Costly missed message

A shipbroker acted on a fixture in which main terms were agreed. After the owners confirmed the recap they said to the broker that a certificate for the ship would be issued soon but that for reference, the charterer could check the certificate of a sister ship which was almost the same, and where “the navigation area is R1 as well’.

The certificate for the sister ship was not passed onto charterers as the shipbrokers’ themselves did not receive it as their spam filter blocked it. The shipbroker finally received it via a Whatsapp message but still had issues transferring it to their email system. Believing the actual certificate for the ship would be received shortly, the brokers did not bother to pass on the certificate or even just the comment that ‘navigation area is R1’. The charterers lifted subjects subsequently.

The issue arose when voyage instructions were passed on to a Master, who advised that the R1 notation meant that the ship could not sail beyond a certain distance from shore. This meant that the ship could not perform the intended voyage.

A without prejudice negotiation ensued, resulting in the charterparty being cancelled and a separate agreement being reached for the charter of the ship for a shorter period but at a higher rate.

During these negotiations, charterers became aware that owners had advised the shipbrokers of the R1 notation before charterers lifted subjects. As a result, charterers alleged a claim against the shipbrokers for breach of contract/negligence and claimed their losses for the cost of additional time and bunkers during the replacement one round trip charter, the costs of hiring a replacement ship for the balance of the charter period, additional insurance costs and legal costs.

There were issues as to who the broker owed a duty to, as charterers had their own broker, and the applicability of the commission agreement was in question. Further, the losses claimed were unclear and not evidenced. However, the charterers commenced arbitration against the shipbrokers. Legal advice was obtained by ITIC, on behalf of the shipbroker, which said it was likely the shipbroker would have a liability (either directly to the charterer, or the charterer would have a claim against the owner, who in turn would have a claim against the shipbroker for failing to pass on the message, which would be a more expensive option than the first).

Following receipt of further information, clarification of the claim, and arguments made regarding the charterers’ actual losses, the claim was settled for about US$380,000 which was around 70% of the initial full claim.