What's in a name?
To see the article as it appears in The Baltic, please click here. The article can be found on page 97:
It is surprising how many claims reported to ITIC involve disputes about the correct identity of the contractual parties. Legal issues created by inaccurate or erroneous names can often give rise to costly and protracted litigation.
In the Sibohelle the brokers had recorded the claimant’s parent company, and not the claimant, as the vessel’s “T/C Owners”. The reason given for the error was that the broker had consulted an industry website to obtain details of the Sibohelle. The website erroneously named the parent company as the vessel's time chartering owner. The error was repeated in the broker’s recaps, and was not spotted and corrected. No formal charterparty was ever signed or drawn up.
The fixture was performed. The identity used in post fixture matters was inconsistent. Notices of Readiness were accepted in the name of claimants while statements of facts named the parent company as the time charterers. Finally the freight invoice was issued on the parent company’s paper but specifically stated that the amount was due to the claimant whose bank account was identified. The freight was paid to that account.
The issue that gave rise to the proceedings was a demurrage claim of over USD 320,000. The claimant had commenced arbitration against the voyage charterers but their case had been struck out by the arbitrator because the fixture had been made between the parent company and the voyage charterers. The claimant challenged the arbitrator’s ruling.
The application to the High Court was made on the basis of three factual assumptions. These were (i) that the claimant had instructed the brokers to fix the vessel (ii) that the brokers had made a mistake when naming the parent company as the “T/C owners” and (iii) the brokers did not have instructions or authority to enter into a contract on behalf the parent company.
The first question considered by the High Court was whether the naming of the parent company as the “T/C Owners” meant that no contract had come into existence at the time of the recap as the brokers did not have authority to act for the parent company. The Court held that no contract had been concluded at that stage.
In the majority of cases dealt with by ITIC the fixture will not have been performed. In the Sibohelle the Court went on to consider whether a contract had been formed by conduct because the voyage had been performed and freight paid to the claimants. The judge found that such a contract had been concluded and the matter was remitted to the arbitrator.
In the Sibohelle the origin of the misnaming was the broker’s use of information obtained from a website. Sometimes the mistake can be a simple error. In The Rhodian River and The Rhodian Sailor separate one-ship companies owned the two vessels and the same brokers acted for both companies. After the fixture of The Rhodian Sailor (owned by "the Sailor company") was agreed, the charterers' brokers asked for the full name of the owners and the owners' brokers mistakenly gave them the name of "the River company" which owned The Rhodian River. This would probably not have been of much significance had the Rhodian Sailor not sunk. The owners wanted to rectify the charterparty to show the correct company while the charterers (presumably wanting a contractual party with an asset) refused.
In an industry in which the use of single purpose companies is common the identity of the people behind the venture is often regarded commercially more important than its precise legal style. In The "Double Happiness" the owners' brokers told the charterers' brokers that the vessel being fixed was controlled by a well known group but did not name any particular company as the owner. While this approach may reflect what is commercially important getting the correct style right is important if disputes are to be avoided.
In the cases handled by ITIC it is unlikely that anyone has set out to practice deception but they are simply occasions on which no one has really got to grips with the issue. Vague company names or the use of initials can make it difficult to establish the legal party responsible for the fixture. As was the case in the Sibohelle a variety of descriptions may be used pre and post fixture. Such inconsistencies will be seized upon by lawyers to try to extract their clients from the fixture. ITIC has in the past dealt with disputes involving the correct translation of Arabic and Chinese company names. In these cases the charterparty had not been performed and the Owners were alleging that the broker had fixed the ship to non existent companies. As in many fixture disputes a little attention to detail at the time of fixing would have paid dividends.