Debt Collection Insurance
- Date: 17/04/2013
In the last 20 years, ITIC has recovered more than USD 130,000,000 in unpaid commission, outstanding port disbursements, survey fees and other debts for Members. The insurance pays the legal costs of pursuing the debt. Tact is vital in order to preserve commercial relationships and often a polite reminder is all that is needed to secure payment. If proceedings are, however, necessary, ITIC’s specialist team will use whatever legal means necessary to try to recover the monies owed to you.
A South American port agent advised ITIC that the owners of a cruise ship owed them over USD 25,000 relating to the costs of crew and supplies incurred during various calls.
Reminders and chasers to the owners had not resulted in payment and it was decided that more aggressive action was needed. ITIC ascertained that the ship was chartered to a cruise line and was due to sail from a port in the Canadian Arctic for the High Arctic, and had no apparent plans to revisit South American waters.
ITIC instructed its Canadian lawyers to arrest the ship where she was in the Canadian Arctic and within hours of the arrest being served the owners paid all the outstanding debts in full.
The owners admitted that they did not think that anyone would be able to arrest the ship in such a remote place. The owner’s miscalculation led to them having to pay not only the outstanding disbursements, but also the arrest costs.
Outstanding Survey Fees
A P&I club asked a marine surveyor to carry out a condition survey on a ship. The surveyor noted several deficiencies and, as a result, the P&I club requested the surveyor to conduct a follow-up survey. Although the P&I club copied the instructions to the shipowner, it was not clear whether the P&I club or the owner would be responsible for the survey fee.
Unfortunately, the surveyor did not question this when accepting the instruction; he merely carried out the survey and sent his report to the P&I club. The invoice was sent to the owner. The owner did not pay and the surveyor asked ITIC to collect the debt. It became apparent that the owner was in financial difficulties and could not pay the surveyor’s invoice.
ITIC negotiated on behalf of the surveyor with the P&I club and the owner and, eventually, the invoice was paid.
Shipyard fails to pay sale and purchase commission
A sale and purchase broker acted for a shipyard in connection with the construction and purchase of three multi-purpose ships. Under the terms of a separate commission agreement, the shipyard was to pay 2% of the purchase price to the broker in four instalments at different stages of the construction of each ship.
The instalments were not all made even though the construction and sale was accomplished; the brokers were owed considerable amounts of commission.
Solicitors successfully attached property belonging to the shipyard, and eventually an amount of USD 515,0000 was recovered for the Member. Although the recovery took the best part of five years, and the legal costs were substantial, an outstanding result was achieved for the Member.
Ship for sale
A port agent sought ITIC’s assistance in recovering a debt of over USD 100,000 from the owner of a vessel. The vessel made two calls at the port, having had to return for repairs soon after departure.
The agent incurred various third party costs on behalf of the owner, including pilotage, towage, stores and repair-related costs, for which they had not been paid in full despite numerous email exchanges with both owner and managers. The owner had been unable to settle this debt as the previous charterers had pulled out of a charter leaving them out of pocket.
ITIC was advised that the vessel was soon to be sold, and the agent was understandably concerned that, once the ship was sold, they would not be able to recover the costs. The ship agent had been assured by the ultimate purchaser that their debt would be discharged once the sale had gone through, but they were unsure that this would actually be the case.
ITIC made contact with the owner and the purchaser, and asked to be shown a copy of irrevocable instructions from the owner to the purchaser to the effect that the agent’s debt would be settled in full upon finalisation of the sale and before any payment was made to the owner.
Having seen this instruction, ITIC were kept informed of the progress of the sale and had also noted that the subject vessel had two sister vessels against which action could be taken should owner and purchaser not keep to their promises. Immediately upon finalisation of the sale, full payment was made to the agent without any further delay.