In a 15 page judgment that may please some and surprise others, Males LJ, giving the judgment of the court, held that demurrage liquidates the whole of the damages arising from a charterer’s breach in failing to complete cargo operations within the laytime “and not merely some of them”.

Accordingly, if a shipowner seeks to recover damages in addition to demurrage arising from delay, it must prove a breach of a separate obligation. Mere delay by the charterer in loading or discharging beyond the agreed laytime will not be enough.

High Court decision reversed

The September 2020 decision of Mr Justice Andrew Baker has therefore been overturned. He had concluded, after a detailed review of the law and commentary, that demurrage serves only to liquidate loss of earnings resulting from delay to the ship through failure to complete operations within the laytime, and nothing more.

The Court of Appeal also held that the 1990 case of The Bonde, thought by one side of the debate to have settled an issue which has divided judges and academics for decades, was correctly decided. Andrew Baker J had reached the “firm and clear view” that The Bonde was based on “faulty reasoning”.