A time-limitation wrangle at London arbitration has revealed a costly mix-up over which broker was working for which party.
Financing company C Demurrage said the case offered an insight into differing roles within a familiar broking structure and a look at the law of agency.
A contract of affreightment (COA) on an amended Asbatankvoy form had been fixed through brokers known only as A, B, C and D.
In this particular chain, A was the owner's in-house broker, while B was independent and also the owner's broker, C's position was unclear and D was the charterer's broker.
The COA contained a barring provision which said that the owner's demurrage claims had to be presented with documents “within 21 days of discharging completion." A 1.25% broker commission was also payable.
Seven claims worth nearly $315,000 were resisted by the charterer under the above clause.
Each side said C was the other’s broker and therefore agent.
The owner said it had sent all seven claims to C before the deadline and so, while none had likewise been passed on by C, they had nevertheless reached the charterer in time through this agency.
The owner argued that the charterer had held out broker C as its agent, ie it had behaved so as to make the owner think C was its agent.
And it contended that as the charterer had paid many of the other claims that had been sent to C, it was now prevented from denying that C was its agent.
Claims time-barred
But the tribunal ruled that there was no evidence that the charterer had held C out as acting for it.
The seven claims were therefore time-barred, as none had reached the charterer in time.
C Demmurage said the owner lost almost $315,000 because it had fallen into the habit of sending its claims to an entity that was not the charterer's agent and had no authority to receive them.
"That did not matter where claims had been processed in good time and settled, but it did when the deadline came and the intermediary had not passed them to charterer's agent," it added.
"Thus it is very important to know from the outset who is acting for who in a broking chain, and to identify anyone who (albeit with an entirely valid role) is not actually representing either side.
"Otherwise, whether in a long-term COA, a lengthy course of dealing or a single spot fixture, a late claim submitted to the wrong party may prove time-barred. Broking arrangements vary greatly; it may be difficult in some cases to determine roles and the law of agency is a huge topic."
