Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu
What are demurrage and detention and whether they are charges valid under the shipping law in Malaysia? 

SHIPPING LAW, INTERNATIONAL TRADE DEMURRAGE & DETENTION CHARGES

SHIPPING LAW, INTERNATIONAL TRADE DEMURRAGE & DETENTION charges

Recently there is a dispute between shipping lines and shippers on landside charges imposed. Shippers (represented by MNSC and FMFF) claimed shipping lines to be “profiteering” from these charges. Two of these charges are demurrage and detention. What are demurrage and detention and whether they are charges valid under the shipping law in Malaysia? 

What are demurrage and detention?

Most charterparties will provide agreed lay days for loading and discharging of cargo to be completed. Charterer is required to complete loading and discharge during this period. This period is known as “laytime” or “lay days“.

 However, some charterparties will provide for “additional” period (on top of laytime) for charterers to complete loading and discharge on payment of a fixed daily amount. This is termed demurrage. For example, if the agreed laytime in a charterparty is fixed for “3 days after which demurrage at RM1,000.00 for an additional 3 days” and if loading is completed on the 5th day, the liner is entitled to charge demurrage of RM2,000.00 (being an additional period of 2 days outside laytime to complete the loading operation).

By relying on the above example, what happened if loading cannot be completed on the 6th days and was completed on the 10th day. In this situation, the additional days outside the number of days fixed for demurrage is also known as “detention”. Liner is then entitled to be paid “detention charges” or “damages for detention“. On a side note, if demurrage is not provided in a charterparty, any additional days spent to complete loading and discharge will be treated as detention too.

Are demurrage and detention valid charges in Malaysia?

It must be remembered, demurrage and detention are purely creation of contract in English law. These are essentially “liquidated damages” in English law required to be paid in contract as a result of the charterer’s breach for its failure to load or discharge within laytime. In UK, liquidated damages are allowed to be claimed as long as they are not “extravagant and unconscionable” in which event it will be treated as a penalty.  

However, unlike in the UK, there is no distinction between liquidated damages and penalties in Malaysia. Any sum named in a contract as the amount to be paid in case of breach it is to be treated as penalty. In another words, demurrage and detention (which is essentially a sum named in a contract) is treated as a penalty in Malaysia. It follows that liner is only allowed to recover “reasonable compensation” under Section 75 of the Contracts Act notwithstanding what is stipulated as demurrage and detention in the charterparty. Liner is required to prove actual damage suffered before they are entitled to claim demurrage and detention.

Hence, whenever there is a claim for demurrage and detention in Malaysia, Charterer should insist upon the liner to show actual losses. Ask the liner what are the actual losses liner would suffer as a result of delay. Charterer in Malaysia should recognise that there is a difference between shipping law in Malaysia and that of the shipping law in the UK insofar as demurrage and detention is concerned.

Back to Latest Legal Updates

Recent Post

STRATA TITLES ACT – DEVELOPER MUST ACCOUNT FOR COMMON PROPERTY COMPENSATION: HIGH COURT IMPOSES CONSTRUCTIVE TRUST

In JMB Kelana Square v Perantara Properties Sdn Bhd & Ors [2025] 12 MLJ 51, the High Court held that a developer who received compensation for land compulsorily acquired for the LRT 3 project could not retain sums attributable to common property. Although the compensation was paid entirely to the developer as registered proprietor, the Court found that part of the acquired land constituted common property, and the developer therefore held RM6.05 million on constructive trust for the Joint Management Body. The decision affirms that JMBs have proprietary standing to recover compensation for common property and that courts will intervene to prevent unjust enrichment in strata developments.

