A commission won and then defended

A Norwegian shipbroker made a claim against their principal for the commission on two newbuildings. The principal had appointed the member as their exclusive broker. The broker introduced the principal to a shipyard but the principals completed the contract directly. The principal refused to pay commission and the broker sued. The broker’s claim was rejected by the trial court but the claim was successful on appeal.

The member obtained nearly USD 690,000 from the principals. The payment appeared to be just in time as shortly afterwards the principal went into liquidation.

Some time later the broker received an approach from the liquidators demanding repayment of the money. The relevant provisions of Norwegian law are contained in Section 5 -5 of the Satisfaction of Claims Act. This provides that a payment made by an insolvent company may be voided if made within a three month period of the company going into liquidation.

The rule is not absolute because the payments will only be reclaimable if they materially worsened the company’s payment capacity and were not “ordinary” commercial transactions.

The broker rejected the demand and the liquidators issued proceedings to recover the money. Lawyers mounted a strong defence and the liquidator eventually dropped the case. The broker having first sued for the commission and then sued again for its return was finally able to keep the money.