Denmark: Liner terms prevail


Published: 23 June 2014

The Association is grateful to Aage Krogh, Pia Mark and Lisa Brændstrup of IUNO, Denmark for sharing this legal news with the Association and its members. Prepared with the assistance of Skuld Copenhagen.

Subject case

Members will be interested to note that in a recent Danish legal decision, which involved the carriage of wind turbine blades, the Danish court found that the standard liner terms of the Danish Merchant Shipping Act prevailed over terms included in the reverse side of the booking note.

The impact of this decision was significant with respect to the question of whether or not the carrier could claim demurrage against the shipper for a period of delay occurring at the port of loading. Attached is a copy of the article previously prepared by IUNO, discussing the subject case.

Charterparty advice

Whenever an owner or a charterer decides to contract for shipment on liner terms as opposed to a standard time or voyage charterparty, it is important to keep in mind the significant differences that arise. Liner terms put the risk and responsibility of time and cargo operations firmly on the side of the carrier, with the shipper and receiver simply having obligations to respectively supply and take delivery of the goods to be carried. Legally this is very significant.

In practice, however, the words “liner terms” may be used in a liberal fashion without having in mind precise legal definitions and consequences. As such, a blend or hybrid of terms may sometimes be used which contain elements of both “liner” and “voyager charter” terms. 

When contracting in a hybrid fashion, therefore, it may not be immediately clear whether the subject contract will be considered in one way or the other.

Express references to “liner terms”, however, and agreements as to freight which are commensurate with such terms, will lend weight to a shipper’s arguments that such terms are to apply. Indeed this appears to have influenced the court’s view in this case.

In order to “bring in” additional terms, such as terms relating to laytime and demurrage it may be necessary to make very express reference to these both in the fixture negotiation and in the front of the booking note, so that these can have the desired effect.

English law position

While this case was decided on the basis of Danish law, when one looks at English interpretations of such issues, as may be found in London Arbitration 1/12 of LMLN August 2012, similarities will be found in the approach to the contractual construction.

Therefore, parties contracting on the basis of English law should also keep in mind that when they say “liner terms”, very specific legal results may follow and it would require very express and clear terms to change the situation with respect to matters such as laytime and demurrage.

For further information, members are asked to contact the Association.