Failure to incorporate terms and conditions could find shipping out of its depth

International Transport Intermediaries Club (ITIC) has warned its members of the need to incorporate terms and conditions into their business dealings in order to limit their potential exposure to liability.

ITIC cites the case of the agent at a discharge port who advised a shipper with cargo on board an inbound vessel that that the maximum draft was 40ft. Since the vessel’s draft was just under 41ft, it made an interim call to unload some cargo.

The agent subsequently received a claim from the shipper alleging that the
information it had provided was incorrect, and that vessels with drafts in excess of 40ft could still call at the port, but with two pilots on board, rather than one. The shipper argued that the agent should have been aware of this, and claimed $250,000 in respect of the costs of the wasted call and transporting the excess cargo.

The agent could not find the relevant provision relating to vessel draft on the website of the local pilots’ association, but was subsequently advised by the shipper that there was a link on the agent’s own website to an article explaining that vessels over 40ft could call at the port, providing there were two pilots on board. The agent contacted the local pilots’ association who confirmed that it was possible to call with a draft of 41ft and that the information was on its website, albeit not easy to find.

The agent had incorporated standard trading conditions which limited its liability to ten times its agency fee. This amounted to $36,500, which sum was accepted by the shipper and reimbursed to the agent by ITIC.

ITIC says the claim demonstrates the importance of businesses incorporating their terms and conditions into all their business dealings. ITIC’s terms and conditions, and guidelines for incorporating them, can be accessed at: https://www.itic-insure.com/knowledge/standard-trading-conditions/

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
charlotte.kirk@thomasmiller.com

ITIC reimburses broker accused by owner of breach of authority

International Transport Intermediaries Club (ITIC) recently represented a shipbroker accused by an owner of breach of warranty of authority in a dispute arising under a non-performing contract of affreightment (CoA).

The shipbrokers had negotiated the terms of a CoA between the charterers and the ship owners, receiving all their instructions from an agent purporting to act for the charterers. The CoA provided for a minimum of 18 shipments to take place over a 12-month period but, when the charterers failed to nominate any cargoes during the period of the CoA, the owners began proceedings against them, claiming damages of $3.1m. In their defence, the charterers denied being a party to the CoA and alleged that neither the shipbrokers nor the agents had authority to negotiate or enter into the CoA on their behalf.

The owners then joined the shipbrokers into the proceedings, alleging that they had breached their warranty of authority by representing to them that they were authorised by the charterers to conclude the CoA. They added that, if the brokers did not have such authority, then they would be liable for the loss suffered.

Liability for breach of warranty of authority does not, under English law, depend on any negligence on the part of the shipbroker. It is, however, specifically covered under ITIC’s rules. The shipbrokers maintained that they had not purported to represent the charterers and said that the owners had known that the brokers were acting on the agent’s instructions. The agents, meanwhile, claimed that they had been authorised to conclude the CoA.

After filing their defence, the charterers did not take an active part in the proceedings. The matter went to mediation between the remaining parties but did not settle on the day. Following the mediation, the owners indicated that they would be willing to accept a
substantial reduction in their claim. The brokers and agents were able to negotiate a
split of the settlement, with the agents paying the largest proportion. ITIC reimbursed the shipbrokers’ contribution of $260,000.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Ship agent liable for negligence leading to excessive dunnage disposal charges

International Transport Intermediaries Club (ITIC) has recently reported a dispute in which a ship agent in Australia was held liable to its shipowner principal for excessive charges demanded by a contractor for the disposal of dunnage and other materials related to the packing of cargo.

The agent was asked by its principal to arrange for the disposal of the materials upon the arrival of the principal’s ship in Australia, where strict local quarantine regulations apply. The agent engaged the services of a licensed disposal company which, although it had previously been used to dispose of ship’s garbage and other more hazardous waste, was not the company the agent normally used to dispose of dunnage.

The agent instructed the disposal company by telephone, without verifying the total cost. The materials were disposed of and the disposal company submitted its bill for approximately Aus$70,000. When the owner questioned the unusually high charges, the disposal company said it had charged its usual rate for licensed waste disposal. Subsequent enquiries by the agent, meanwhile, confirmed that the amount which its usual dunnage disposal company would charge to deal with dunnage and packing materials would have been approximately Aus$7,000.

The owner was unwilling to pay more than the reasonable costs which should have
been incurred. Because the agent had been negligent in its selection of the disposal company, ITIC reimbursed it the balance of the invoiced sum, amounting to Aus$63,000, which the agent was liable to pay the owner.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

ITIC settles dispute after Turkey bars entry to vessel with Cyprus connections

International Transport Intermediaries Club (ITIC) recently settled a dispute between a shipowner and its Turkish agent for losses arising from the refusal of Turkish port authorities to allow a vessel to berth because of its connection to Cyprus.

Turkish regulations prohibit any vessel directly or indirectly related to the Republic of Cyprus from calling at Turkish ports. The owner was an existing customer of the agency group appointed to handle the ship’s call in Turkey, but had not called at this particular Turkish port before.

