Is Your Email Putting You at Risk?

Friday, September 24, 2010

International Transport Intermediaries Club (ITIC) says that shipbrokers run the risk of exposure to substantial liabilities as a result of inadequate monitoring of their email communications.

In the latest issue of its Claims Review, ITIC cites the case of a shipbroker acting for a shipowner which had a demurrage claim against charterers. The charter party included a 60-day notification period and a 90-day time-bar for documented claims. The owner passed the full documented claim to the shipbroker, which sent it to the charterer via email on the same day, to the email address specified by the charterer. The shipbroker did not receive any email failure notice or rejection and, on this basis, believed that it had been sent successfully. But the charterer’s instructions stated that the sender would receive an automated confirmation of receipt within 48 hours and this was not received by the shipbroker.

The broker, not having heard from the charterer, re-sent the claim to the same email address, after the sixty-day notification period but before the ninety-day period had expired. Again, no notice of any systems failure or rejection was generated and, again, no automated response was received from the charterer. The owner continued to chase for payment, but the charterer argued that it had never received the claim and that it was therefore time-barred. The charterer was not prepared to negotiate further.

ITIC, acting for the shipbroker, obtained counsel’s opinion that the charterer was likely to succeed in its claim. When the shipbroker did not receive the automated response from the charterer, this should have alerted it to the fact it was not received. However, as the broker had sent the email in time, it did not seem fair that the charterer should be able to avoid liability completely.

The owner started arbitration proceedings against the charterer, but insisted that it would issue litigation against the broker if the arbitration was unsuccessful. Following ITIC’s intervention, however, the charterer agreed to contribute towards the costs of the claim and the owner agreed to forgo its entitlement to the legal costs which it had already incurred.

The claim against the shipbroker was paid by ITIC, which says it has issued several circulars and guidelines on demurrage time bars, and empasises that it is important that all brokers review their systems to ensure that no mistakes can occur.

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