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Demurrage payment at destination port

The problem of no pick-up at the port of destination is the main risk faced by domestic exporters in international trade, and the way for exporters to avoid bearing demurrage at the port of destination.
1. Avoid signing agency transportation contracts
When FOB trade terms are applicable and the consignee designates a NVOCC, the most appropriate way for the exporter (shipper) is to avoid signing the international freight forwarding contract or similar documents with the NVOCC, so as to avoid taking the responsibility on himself. Even if it is necessary to sign a similar contract, the shipper should try to clarify the agreed terms and avoid assuming responsibilities that are not equal to the rights.
2. Agreed responsibilities in trade terms.
Generally, the parties will strictly abide by the rules of trade terms to allocate the rights and obligations during trade, which also regulates a series of behaviors in trade, such as transportation, customs clearance, freight payment and so on. However, in some cases, due to the flexibility and convenience of the transaction, the parties will also modify some links after agreeing on the trade terms. At this time, the rights and obligations between the parties will be changed on the basis of the existing trade terms. Because domestic exporters lack the awareness of legal risk prevention, when the counterparty changes the agreement of trade terms, exporters still do not realize the importance of the change of rights and obligations.
In view of this, when signing the international transportation contract, the domestic exporter (shipper) should divide the scope of responsibility in strict accordance with the provisions of INCOTERMS2000 or 2010 or 2020, clarify the scope of expenses under FOB trade terms, and clearly exclude the relevant expenses incurred when the importer does not pay the freight or no one picks up the goods at the port of destination. Especially when the importer appoints the NVOCC, due to the principal-agent relationship between the importer and the NVOCC, the expenses incurred by the NVOCC due to the performance of the agency shall be borne by the principal (importer).
3. Timely notification obligation and consequences of violation.
The NVOCC is obliged to inform the cargo in transit and arrival at the port without delay for any reason. When signing the international transportation contract, the shipper should clarify the obligation of NVOCC, so that in case of abnormal cargo status, the shipper can timely know the risk information, so as to take disposal measures and reduce losses. Especially for the goods that have been released by telex, in the case that the NVOCC neither informs the shipper of the status of the goods nor delivers to the consignee, both parties should agree that the NVOCC should not only bear the expanded losses, but also bear liquidated damages.
4. Auction or resale
If no one picks up the goods at the port of destination or the importer does not pay the relevant fees, the carrier has the right to apply to the court to auction the goods to offset the relevant fees if the legal period specified in Article 88 of the maritime law is exceeded. In practice, unlike the usual domestic practice, auction is only one of the means to deal with goods because the situation abroad is more complex than that in China. In addition, the carrier can resell the goods, especially when the goods market is good, and the reselling of the carrier will not harm the interests of the exporter.
5. The carrier’s lien on the goods
Article 87 of the Maritime Code stipulates that “if the freight, contribution to general average, demurrage, necessary expenses advanced by the carrier for the goods and other expenses payable to the carrier have not been paid, and no appropriate guarantee has been provided, the carrier may retain its goods within a reasonable limit.”
The effect of lien is mainly reflected in the possession and priority of the lien holder, because lien is a legal security right, which cannot be excluded by agreement. Based on this, the shipper can only make the carrier lose the reason to exercise the lien by clearly specifying the scope of responsibility in the international transport contract. Then even if the carrier intends to exercise the lien, because there is no exercise basis, the carrier’s claim cannot be supported by law.