Ship brokers in Asia were due commission on the sale of a vessel for scrap. The buyers performance of the Memorandum of Agreement (MoA) was guaranteed by their Hong Kong based affiliate.
The MoA was subject to Singapore Arbitration and stated:
“Purchase Price […] to Sellers bank account less 1% to [broker] as brokerage commission, which is to be deducted from Buyers balance payment.”
The purchase went ahead but the buyers did not pay the brokers. The vessel was scrapped shortly after delivery.
The member had purchased ITIC’s Rule 10 “additional legal expenses and debt collection
cover”. ITIC wrote to the buyers and their guarantor and when this didn’t secure a response commenced arbitration in Singapore against both the buyers and the guarantor. The arbitration was uncontested and an award of US$ 54,500 plus interest and costs was obtained.
ITIC instructed Lawyers in Hong Kong to enforce the award against the guarantor. The threat of winding up the company persuaded the guarantor to settle the outstanding commission. ITIC reimbursed the unrecovered legal costs which were about US$ 20,000.