Charterparty Commission Dispute Involving Two Brokers

A shipbroker who was a Member of ITIC (broker A) had been a co-broker in chartering a ship with another broker (broker B). Broker B was not a member of ITIC. During the negotiations, broker B added 2.5% commission into the charterparty, which already contained the industrystandard 2.5% commission clause, thus making 5% total commission payable. This was done without the consent of broker A. The owner did not object at this stage and the fixture was completed. However, once the brokers started invoicing for 5% commission the owner took exception and stated that he had only agreed to 2.5% commission for division, not 2.5% for each broker. The owner then stopped paying all commission. The brokers both stated that 5% in total was agreed in the charterparty, even though it was not the standard amount. The brokers stated that if it was not paid, they would have no option but to commence legal proceedings. As no further commission payments were made, broker B commenced arbitration proceedings and asked broker A if he wanted to be joined in. ITIC advised that we were happy to support broker A if he wanted to become a co-claimant. Broker A then decided to become a party to the proceedings. A lawyer was retained to represent both brokers. They proceeded to arrest the owner’s ship in New Zealand for security in the arbitration proceedings and security was awarded. The arbitration proceedings commenced and progressed very slowly over a number of years. Broker A was always keen to settle the matter, as he was always happy with 2.5% for division. The owner refused to settle and accused broker B of dishonest behaviour throughout the fixture. As the matter approached a hearing in London, broker A repeated his preference to settle the matter, rather than having to attend a hearing. On this basis, the Club managed to negotiate a settlement on behalf of broker A, for the 1.25% commission he was initially expecting. Broker B requested his own settlement.