Alleged wrongful cancellation of charter party

Brokers were authorised by charterers in South America to fix a ship for a time charter voyage from Uruguay to Peru with a cargo of bagged rice.  The charterer stipulated that the ship had to present at the load port by 8th May at the latest.

The broker encountered considerable difficulty in locating a suitable ship but finally found one which would become available in Chile.  The charter was therefore arranged on the basis that delivery would be accepted in Chile and the ship would then ballast round Cape Horn to load in Uruguay.  The broker calculated the time for the voyage from Chile to Uruguay and felt that the latest date for delivery at the Chilean port would have to be 27th April, and duly sent a re-cap of the fixture to the charterer showing laycan as 25/27 April.  Owner's broker then requested a correction in the re-cap to show laycan dates as 25/28 April and the charterer's broker therefore agreed to make the change, but unfortunately omitted to advise the charterer.

The ship sailed from the Chilean port a few minutes before midnight on 28th April but the charterer, being still under the impression that the cancelling date was 27th April, proceeded to charter a substitute vessel through another broker when the original ship had not delivered by midnight 27th April.  On 29th April the charterer instructed the broker to notify owners that they were cancelling the ship.

Owners reluctantly accepted cancellation and immediately claimed the amount of US$ 427,712 as damages arising from wrongful cancellation.  The Managers quickly concluded that, as the broker was clearly liable, the best course of action would be for the Club to dispute the quantum of the claim on behalf of the charterer and the broker.

The dispute went to arbitration and the arbitrators found in favour of the owners who were awarded US$ 353,704 and 75% of the costs of the award.  Costs paid by the Club amounted to US$ 155,429 and the total cost of the claim was US$ 509,133 - a large price to pay for one small oversight.