Resolution Method of Claim Demurrage & Port Charge Case in Indonesian EPC Contract for Power Plant Project

Abstract

Import activity is part of the arrangements for the Engineering Procurement and Construction (EPC) contract for a power plant project in Indonesia with International Commercial Term (Incoterm) 2000 Type Delivery Duty Unpaid (DDU). Type Incoterm DDU introduced since the year 2000 2010 and is widely used in a country that provides import tax exemption for strategic and special goods for example, power plant equipment. Using DDU Incoterm, International EPC contracts always raises a claim demurrage and port charges when the Owner liability for late processing of custom clearance. Claims filed by the Contractor normally include all costs incurred from the time the material arrived until the material can be sent to the project site. This is very detrimental to the Owner's expense if it’s recognized as the final total value of the claim. To avoid more losses on one parties, it can be used a method of calculating the portion separating responsibilities between the Owner and the Contractor that listed in clausal contract.