International Transport Intermediaries Club (ITIC) says the current global economic downturn means that shipbrokers will have to be particularly careful to ensure that their entitlement to commission is properly protected.
In the latest issue of its Claims Review, ITIC cites the case of a Norwegian broker which made a claim against its principal for the commission on two newbuildings. The broker, which was appointed by the principal on an ‘exclusive’ basis, introduced the principal to a shipyard. The principal, however, completed the contract directly. The principal refused to pay commission and the broker sued. The broker’s claim was rejected by the trial court but the claim was successful on appeal.
The member obtained almost $690,000 from the principal. Furthermore, the payment appeared to be just in time because, shortly thereafter, the principal went into liquidation. Some time later, the broker received an approach from the liquidators demanding repayment of the money. The relevant provisions of Norwegian law stipulate that a payment rendered by an insolvent company may be voided if made within a three-month period of the company going into liquidation.
But the rule is not absolute, because payments will only be reclaimable if they have materially worsened the company’s payment capacity and are not ‘ordinary’ commercial transactions.