Press release: Ship arrested to force owner to settle unpaid debts

The International Transport Intermediaries Club (ITIC) – a mutual insurer that provides professional indemnity cover for transport intermediaries operating in the marine, offshore, renewable and aviation industries – has warned stakeholders to ensure measures are in place to cover additional financial obligations when settling unforeseen invoices. 

In the latest edition of its Claims Review, published bi-annually, ITIC shared a case study where a ship was arrested to force the ship owner to compensate their agent for unpaid debts for a tug owner’s services during previous rescue efforts of a different ship within its fleet. 

The ship owner, whose ship experienced difficulties in the Atlantic, requested a ship agent to arrange tugs to attend to the ship. The agent arranged for tugs to participate in the ship's rescue, but the ship subsequently sank.

The agent later received invoices totalling US$ 220,000 from the tug company, which they passed to the owner. 

The owner claimed they were in financial difficulties due to losing their ship and could not pay the invoice. They promised to pay once one of their other ships had been sold, but it was undetermined when this might be. In the meantime, the agent was coming under pressure to settle the invoices of the tug company directly.

ITIC wrote to the owner but did not receive a response. 

ITIC noted that another ship operated by the same owner was heading to a French port. France is considered an "arrest friendly" jurisdiction as it usually allows for the arrest of sister ships. The ship in question had a different registered owner, but advice from French lawyers confirmed that an arrest should be possible as the beneficial owner appeared to be the same.

The ship was arrested, and to obtain its release, the owner placed security through a cash deposit into the court's account. The ship was released and negotiations for the payment of the invoices began.

Ultimately, the tug owner agreed to lower their demands to US$ 100,000, and the matter was settled for this sum by the owner. 

Mark Brattman, Claims Director at ITIC, says: "If a shipping line becomes bankrupt, suppliers will look to get paid by any means and from any party. Having suitable insurance in place can therefore be very helpful for agents finding themselves in these situations."

Ends

For further information please contact:
Margaret Mentz, Navigate PR
T: +44 203 326 8461
E: mmentz@navigatepr.com 

About ITIC

International Transport Intermediaries Club (ITIC) is the world’s leading provider of professional indemnity insurance to transport professionals across the globe. 

As a mutual insurer, it has over 90 years’ experience providing cover to companies in the marine, naval architecture, aviation, offshore and hydrographic industries. With 3,100 members in over 110 countries and with a worldwide network of correspondents, ITIC is the acknowledged leader in its field.

ITIC’s insurance has been developed primarily to cover claims of negligence – errors or omissions. Cover can also extend to specialist areas such as debt collection, loss of commission income, cyber liability, cash in transit and directors’ and officers’ insurance. ITIC’s wide cover also includes a unique discretionary insurance which could support claims not normally be paid by other professional indemnity insurers.

ITIC is managed by Thomas Miller. More details about ITIC and the services it offers can be found at www.itic-insure.com