In the agent’s pre-arrival messages to both owners and charterers, it mentioned that anything linking the vessel to Cyprus could lead to the ship not being allowed to berth. In spite of the agent’s express warning to its principal, a document was sent to the agent showing the address of the Panamanian-registered owning company as being ‘care-of’ a company in Cyprus. The agent failed to notice the address and the documentation was forwarded to the authorities.

After the vessel was refused permission to berth, the agent maintained that the owner had been warned about the embargo of all things Cypriot, and had failed to take the necessary action. The owner, meanwhile, claimed that the agent should have carefully reviewed the document. Accordingly, it deducted its alleged losses from other sums due to the agency group.

Although the owner ultimately agreed to accept 50 percent responsibility for the incident, this still left the agency group with a shortfall of $50,000, which was reimbursed by ITIC.


ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com


For more information:
Charlotte Kirk
ITIC
Tel. +44 (0)20 7338 0150
Fax. +44 (0)20 7338 0151
charlotte.kirk@thomasmiller.com

Chemical tanker owner fails in claim against agent for low-sulphur fuel costs

 

 

International Transport Intermediaries Club (ITIC) has reported a case in which the owner of a chemical tanker made an unsuccessful claim against a port agent for costs incurred in taking on additional low-sulphur fuel at a European port.   The port agent was appointed by the owners of the chemical tanker to attend the vessel in port. As the agent did not have an office at that particular port, it engaged its usual sub-agent to assist locally.   Prior to the vessel’s arrival, the master sent an email to the agent asking whether there were any restrictions on the type of fuel that could be used while the vessel was both alongside and at the port’s outer roads. The agent passed this request to its sub-agent, who in turn made inquiries of the local harbour-master, who was responsible for enforcing the EU directive relating to the use of low-sulphur fuel.   The harbour-master confirmed that the vessel was required to burn low-sulphur marine gas oil from the time of its arrival at the port’s outer roads. This advice was passed to the master, who duly followed these instructions.   As the vessel waited at anchorage it became clear to the master that he would not have sufficient low-sulphur fuel on board to complete operations and, as the vessel was unable to take on additional low-sulphur fuel at that port, the owners decided to divert to another port to replenish their supply. The vessel thereafter returned to its intended discharge port and operations proceeded without further disruption.   The agent subsequently received a claim from the owners of the vessel for approximately $150,000. The owners alleged that the information provided to them by their agent was incorrect, and that the local regulations only required vessels to burn low-sulphur fuel while alongside the berth, and not at anchorage. Because low-sulphur fuel was more expensive, the owners claimed for the additional costs incurred in burning this fuel when, they claimed, this was not necessary. They also claimed for the costs of diverting the vessel to take on the additional low-sulphur fuel.   It was established that the sub-agent had simply passed on the instructions received from the harbour-master, and that the agent had in turn passed this on, word for word, to the owners. Lawyers mounted a vigorous defence to the claim, which was subsequently withdrawn. ITIC covered the legal  costs of defending the agent.

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com

 

 

 

For more information:                             

Charlotte Kirk                                              

ITIC                                                               

Tel. +44 (0)20 7338 0150                          

Fax. +44 (0)20 7338 0151                         

charlotte.kirk@thomasmiller.com           

ITIC highlights value of diligent debt collection

ITIC has highlighted the value of diligently pursuing the collection of shipping industry debts in today’s difficult economic climate.

In its latest Claims Review, ITIC notes that a shipbroker acting for charterers was owed $25,000 in commission by an Indian voyage charterer under a charter party which provided that the charterer would deduct the commission. Having written to the charterer and not received a response, ITIC ascertained from local sources that the charterer was in serious financial trouble. It was also rumoured that the charterer was about to receive a large injection of finance from a foreign investor.

A local lawyer was appointed to pursue the debt, and a letter was sent to the charterer stating that, if it did not pay the outstanding commission, winding-up procedures would be started via an application to the local court. Again, the charterer did not respond with an offer of settlement.

ITIC, as promised, began the winding-up process, and this prompted an immediate payment to the shipbroker by the charterer.

The ITIC Claims Review also highlights a problem of a different nature faced by a ship agent in Canada, which was owed more than C$70,000 by a local company which had been declared bankrupt. ITIC instructed lawyers to have the ship agent properly listed as a creditor, and although there were other creditors, aspects of the agent’s debt took priority over many of the claimants and ITIC managed to recover C$42,998 on behalf of the ship agent.

ITIC says, “The case shows the importance of ensuring that claims are properly filed in liquidations.”

Copies of the ITIC Claim Review can be requested from: chris@merlinco.com

ITIC is managed by Thomas Miller. More details about the club and the services it offers can be found on ITIC’s website at www.itic-insure.com

For more information:                             

Charlotte Kirk                                              

ITIC                                                               

Tel. +44 (0)20 7338 0150   

charlotte.kirk@thomasmiller.com