on freight tariffs.
A distinction can be made between costs for container demurrage and container detention. Demurrage occurs when the container – after being unloaded from board – has not been taken receipt of by the cargo recipient within the permitted free period (‘free time’). Detention occurs when the cargo recipient who has taken receipt of the container and removes it from the terminal does not return the container to the terminal within the agreed time. Detention and demurrage can be formulated as follows in the bill of lading:
The carrier allows a period of free time for the use of the Containers and other equipment in accordance with the Tariff [..] at the Ports of Loading and Discharge. Free time commences from the day the Container and other equipment is collected by the Merchant or is discharged from the Vessel or is delivered to the Place of Delivery as the case may be. [..] Demurrage, per diem and detention charges will be levied and payable by the Merchant thereafter in accordance with the Tariff.
In practice, for example, demurrage costs tend to run up considerably. The question is whom the carrier can recover these demurrage costs from. The carrier’s contractual party is usually the sender (‘Shipper‘) and is consequently the party who the carrier will (have to) address in the first instance. In the event, for instance, that the sender has gone bankrupt or is (no longer) traceable, the carrier will try to recover the costs from another party that qualifies as Merchant pursuant to the Merchant Clause and can be held liable. The next party that the carrier will subsequently want to address is the consignee. Under Dutch law, the mere mention of the consignee on the Bill of Lading does not make him a party to the contract of carriage under a Bill of Lading. This is, however, effectively the case after presentation by the consignee of the Bill of Lading to the carrier. By joining, the consignee becomes a party to the contract of carriage and is also subject to the conditions applicable to the transport. There may even be a third party holding a Bill of Lading, who is not the sender or the consignee. By presenting the Bill of Lading, such holder also accedes to the contract of carriage under a Bill of Lading. In that case, the same scheme applies as it does for the consignee (who has presented the Bill of Lading) and the carrier can in principle recover the demurrage costs from this third-party holder of the Bill of Lading. The other parties mentioned under the Merchant Clause are basically not parties to the contract of carriage under a Bill of Lading. The fact that the carrier and the shipper have agreed on a certain definition of the Merchant in which a party can be classified does not suffice in order to bind a non-contracting party to a contract of carriage, which has not been entered into by itself or to which it does not become a party by accession. Indeed, the general principle of contract law is that contractual obligations are obligations which a party has voluntarily adopted, and that agreements basically only apply between the parties. The legal instrument of ‘benevolent intervention’ [Dutch: ‘zaakwaarneming’] may still be able to provide a solution for the carrier with respect to a possible claim against the owner of the goods: ‘any Person owning […] the Goods‘. However, other parties appear to remain outside the scope of the carrier.
In conclusion, a note on a ruling on demurrage costs. On 19 February 2020, the Interim Relief Court of the District Court of North Holland, location of Haarlem, rendered an interesting judgment on this matter. In this judgment, the party responsible for delivering the containers and having the containers transported, but which was not the carrier under the ‘non-negotiable waybills‘, claimed demurrage costs from the consignee who joined the contract of carriage. The question was as to whether those costs could be recovered from the consignee. According to the Court in preliminary relief proceedings, the correspondence between the parties mentioned above, as well as the Arrival Notices on which the consignee was mentioned as ‘demurrage payer’ and the invoices to which the consignee had not objected (and which had been paid in part by the consignee), could, in connection with the contract of carriage, serve as a basis for the consignee’s liability for the costs arising from demurrage. It should be noted that, in the present case, the legal basis is not derived from the mere fact that this party (in its capacity as consignee) had entered into the contract of carriage, but that, in the opinion of the interim relief court, a contractual relationship between the abovementioned parties would manifestly have arisen – independently of the contract of carriage.
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Whilst every care has been taken to ensure the accuracy of this information at the time of publication, the information is intended as guidance only. It should not be considered as legal advice and no rights can be derived from it.