Who Should Pay for Demurrage if the Buyer Refuse to Clear the Containers in the Port?
We may encounter such a situation: The contract of carriage of goods by sea is entered by the seller and the carrier. The goods arrive at the port of destination successfully, but aren’t picked up by the buyer, which causes a huge cost at the port of destination. Therefore, a dispute arises regarding who, whether the buyer or the seller, should bear the costs. Under Chinese law, who should bear the cost?
According to Article 86 of the Maritime Law of the People's Republic of China, if the goods were not taken delivery of at the port of discharge or if the consignee has delayed or refused to take delivery of the goods, the Master may discharge the goods into warehouses or other appropriate places, and any expenses or risks arising therefrom shall be borne by the consignee.
Pursuant to the judgments and rulings of Chinese courts, the interpretation of the Article 86 is that the cost should be born by the seller who signed the contract, except that the buyer has taken delivery of the goods with a bill of lading. Because the parties to the contract is the seller and carrier, not including the buyer, the cost caused by the goods is supposed to be born by the seller or carrier, not the buyer. However, the buyer may have a bill of lading, and take the delivery of the goods with the bill of lading, and thereby the buyer enjoys the right rendered by the bill of lading. Therefore, the buyer has to perform the relevant obligations, which includes paying the fees caused by the goods. The judgments (2018)粤民终408号、(2015)闽民终字第1654号、(2013)浙海终字第110号 all support such interpretation of the Article 86.
If you have any legal dispute related to the cost or fees at the port of destination, please feel free to contact our professional and experienced team.