A shipbroker has been forced to settle for $380,000 after a charter deal went wrong.
The arbitration dispute has been revealed by UK insurer International Transport Intermediaries Club (ITIC), which settled the claim for the broker.
London-based ITIC said the case underscores the “paramount importance” of transparent communication and due diligence in the shipbroking sector, following an accusation of breach of contract and negligence for not disclosing critical navigation restrictions to a charterer.
The incident began when an unnamed shipbroker arranged a charterparty agreement between an owner and the vessel charterer.
The owner told the broker that the ship’s official certificate would be provided shortly.
In the meantime, it shared details of a sister vessel, noting that its “navigation area is R1 as well” — a classification restricting the ship from operating beyond a certain distance offshore.
Due to spam filters, the broker did not receive the certificate via email.
Eventually obtaining it through WhatsApp, the broker faced technical issues that prevented the forwarding of the document to the charterer, or advising it about the R1 restriction.
“Confident that the official certificate would arrive soon, the broker neglected to pass along this crucial information,” ITIC added.
Unaware of the ship’s operational limitations, the charterer lifted subjects, finalising the agreement.
Costly charter agreed
It was only when voyage instructions were issued that the ship’s master informed the charterer of the R1 notation, rendering it unsuitable for the intended voyage.
The charter was scrapped and a new shorter-term agreement was made at a higher rate.
“However, during these discussions, the charterers discovered that the broker had been informed of the R1 restriction before they lifted subjects. Feeling misled, they accused the broker of breach of contract and negligence,” ITIC said.
Damages were claimed for the additional time and bunkers required.
ITIC deemed it likely that the broker faced liability, either directly to the charterers or indirectly, through a potential claim from the owner.
Pricey claims risk
“There was also the risk that the owners might pursue a more costly claim against the broker for failing to communicate the navigation restriction,” added the insurer.
The claim was settled at arbitration for about 70% of the amount.
Mark Brattman, claims director at UK insurer ITIC, said: “This case serves as a stark reminder of the essential role that precise and timely communication plays in maritime transactions.
“Brokers must ensure that all critical information, particularly operational limitations, is accurately conveyed to prevent costly disputes and maintain trust within the industry.”
