Unpaid disbursements

A ship agent was appointed by the owners of a detained ship to arrange an inspection at a port. The port authority advised that the required inspection form and fee had to be submitted simultaneously; no inspection could proceed if either element was missing. Although the owners’ representatives transferred the funds in advance, they did not send the completed form until several days later, on a Thursday afternoon. This was despite repeated reminders from the ship agent.

Once both elements were received, the ship agent made the payment the following day, but due to banking delays outside of their control, the funds were not credited until Monday. The port authority would not carry out the inspection until the payment had cleared, causing the ship to be held in port during the weekend.

The owners subsequently alleged that the agent had failed to act diligently and claimed approximately US$80,000 in losses arising from the delay. Their lawyers sent correspondence setting out the claim. ITIC drafted several responses, on behalf of the agent, rejecting the allegations and relying on the incorporated standard terms, which excluded liability for delays not caused by the agents and limited any liability to the agency fee. The owners eventually went quiet.

During this period, the owners also refused to pay around US$55,000 in outstanding agency fees and disbursements relating to five ships in the same ownership group. ITIC advised the agent to wait until the nine-month contractual time bar had expired before taking further action. Once the time bar passed, demand letters and follow-up calls were made, but no response was received. ITIC then issued threats of ship arrest and formal proceedings.

Soon after, the owners’ lawyers put forward a without-prejudice proposal for both sides to discontinue their claims. ITIC replied that their claim was already time-barred. Owners could therefore not pursue this anymore.

As the payment was still not forthcoming, ITIC instructed a local lawyer in the owner’s jurisdiction to issue a formal demand. Shortly afterwards, the owners paid the full outstanding amount.