Disputes over demurrage and detention charges

Disputes often arise between container users (usually the consignees or consignors under bills of lading) and carriers under contracts for the carriage of goods by sea over rent charged for use of a container beyond the free time. At present, laws are silent on such issues as the rate for calculating such charges, the amounts that can be claimed and the time limits for lodging such claims.

Plaintiff and defendant

In current judicial practice, there is general agreement as to the identity of the parties with rights to, and the parties liable for, demurrage/detention charges for the use of a container beyond the free time.

The attitudes of courts in this regard are relatively clear-cut. For example, the Answers II to Questions on Trial Matters Relating to Disputes Over Demurrage/Detention Charges for the Use of Containers Beyond the Free Time Under Contracts for the Carriage of Goods by Sea (Answers), given by the Shanghai Municipal Higher People’s Court specify that if a dispute arises over such matters, the plaintiff may be:

1. a shipping company with legal personality;
2. a branch established in accordance with the law by a shipping company with legal personality;
3. if the shipping company has executed a container management agreement with a domestic shipping brokerage or shipping agency, the domestic shipping brokerage or shipping agency that it has appointed to be responsible for the recovery and management of containers in China; or
4. another legal person or organization that has the authority to impose demurrage/detention charges for the use of containers beyond the free time.

Henry Lee is a partner at LC & Co.

Steven Zhou is a lawyer at LC & Co.