Kuwait: Demurrage Payments In Kuwait

Last Updated: 7 November 2017
Article by STA Law Firm

What is the mindset of an entrepreneur looking to dip his toes in a new venture? Profits? Maybe, certainty? Certainty is a factor that all entrepreneurs look for in a business opportunity. However, certainty is also the factor that is least available to them; primarily, if they are dealing in a speculative industry such as share market, or perhaps, the maritime sector. When a shipowner charters his vessel out, he should consider numerous uncertain factors that may cause obstacles in the future, like when the lay days commence and end, when the bill of lading will come into effect, when freight or hire becomes due and so on. Often the underlying facts of a breach in the maritime industry do not correlate to the obligations and liabilities of the parties as set out in the governing bill of lading and this uncertainty leads to disputes.

The Bill of Lading

During long-distance transportation, damage to the goods is inevitable due to various factors like transit through different climate zones. And varied weather conditions at sea. Therefore, the shipper, carrier, and consignee enter into a bill of lading which lays down the description of the cargo and clarifies the obligation of the parties in case of any uncertain events. It also states the particular condition of demurrage. This requirement specifies which of the parties shall be liable in the event of fault or negligence or if the empty container does not return within the period agreed upon between the parties.

The Role of  Bill of Lading

Unfortunately, as mentioned above, damages and delays are likely to occur in long-distance transportation. In the case of any dispute, the settled terms and conditions of the bill of lading shall be used to clarify the obligations of the parties. In this article, we will explain the provisions regarding demurrage payments and bill of lading in Kuwait.

The Kuwaiti Law Number 28 of 1980 enacting the Law of Merchant Shipping (the Maritime Law) has laid down the provisions surrounding shipping law in Kuwait. The Law has stated that the bill of lading shall be in writing and shall indicate the following  functions:

the bill of lading shall act as evidence in contracts for sea transport. A clause regarding the liability of the parties in the bill of lading should state the obligation of the parties once the goods have been loaded.

The correct and comprehensive description of the entire cargo should be mentioned in the bill of lading.

Any evidence regarding the contract that the parties want to state in the bill of lading.

Further, Kuwait has ratified to the Brussels Treaty of 1924 (for the Unification of Certain Special Rules of Bills of Lading) (the Hague Rule or the Haag Rules). Therefore, this Hague or Haag rules are therefore applicable under the Law of Kuwait and in common practice.

Paying Demurrage

Determining which party would bear the responsibility of paying the demurrage fee in case of delay of an empty container is an issue layered with uncertainty. To understand the idea of this the concept of demurrage, one has to be aware of the facts of the matter.

At the outset, the shipper commences the transportation by providing the shipping order to the carrier for a specific agreed destination. Therefore, the shipper is defined as the initiator of the trip, the ignition plug of the transport engine of worldwide transportation. The next step, as per Article 176 of the Maritime Law, the party, named as the carrier shall issue a bill of lading with the information provided by the shipper by including any details to the consignee. The carrier is the party transporting the goods on the shipping vessel. Sometimes, even the shipper can be held liable to pay the entire demurrage fees, if the consignee will not appear at the port to pay the necessary fees. This is not a usual practice, but our team of maritime lawyers noticed this on many occasions.

Article 179 (ii) of the Maritime Law states that 'the shipper would be responsible before the carrier for compensating for detriment resulting from the inaccuracy of the submitted information in respect of the commodities. The carrier, may not adhere to the inaccuracy of the information stated in the bill of lading before anyone other than the shipper.' Further, Article 4.3 of the Hague (Haag) Rules states that 'the shipper will not be liable for any loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault or neglect of the shipper, his agents or his servants.' Consequently, the entire process of transfer is mentioned in the shipping order.

As a result, the shipper can be held liable to pay the damages of the carrier, which arise due to misinformation about the shipper's consignment or any fault or negligent behavior of a person, that operates under the shipper's authority. Therefore, following this principle, the shipper will also be held liable for any misinformation about the consignee at the port of destination.

Demurrage Paid by the Consignee

The last party named in a bill of lading is the consignee. In the chain of transport, the consignee at the port of destination will organize and fulfill the procedures to deliver the goods. Depending on the agreement between the parties, the consignee may have agreed on the delivery order from the carrier, which means that he has to return the empty containers to the carrier or keep the cargo inside the container to use it as a mobile warehouse if he has explicit consent. In both cases, the container itself will affect the other parties financially. Article 175 (ii) of the Maritime Law states that the conditions of the bill of lading become valid for the consignee, who has agreed to the terms of the bill of lading once the consignee comes in contact with the carrier.

The consignee in contact with the carrier or the agent and receives the delivery order will, therefore, be liable fo demurrage fees in the case of delay in returning the empty containers or does not follow the agreed procedure of delivering goods transported inside the containers.

Conclusion

From our experience, parties in the international shipping market should not only rely on the stated article clauses but consult legal professionals to formulate contracts, which may fit the parties expectations. The dynamicity and the uncertainty of the shipping industry deem it difficult for parties to comprehend the future hindrances that may arise during the bill of lading. Further, the document(s) including the bill of lading should be read thoroughly as any minor mistake could lead to serious, expensive problems in the future.

This article was originally written by Kevin Paul with further contributions from George SK and Jay.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.