STJ Decision May Render Demurrage Charges Illegal in Specific Cases: Understand the Implications

This week, the Superior Court of Justice (STJ) of Brazil upheld a decision by the São Paulo Court of Justice, which deemed the imposition of demurrage charges illegal in cases of improper detention by customs authorities.

In general terms, demurrage is not a penalty clause but rather compensation for contractual non-compliance, aimed at compensating the container owners for potential losses incurred due to the undue retention of containers by the importer for a period exceeding the agreed timeframe. This liability arises irrespective of the importer’s fault in the delay, as long as the delay occurs.

However, in this recent ruling, it was determined that the undue retention and seizure of containers by the importer is no longer their responsibility, as it was caused by an administrative decision made by the Brazilian Customs. Consequently, the concept of “as long as the delay occurs” becomes less broad, as responsibility can now be attributed to another party, in this case, the Brazilian Customs.

This interpretation may positively impact importers, protecting them from being excessively harmed by abusive demurrage charges imposed by carriers and shipping companies in situations where importers were unable to return the containers within the stipulated period due to circumstances beyond their control.

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