What cost cover?

The parties then agreed to widen the permissible discharge range to include a Singapore - Malaysia option. The full recap contained the same wording regarding the cost of piracy cover.

The ship discharged in Singapore and the charterers refused to pay the piracy insurance premium. They understood that the fixture was on the basis that premium was only payable if the ship discharged in East Africa. The owners pointed out that the terms of the recap were clear and the lump sum was not limited to the East African option. The Singapore option had involved transiting an area for which additional cover had been applicable.

The charterers paid the additional amount and then reclaimed it from the broker.

The charterers had received the full recap and the terms were clear. They claimed that as the broker had been negotiating on the basis of East Africa only they should have made certain that the lump sum only applied to East Africa and not the added Singapore option.The broker had told the charterers that they had secured an “East Africa Clause” and this placed the charterers’ reading of the recap in context. On balance it was felt that in a dispute between the broker and charterers a court would find the broker liable for negligence.

ITIC reimbursed the ship broker the US$150,000 for the additional war risks premium.