03/05/2023

Settlement in ‘Eternal Bliss’ matter leaves Court of Appeal decision to stand on extent of damages due to laytime delays

The matter of K Line PTE Ltd v Priminds Shipping (HK) Co Ltd, which went to the Court of Appeal in October 2021, established a significant principle on the extent of demurrage, or the sum owed as liquidated damages for delay beyond stipulated or reasonable loading or unloading times (or laytime). The Court of Appeal’s ruling established a broad principle, that demurrage liquidates the whole of the damages arising from a charterer’s failure to complete cargo operations, including those beyond the simple delay to or unavailability of the vessel during the laytime, such as through loss of cargo owing to deterioration over that period. The ruling dealt with a debate between textbook writers and academic writers, and confirmed that the earlier decision in The Bonde [1991] was correct.

The parties to this case have now settled, and an appeal to the Supreme Court, which was scheduled for June, will now not proceed – and so Lord Justice Males’ ruling stands.

Christopher Hancock KC represented K Line Pte Ltd as counsel, alongside Alexander Wright KC of 4 Pump Court, instructed by Penningtons Manches Cooper LLP.

Reflecting on the Court of Appeal ruling, Mr Hancock KC said:

“This decision will bring certainty into this area of the law, which is welcome, particularly since the profession has for some years been working on the basis that the earlier decision in The Bonde has represented the law.

“It will be interesting to see, going forward, what the impact of the decision is in other fields. Although the Court of Appeal indicated that it did not necessarily follow that liquidated damages clauses in other areas, such as construction law, were to be equated with demurrage, the policy considerations that the Court prayed in aid would seem to be general in application.”