The price of proving innocence

A ship agent was named as a second defendant by cargo interests in a claim for damage to significant quantities of imported aluminium.

The ship agent had not been involved with the damage to the cargo, but had merely been included in the legal proceedings. ITIC, on behalf of the ship agent requested that the shipowner instruct their lawyers to include the defence of the ship agent’s interests, along with those of the owner’s.

The owner’s P&I Club agreed to defend the ship agent and a judgement in favour of the defendants was passed. However this judgement was appealed and then overturned. In the meantime the ship owner went into administration and the P&I Club was no longer in a position to support the claim.

ITIC instructed the lawyer to continue defending the ship agent. The case was then heard by an appeal court who found in favour of the claimants. This decision was appealed in the Supreme Court, who passed judgement confirming that the case filed against the agent lacked substance. The total costs incurred amounted to US$ 95,000.

This claim shows the high price of proving innocence. As with a number of claims seen by ITIC, this example illustrates that you don’t need to make a mistake to be sued and you could find yourself on the receiving end of legal proceedings, even if you are not at fault. You should also read the report on legal costs on the back page of this document.