Check it has been received

A shipbroker, who was a member of ITIC, was acting for a ship owner. The owners had a demurrage claim against the charterers and the charterparty contained the following time bars:

60 day notification – mid January 2008

90 day documented claim – mid February 2008

The owners passed the full documented claim to the shipbroker in December 2007 who sent it to the charterer via e-mail on the same day. This was in accordance with the charterers instructions to all brokers, which stated that all demurrage claims/ post deal claims/ notifications/ deviations/ detentions should be sent to that e-mail address.

The shipbroker did not receive any failure notice or rejection and on this basis believed that it had been sent successfully. However, the charterer’s instructions stated that the sender would receive an automated confirmation of receipt within 48 hours and this was not received by the shipbroker.

As the broker had not heard from the charterer, they chased them and re-sent the claim to the same e-mail address in early February 2008 – which was after the 60 day notification period but before the 90 day period expired. Again, no notice of any systems failure or rejection was generated and again, no automated response was received from the charterer.

The owners continued to chase for payment, but the charterer argued that they had never received the claim and therefore it was time barred. The charterer was not prepared to negotiate further.

ITIC obtained Counsel’s opinion that the charterer was likely to be successful. When the shipbroker did not receive the automated response from the charterer this should have alerted them to the fact it was not received. However, as the broker had sent the e-mail in time it did not seem fair that the charterer should be able to avoid liability completely.

The owners commenced arbitration against the charterer, but stated that they would issue litigation against the broker if the arbitration was unsuccessful. ITIC then contacted the charterer and suggested that it seemed sensible to settle the claim before unnecessary costs were incurred. Eventually, the charterer agreed to contribute 25% towards the costs of the claim and the owners agreed to forgo their entitlement to the legal costs which they had already incurred.

The claim on the shipbroker was paid by ITIC.

ITIC has issued several circulars and guidelines on demurrage time bars. It is important that every shipbroker reviews their systems to ensure no mistakes can occur.