Demurrage Claims by e-mail (Circular 01/10/05)

Our Ref: 2005/01

October 2005

To Shipbroker Members and their Insurance Brokers

Every year the Club pays claims caused by shipbrokers failing to forward demurrage claims properly. By the time the mistake is discovered the demurrage claim has become time barred under the terms of the relevant charterparty. This the most common cause of claims against tanker brokers and with high freight levels these can be for significant sums of money.

Historically brokers have used courier services to send the claim documentation to the owners. There is however an increasing tendency for principals to adopt a policy for claims to be sent electronically. This move to e-mail will save courier costs, and will potentially accelerate the progress of the claim along the chain from Owner to Charterer, but is not without pitfalls

Email can be unreliable. It is not be enough for the broker simply to send the message and forget about it. ITIC has seen a number of cases where brokers have not checked the message was received. Faced with the charterer's denial that the claim reached them, all that the broker may be able to prove is that their Internet Service Provider forwarded a message. This is not the same as showing receipt. The fact that the ISP did not send a message warning that it has not been possible to send the message is not evidence that the message has actually been received.

The majority of principals who have asked brokers to use e-mail have said that they will acknowledge the claim. The implication is that without such receipt the principal will not accept that the claim has been delivered. A common suggestion is that if the broker has not received an acknowledgement within 48 hours then the broker should check with the principal. Brokers must have a system for checking the acknowledgement has been received.

ITIC suggests that the broker should be pro-active and telephone to check receipt. The cost of the call is minimal compared to the amount at stake. The Club has already seen claims which could have been prevented by such checks. A recent example involved a claim sent to the wrong office. Another claim involved the attachment (including the supporting documentation) not being correctly transmitted while the covering message was. The charterer said nothing until after the time bar had passed.

Of course, one of the pitfalls of couriers and faxes still remains: the message may have been successfully sent and received, but if the address was wrong, e.g. an incorrect branch or department, then obviously the intended recipient is not receiving the message. It is generally safer for messages to be sent to an address accessed by several people, e.g. a departmental e-mail address, rather than the e-mail account of an individual.

So, although email is quick, cheap and easy it should not be exclusively relied upon for sending demurrage statements, or any time sensitive documents. These transactions should be followed up with either a message written by the automatic answerback, or a telephone conversation.

ITIC recommends that all brokers ensure that they have a suitable system in place to confirm receipt. Of course, this should be in addition to general post-fixture procedures which can cope with staff holidays or unusually short periods for presentation of the demurrage claim.

For ITIM, Managers
International Transport Intermediaries Club