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DAMAGES IN ADDITION TO DEMURRAGE: FURTHER ISSUES

Lloyd's Maritime and Commercial Law Quarterly

DAMAGES IN ADDITION TO DEMURRAGE: FURTHER ISSUES

Robert Gay *

This article considers three potential difficulties for the view taken by Bankes LJ in Reidar v Arcos, that if voyage charterers are in breach of their obligation to complete cargo operations within the laytime, then (without any breach of any other obligation) they may be liable for losses of separate types (such as damage to the vessel or to cargo) resulting from the delay, in addition to demurrage in respect of the delay itself. It is suggested that these potential consequences are not insuperable objections to Bankes LJ’s view. However, it may be that the replacement of the obligation of reasonable despatch by a fixed laytime will inevitably lead to paradoxical consequences in one way or another.
Simplifying the facts slightly, in Reidar v Arcos 1 a ship was voyage-chartered to carry a cargo of timber from Archangel to Manchester. The quantity the charterers were to load was specified only as a full and complete cargo of timber, and the freight was at a rate per “standard” of timber. The ship arrived at the load port on 3 October 1923; if loading had been completed within the laytime allowed, she could have sailed on 17 October and so could have arrived at the discharge port before the end of October, and thus she could lawfully have carried a full cargo including a summer deckload, in total 850 standards. However, if the ship arrived in the UK after the end of October, she could lawfully carry only a winter deckload and so could carry only 544 standards. On 23 October the position was that the ship could not reach Manchester before the end of October and only 544 standards had been loaded, and so the ship sailed with only 544 standards. The owners claimed demurrage for the delay in loading, and in addition damages (“deadfreight”) for the loss of the freight on 306 standards. The Court of Appeal held unanimously that the owners were entitled to the deadfreight in addition to demurrage.
The owners’ case was that the charterers were in breach of their obligation to load a full cargo. This case was accepted by Greer J at first instance2 and by the majority (Sargant LJ3 and Atkin LJ4) in the Court of Appeal. Also, Greer J and all three members of the Court of Appeal held that the owners’ loss of freight was a separate loss from the loss that was dealt
* LMAA arbitrator (Supporting Member); barrister (non-practising).
1. Aktieselskabet Reidar v Arcos Ltd (Reidar v Arcos) (1926) 25 Ll L Rep 513; [1927] 1 KB 352 (CA).
2. Aktieselskabet Reidar v Arcos Ltd (1926) 25 Ll L Rep 30, 32.
3. (1926) 25 Ll L Rep 513, 517; [1927] 1 KB 352, 365–366.
4. (1926) 25 Ll L Rep 513, 516; [1927] 1 KB 352, 363. The judgments in the Court of Appeal in Reidar v Arcos were in fact reserved, but (as Diplock LJ remarked in Suisse Atlantique Société d’Armement Maritime SA v NV Rotterdamsche Kolen Centrale [1965] 1 Lloyd’s Rep 533 (CA), 541) they read as they had been given ex tempore, and it has proved difficult to analyse the judgment of Atkin LJ. He speaks of a single obligation on the charterer, but it is an obligation “to load a complete cargo within the lay days” (Reidar v Arcos (1926) 25 Ll L Rep 513, 516; [1927] 1 KB 352, 363) and it is clear that he, like Sargant LJ, would determine what is a complete cargo by what would have been a complete cargo if the charterer had completed loading within the laytime allowed. Thus, for Atkin LJ also the charterer’s breach did not consist simply in taking too long, but in not loading a complete cargo. (It may be helpful to compare a passage in the judgment of Sargant LJ where he says “The same result would I think follow if … were to be read as an agreement that the charterers might have some extra time for loading at an agreed rate per day. Even on this interpretation this could not in my view be read as extending further than an agreement to allow some extra time for the purpose of loading a full cargo” ((1926) 25 Ll L Rep 513, 518; [1927] 1 KB 352, 367).
Damages in addition to demurrage: further issues

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