Emphasising on the costly consequences of failure on the part of shipping intermediaries to confirm in writing any initiative performed on behalf of their principals, the International Transport Intermediaries Club (ITIC) in the latest issue of its Claims Review, said that it has seen an increasing number of claims on its ship broking members relating to the receipt and forwarding of messages.
It is quintessential for shipbrokers to maintain accurate records and to reconfirm telephone conversations in writing, the article elaborates on how the mere failure of a shipbroker to provide written confirmation of the appointment of an arbitrator in a dispute between its principal, a charterer, and a ship owner, exposed the broker to a claim and costs in excess of $200,000 at a court-ordered mediation in the United States.
In the case at hand the shipbroker found itself in the middle of a dispute between the owners and charterers involving a demurrage claim in excess of $400,000. The charterers failed to settle and the owners initiated arbitration in London. Since the charters failed to either nominate an Arbitrator or file appearance in the proceedings initiated by the owners, the sole Arbitrator appointed by the owners passed an award against the charters for the full amount of the demurrage claim plus interest and costs – totalling to $575,000. The owners tried to collect the award against the charterers through the US courts. The charterer’s defence was that they had never been advised of the arbitration proceedings and therefore had no opportunity to appoint an arbitrator. The charterers also alleged that the shipbroker had failed to inform them about the arbitration, and brought the broker into the US action. The broker confirmed that it had advised the charterer by telephone about the appointment of an arbitrator, and again when arbitration proceedings had started but they had failed to confirm this by email and the charterer, well aware of the lack of written confirmation, simply denied that such telephone conversations had taken place. The case was concluded via mediation wherein the owners received an award of $450,000 of which the broker contributed $75,000 to the settlement; the legal costs of defending the broker were in excess of $140,000 – a total of $215,000. “This was a high price to pay for a simple failure to follow up a telephone conversation with an emailed confirmation” said ITIC.