Demurrage & Detention (D&D) fees can explode, as Part 1 showed with a single $60,000 (₩80 million) container mishap.

But that initial shock? Often just the start.

The real fight begins when you try to dispute D&D charges, hitting a wall built of complex legal systems and biased contracts. Even clearly unfair fees are tough to challenge.

This article breaks down that wall: Why is fighting D&D so hard? How do carrier contracts stack the deck? How do laws differ across borders?

We’ll dissect the contractual traps, liability loopholes, billing duration disputes, fee reduction barriers, cost recovery impossibilities, and the carrier’s ultimate trump card – the lien.

Understand these pitfalls to navigate the D&D minefield.

Missed Part 1? We recommend reading it first to understand the root causes of exploding D&D charges.

The $63,000 D&D Nightmare: What’s Driving Crippling Demurrage & Detention Charges? (Part 1. Unpacking the Causes)

Key Legal Pitfalls in D&D Disputes Shippers Need to Know

Demurrage & Detention Analysis Part 2 – Section 1:
Hidden Legal Risks and Why Court Action Is Often Difficult

Faced with exorbitant D&D bills, many logistics managers understandably ask,

“If these charges are unfair, why can’t we pursue legal action?”

While seemingly straightforward, the legal reality surrounding demurrage and detention often favors the carriers. Rather than offering simple protection, the law frequently contains hidden complexities that make asserting shipper rights a challenging path. Here’s why:

1. Inherent Disadvantages for Shippers: Why Standard Carrier Contracts Limit Options

The foundation of many D&D disputes lies within the transport contract itself, which often inherently favors the carrier.

• The Power of Liquidated Damages Clauses:
  • D&D clauses are typically structured as liquidated damages – pre-agreed sums payable for delays.
  • This structure allows carriers to invoice D&D without proving the actual financial loss incurred due to the delay. Carriers generally don’t need to demonstrate specific damages, like lost business opportunities from a container’s late return.
  • In legal proceedings, this gives carriers a significant procedural advantage.
• Non-Negotiable Contracts:
  • Ocean freight contracts predominantly use standard terms drafted by carriers, leaving shippers little room for negotiation.
  • Small and medium-sized shippers, especially, rarely possess the bargaining power to secure more favorable free time or lower D&D rates.
• The Key Takeaway: Due to standard contract terms, shippers often begin disputes from a disadvantaged position.

2. Challenges in Assigning Liability: Who Pays?

When an unexpected D&D invoice arrives, the immediate question is, “Why are we being charged?”

However, pinpointing legal liability isn’t simple and varies significantly by jurisdiction.

• Primary Liability Typically Rests With…
  • The party who directly contracted with the carrier is usually considered primarily liable.
  • However, carriers frequently pursue consignees or their agents (like freight forwarders) at the destination port as well.
• In the UK: Tougher Standards for Proving Responsibility
  • UK courts generally require more than just a name on the Bill of Lading (B/L) to assign D&D liability.
  • Active involvement is crucial – did the party request the cargo’s release or take actions to claim it?
  • UK courts have often ruled against assigning liability to parties merely listed as a “notify” party or banks holding the B/L as collateral if they took no action regarding the cargo itself.
• Belgium & The Netherlands: Liability Triggered by a Simple Request
  • Conversely, courts in Belgium and the Netherlands may deem a simple request for cargo release sufficient grounds to assign liability to the requesting party.
  • Differing interpretations of contract clauses and national laws can lead to starkly different outcomes in similar situations.
• This jurisdictional variance makes predicting D&D liability complex for international shipments, often necessitating expert legal advice.

3. Issues with Billing Duration: How Long Can D&D Charges Accrue?

As container delays extend, D&D charges escalate rapidly. Is there a legal limit on how long carriers can continue billing?

While courts generally agree billing cannot continue indefinitely, the precise cutoff point varies and often lacks clarity.

• In the UK: Charges End When the Contract Is “Frustrated”
  • Following the MSC v Cottonex ruling, D&D charges may only accrue until returning the container becomes objectively impossible (e.g., cargo confiscated, container permanently lost).
  • Beyond this point, the claim potentially shifts from ongoing D&D to damages for the unreturned container’s value.
  • Determining the exact moment of “frustration,” however, is subjective and relies heavily on court interpretation.
• In Belgium: Potential One-Year Cap
  • Belgian courts often lean towards limiting D&D accumulation to one year.
  • If a container remains unreturned after this period, it might be deemed lost, potentially ending the carrier’s right to bill further D&D.
• In the U.S.: Focus on “Reasonableness”
  • U.S. law doesn’t set a specific time limit for D&D accrual.
  • However, under the Ocean Shipping Reform Act of 2022 (OSRA 2022), all D&D practices must be “reasonable.”
  • Shippers can challenge potentially unreasonable durations by filing complaints with the Federal Maritime Commission (FMC). However, the regulatory landscape remains somewhat uncertain, as carrier organizations have legally challenged the FMC’s rulemaking authority on D&D issues.
• The lack of international uniformity regarding billing duration adds another layer of legal uncertainty for shippers.

