Demurrage review: separate time from other charges

Key takeaways

• Identify what each line is claiming and why.
• Distinguish proof of an expense from a right to recover it from the counterparty.
• Check whether different components rely on different provisions or presentation requirements.
• Avoid duplicate recovery assumptions when time and expense claims overlap.
• Approve a defined claim position rather than an unexplained aggregate total.

Start with the substance of the demand

BIMCO's laytime and demurrage programme treats demurrage and damages for detention as distinct topics. That limited reference reinforces the need to identify the basis of a demand rather than rely on its label. Check the current text and obtain advice on the actual claim components and applicable law.

A voyage file may contain a time account, supplier invoices, additional service requests and correspondence about alleged losses. Combining them into one spreadsheet can be convenient for internal administration. It should not conceal that the components may require different analysis.

Ask what the claimant says each amount represents. Is it calculated from an agreed time rate, reimbursement under an identified arrangement or damages said to arise from another obligation? The reviewer does not need to decide every legal question personally, but it must identify the questions that require advice.

A broad description such as “all delay costs” is insufficient for release. The principal should understand the basis on which the team proposes to seek each material component.

Distinguish expense evidence from recovery entitlement

A supplier invoice can support that a service was charged. It may not establish who authorised it, whether it was necessary, how it relates to the disputed event or whether another party must reimburse it. Those issues require the relevant records and contractual analysis.

The review should identify the service purpose, ordering authority and proposed allocation. If the expense was incurred under a separate arrangement, preserve that arrangement. Do not move the charge into the demurrage account merely because the same port call generated it.

Similarly, proof that a cost was paid is different from proof that it is recoverable. Payment may strengthen the evidence of expenditure, but it does not answer the legal basis for shifting the cost. The commercial principal needs both questions addressed before relying on the demand.

Where the invoice is provisional, disputed or subject to a credit, show that status. Claiming a gross figure without accounting for a known adjustment can overstate the factual premise even before the contractual issue is considered.

Test the relationship between time and expense

Time and expense components may arise from the same event. That common origin does not automatically make them jointly recoverable or mutually exclusive. The adviser should assess the relevant wording, alleged obligations and any overlap in the recovery sought.

The preparer should explain the relationship factually. Identify the period associated with the time claim, the service or loss associated with the additional amount and the reason both are advanced. This gives the reviewer a concrete basis for testing potential duplication or an unsupported additional head of claim.

Do not assume that adding a receipt avoids a legal limitation, or that using a different label changes the substance of a demand. Conversely, do not delete a potentially distinct component solely because it occurred during a period included in the time account. The actual basis requires review.

The commercial decision may be to advance supported components separately, seek more evidence or negotiate a defined package. Whatever route is chosen, the principal should see the distinction between the components and the remaining uncertainty.

Route each component for the review it needs

The table describes questions, not categories that are automatically recoverable. Technical allegations require qualified assessment. Legal questions should reach the appropriate adviser. Commercial negotiators need the resulting analysis before presenting a compromise as an informed recommendation.

The reviewer should also identify whether a component has its own notification or supporting-document issue. Do not assume that completing the demurrage submission process necessarily addresses every other demand included in the same message.

Fictional case: the port-cost bundle becomes a demurrage invoice

In a fictional fixture, the operations team sends the claims desk a bundle containing the time account and invoices for additional port services. The preparer places every amount under a single demurrage heading because all arose during the same delayed call.

The counterparty accepts the arithmetic of the time component but challenges the additional charges. The claimant initially responds by resending the invoices, without explaining the contractual basis for reimbursement. The exchange does not address the actual objection.

A reviewer separates the components. It confirms what each service was, who ordered it and which arrangement is said to support recovery. It also asks the adviser to assess the relationship between the additional demands and the time claim. The principal then decides which supported position to advance and which questions require further evidence.

The revised package is clearer even if the aggregate amount does not change. The fictional case illustrates why proof of expenditure and entitlement to reimbursement require different analysis; it does not decide whether any particular port charge is recoverable.

Review the package before authorising release

The final review should connect each material amount to its stated basis, evidence and status. Identify any disputed assumption or legal question that remains open. A principal should not discover after release that the team included an unreviewed component simply because it appeared in the voyage cost file.

Reconcile the invoice, calculation and narrative. If the cover letter describes a time claim while the total includes unrelated service charges, the package does not explain itself accurately. Use clear component descriptions and the appropriate reviewed communication structure.

Confirm the scope of authority to advance or compromise the demands. A person authorised to issue the time calculation may not have authority to settle a separate loss claim. The mandate should be clear before negotiations turn an administrative package into a substantive agreement.

After release, track responses by component. Acceptance of one line, a request for evidence on another and rejection of a third should not be reduced to a single claim status. The next decision depends on the specific response and the position remaining open.

Common mistakes

The main mistake is placing every cost from a delayed port call under a demurrage label. Another is treating a paid invoice as proof that the charterer must reimburse it. Identify the factual and contractual basis separately.

Avoid assuming that different labels eliminate overlap in the recovery sought. Do not let an aggregate negotiation hide unresolved authority or submission questions. Finally, track component responses accurately so a limited agreement is not described as acceptance or rejection of the entire package.

Where Zeaclub fits

Zeaclub provides a multi-party shared workspace for owners, charterers, brokers and port agents.

Zeaclub offers digitalised procedures across the voyage workflow.

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