Once on Demurrage

What it does

The shorthand once on demurrage, always on demurrage expresses a long-established rule: once laytime has been used up and the vessel has passed into demurrage, time runs continuously, and the interruptions that stopped the laytime clock no longer apply. Sundays, holidays, weather, and similar excepted periods that would have suspended the count during laytime generally keep counting once demurrage has begun.

The reasoning is that demurrage is compensation for the charterer's failure to release the ship within the agreed time, and the charterer should not enjoy the same exceptions a second time after already overrunning. The rule is a default rather than an absolute: clear words in the charter can carry an exception forward into the demurrage period, but absent such words the clock simply keeps running through what would otherwise be excepted time.

Commercial effect

The principle sharply increases the cost of overrunning laytime, because the charterer loses the protections it enjoyed while laytime was running. A delay over a weekend that would have been free during laytime becomes fully chargeable once the ship is on demurrage, so the financial penalty for crossing the laytime boundary is steeper than the daily rate considered on its own would suggest.

This makes the laytime boundary a genuine cliff edge rather than a gentle slope, sharpening the incentive on the charterer to finish within the allowance. For the owner it provides reassurance that demurrage, once it starts, accrues without the stop-start interruptions that complicate the laytime calculation and that the charterer could otherwise use to reduce what it pays for the detained ship.

Owner's perspective

The owner relies on the principle to ensure that demurrage, once triggered, accumulates cleanly and continuously. The owner therefore resists any clause that would carry laytime exceptions forward into the demurrage period, since each such exception reopens the interruptions the rule is meant to close and reduces the compensation due for the vessel that has been held beyond its time.

Where a charterer seeks to except specified events even after demurrage has begun, the owner scrutinises the wording closely. The owner wants exceptions, if conceded at all, to be narrow and explicit, because a broadly drafted carry-forward can undo the practical effect of the rule and return the parties to the stop-start counting of the laytime period that demurrage is meant to leave behind.

Charterer's perspective

The charterer faces the full force of the principle and so has every reason to complete cargo work before laytime expires. Where it expects delays beyond its control to persist after laytime might run out, the charterer negotiates express wording to carry particular exceptions into the demurrage period, since without it those delays will be charged in full at the demurrage rate.

A charterer exposed to predictable interruptions, such as a port that regularly closes for weather, may press for an exception that survives the onset of demurrage for that specific cause. It must do so in clear terms, because the default rule runs against it and a vague reservation will not be enough to displace the continuous counting that demurrage normally brings once the allowance is gone.

Negotiation points

• Whether any laytime exceptions are expressly carried forward into the demurrage period, and if so which ones.
• The precision of any such carry-forward wording, since the default rule requires clear words to displace it.
• How the clause interacts with the weather and holiday exceptions that applied during laytime.
• Whether strikes or force majeure events are treated differently once demurrage has begun.

Common variations

• The plain default, where no laytime exceptions survive into the demurrage period.
• An express clause carrying a named exception (such as weather or strikes) forward into demurrage.
• Wording that suspends demurrage only for events within the owner's control or fault.
• A general exceptions clause drafted to apply throughout, displacing the default by clear words.