Strikes and Lockouts

Strikes and Lockouts. When the loading and/or discharging are interrupted by hindrances beyond the control of either the charterer or the shipowner, the effect on laytime and on demurrage can become quite significant because of the cost of the loss of time.

Such hindrances can occur because of “strikes” (a refusal to work by labourers) or “lockouts” (a closure of working areas by management, preventing workers from working). It is to the charterer’s advantage if these hindrances can be excepted from the counting of laytime or even time on demurrage. The general principle of “Once on demurrage, always on demurrage” may even become inoperative with appropriate words in the charterparty causing time on demurrage to be fully excluded or the payment of demurrage to be at half the agreed rate.

The GENCON Strike clause can apply to the counting of laytime. This came to be decided in The Onisilos, 1971. When the vessel arrived at the first of three discharging ports, a strike was already in progress. There was six days laytime remaining for the three discharging ports. While the vessel was waiting at the first port, the 1aytime expired. The charterers were held to Succeed in their claim to pay half demurrage for all time after laytime ended, including time at the other two discharging ports. It was stated that when the ship arrived at the port it found that there was a strike that prevented discharging. The ship waited for the strike to end. The waiting time counted as part of the laytime. When the laytime ended, the strike was still on. Because no demurrage was payable during time on laytime, the shipowner’s argument, that half demurrage was payable only while the ship was waiting for the strike to end, failed.

In The Saturnia, 1984, the judge said that the words allowing the charterer to pay half demurrage after time for discharging had expired suggested that the clause draftsman had in mind a strike or lockout taking effect before laytime had expired. The case dealt with the situation of a strike taking effect after laytime had expired. It was held that the half demurrage provision did not apply where laytime had expired before the discharge was affected by the strike, so because of the principle of “Once on (full) demurrage, always on (full) demurrage” the charterers were not protected.


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Written by Ship Inspection

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Strike clause