Read More »
1 February ,2026 No Comments

UNFAIR DISMISSAL – MEDICAL LEAVE IS NOT MISCONDUCT: HIGH COURT UPHOLDS INDUSTRIAL COURT’S PROTECTION OF SICK EMPLOYEE

In Aerodarat Services Sdn Bhd v Lawerance Raj a/l Arrulsamy & Anor [2025] 11 MLJ 26, the High Court dismissed an employer’s judicial review and affirmed that prolonged medical leave does not, by itself, amount to misconduct justifying dismissal. The Court held that the employer failed to prove the critical element of intention not to return to work or unwillingness to perform contractual duties, despite high absenteeism caused by serious illness and surgery. The ruling reinforces that employers must distinguish between genuine illness and misconduct, and cannot rely on medical absence alone to terminate employment.

Read More »
1 February ,2026 No Comments

WILL AND PROBATE – COURT OF APPEAL INVALIDATES WILL OF 97-YEAR-OLD TESTATOR: CAPACITY, SUSPICION AND UNDUE INFLUENCE PROVED

In Kong Kin Lay & Ors v Kong Kin Siong & Ors [2025] 5 MLJ 891, the Court of Appeal set aside a will executed by a 97-year-old testator, holding that there was real doubt as to testamentary capacity, compounded by serious suspicious circumstances and undue influence by certain beneficiaries. The Court emphasised that while the “golden rule” is not a rule of law, failure to obtain medical confirmation of capacity where doubt exists is a grave omission. Credibility issues with the drafting solicitor, beneficiary involvement in the will’s preparation, and suppression of evidence led the Court to declare the will invalid and order intestacy.

Read More »
1 February ,2026 No Comments

NOT AN ‘AGREEMENT TO AGREE’: ENGLISH COURT OF APPEAL SAVES LONG-TERM SUPPLY CONTRACT DESPITE OPEN PRICE CLAUSE

In KSY Juice Blends UK Ltd v Citrosuco GmbH [2025] 2 Lloyd’s Rep 581, the UK Court of Appeal held that a long-term supply contract was not unenforceable merely because part of the price was stated as “open price to be fixed”. The Court implied a term that, in the absence of agreement, the price would be a reasonable or market price, noting that the product’s value could be objectively benchmarked against the market price of frozen concentrated orange juice. Emphasising that courts should preserve commercial bargains rather than destroy them, the decision confirms that section 8(2) of the Sale of Goods Act 1979 operates as a saving provision, not a bar to enforceability.

Read More »
1 February ,2026 No Comments

DISCOVERY APPLICATION – HIGH COURT ORDERS JPN TO DISCLOSE FAMILY TREE — STATUTORY RIGHT OVERRIDES ADMINISTRATIVE SECRECY

In V Kalanathan a/l Veeran v Ketua Pengarah Jabatan Pendaftaran Negara (JPN) & Ors [2025] 12 MLJ 529, the High Court directed JPN to disclose the family tree details of a deceased co-proprietor to assist in probate proceedings. The Court held that such information, recorded in JPN’s digital registers, constitutes a “document” under Order 24 rule 7A ROC 2012 and is not an official secret in the absence of a valid OSA certification. JPN’s reliance on internal circulars was rejected, as statutory rights under the Births and Deaths Registration Act 1957 cannot be curtailed by administrative policy. The ruling reinforces that discovery against government agencies is permissible where necessary to ensure the fair disposal of proceedings.

Read More »
1 February ,2026 No Comments

PROFESSIONAL NEGLIGENCE – SOLICITOR – PANEL SOLICITORS LIABLE: LITIGATION BRIEF DOES NOT EXCUSE FAILURE TO PROTECT BANK’S SECURITY

In Malayan Banking Bhd v Russell Lua Kok Hiyong & Ors [2025] 12 MLJ 599, the High Court held the bank’s former panel solicitors professionally negligent for failing to safeguard the bank’s proprietary interest in a charged property during litigation. The Court ruled that a solicitor’s duty to protect a client’s interests extends beyond the confines of a ‘litigation-only’ brief, particularly where the risk of loss is obvious and foreseeable. Limitation was held to run only when actual loss crystallised, and all partners were found jointly and severally liable under the Partnership Act 1961. The decision is a clear warning that solicitors must act proactively to protect client interests, even outside their immediate scope of instruction.

Read More »
1 February ,2026 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN
× Contact Us