Rotation refusal

A shipbroker was instructed by their principal to find a ship to perform a shipment under a Contract of Affreightment (COA) which their principal had entered into with a trader. Once the trader nominated a shipment under the COA, the shipbroker sourced a suitable ship and introduced the principal to an owner. A voyage charter was subsequently concluded between them.

After the fixture was completed, it became clear that the head COA and the voyage charter were not fully back‑to‑back. Under the voyage charter, the charterer was required to nominate the load and discharge ports and provide their rotation within five days of loading. However, the head COA contained no such restriction.

The charterer under the COA initially nominated ports and rotation within five days but later changed the rotation, as they were contractually entitled to do. When the voyage charterer informed the shipowner of this revised rotation, the owner refused to comply unless an additional US$200,000 was paid.

Faced with no practical alternative, the voyage charterer paid the additional amount and subsequently incurred a loss on the carriage. They pursued a claim against the shipbroker, alleging that they had failed to ensure that the two charterparties were back‑to‑back.

ITIC argued that the shipbroker had not actually received any instruction requiring them to make the contracts fully back‑to‑back. The principal contended that such instruction was unnecessary because the requirement was “obvious,” although their legal department later acknowledged it could present an issue for them if litigated.

A commercial compromise was ultimately reached, with settlement agreed at US$110,000.