4. Can You Reduce Excessive Charges in Court?

As discussed in Part 1, D&D invoices can sometimes far exceed the carrier’s actual damages. Can a court be persuaded to reduce these amounts?

Again, the answer depends heavily on the jurisdiction.

• In the UK: Strict Adherence to Contract Terms
  • UK courts tend to strictly enforce contractual terms, even if the resulting D&D amount seems disproportionate to actual losses.
  • If the parties agreed to the rate beforehand, UK courts are generally reluctant to intervene and reduce the penalty.
• Belgium/Netherlands: Some Flexibility under Civil Law
  • The civil law systems in these countries grant courts the power to moderate contractual penalties deemed “manifestly unreasonable or excessive.”
  • However, the burden falls squarely on the shipper to prove the charges are disproportionate to the actual harm suffered by the carrier.
• U.S. System: Potential FMC Intervention via “Reasonableness”
  • The “reasonableness” standard mandated by OSRA 2022 applies not only to D&D practices but potentially also to the charge amounts.
  • Charges perceived as grossly disproportionate might be contested as an “unreasonable practice” subject to FMC review and potential enforcement.
  • A notable case involved Hapag-Lloyd settling for $2 million over D&D practices the FMC investigated as potentially unreasonable.

5. Challenges in Recovering D&D Costs: Limited Recourse for Recovering Payments

Perhaps most frustratingly for shippers, recovering paid D&D charges from third parties responsible for delays is extremely difficult.

This right of recourse (or subrogation) is severely limited in practice due to the complex web of separate contracts governing sales, carriage, forwarding, and insurance, each with its own terms and limitations.

• vs. Sellers/Buyers:
  • Sales contracts (governing goods) and transport contracts (governing carriage) are legally distinct.
  • Even if a seller’s late document delivery or a buyer’s failure to clear customs caused the D&D, recovering these charges as a breach of the sales contract is exceptionally difficult. Dutch courts, for example, have specifically ruled against such claims.
• vs. Inland Carriers (Truck/Rail/Barge):
  • Contracts often fall under international conventions (like CMR for road, CMNI for inland waterways, COTIF-CIM for rail).
  • These conventions typically cap the carrier’s liability, often limiting it to a multiple of the freight charge for the delayed leg (e.g., recovery for a $5,000 D&D charge caused by a $500 trucking delay might be capped at $500).
• vs. Freight Forwarders / Terminal Operators:
  • Most operate under standard trading conditions explicitly excluding liability for consequential or indirect losses, which typically includes D&D. Successfully pursuing them legally for D&D costs is therefore highly unlikely.
• vs. Insurers:
  • Standard cargo insurance or transport liability policies generally do not cover D&D charges.
  • Specific insurance products designed to cover shippers’ D&D costs are not widely available currently.
• The Bottom Line: The party initially billed for D&D—often the shipper or their forwarder—usually bears the cost with very limited avenues for recovery.

6. The Carrier’s Right of Lien: A Powerful Tool

Adding to the shipper’s challenges is the carrier’s potent legal tool: the right of lien. This allows them to retain possession of cargo until outstanding charges, including D&D, are paid.

• Why Liens Pose a Significant Risk:
  • Crucially, carriers can often exercise a lien over different shipments belonging to the same shipper to secure payment for D&D accrued on a previous, unrelated shipment.
  • Example: If D&D is owed for cargo A, the carrier might refuse to release cargo B (currently in their possession) until the debt for cargo A is settled.
  • This tactic can severely disrupt a shipper’s supply chain and cash flow, compelling many to “pay now, argue later,” even if they strongly dispute the D&D charges.
• The carrier’s lien thus transforms a D&D dispute from a mere financial issue into a critical operational risk.

The D&D Risk Doesn’t End Here

Across Parts 1 and 2 of this series, we’ve pulled back the curtain on Demurrage & Detention (D&D) risks. In Part 1, we saw how D&D costs can quickly spiral out of control due to factors often beyond your influence and questionable fee structures. Then, in Part 2, we navigated the legal maze, uncovering why fighting these charges is so challenging and why you often get stuck with the bill even when it’s not your fault.

But is that the whole story? Are you aware that the intensifying global tariff wars are adding another dangerous layer, making D&D risks even more unpredictable and potentially damaging?

So, how do you navigate this tangled web where standard D&D challenges meet complex tariff conflicts? What steps should you be taking right now to safeguard your business?

You’ll find the clear answers and a concrete action plan covering all of this in the upcoming in-depth D&D analysis report from TRADLINX. 

Prefer email? Contact us directly at min.so@tradlinx.com (Americas), sondre.lyndon@tradlinx.com (Europe) or henry.jo@tradlinx.com (EMEA/Asia)