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Transport

Shipbroker awarded commission for two years after termination of contract of carriage

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Legal news
calendar 20 September 2012
globus Denmark

A shipbroker had arranged a contract of carriage which was terminated after a period and replaced by a new contract. The shipbroker had prepared a draft for the new contract, but was not present at the signing of the contract. Nevertheless, the Maritime and Commercial Court and the Supreme Court held that the shipbroker was to be paid commission for the new contract of carriage.

A Danish shipbroker concluded in 2007 an agency agreement with an Icelandic shipping company which gave the shipbroker the right to an agency fee of DKK 2,700 for each ship call. The same year the shipbroker arranged and adopted a contract of carriage between the Icelandic shipping company and a Danish company. The contract concerned the carriage of goods between Iceland and Denmark and was interminable for a period of one year. After this one-year period, the contract would be terminable by twelve months’ notice. According to the contract, the shipbroker was entitled to a commission of 2.5 per cent of the freight.

On expiry of the interminability period, the shipping company terminated the contract of carriage with effect from the end of 2009. For the remaining contract term, the shipping company and the shipper negotiated about a new contract of carriage which was to replace the terminated contract. In that connection, the shipbroker sent a draft contract to the shipping company. The shipping company did not comment on the draft directly but sent a proposal for amendments to the previous contract. The shipping company’s proposal for amendments did not affect the contract clause concerning commission payable to the shipbroker.

After having discussed the proposal for amendments with the transport buyer, the shipbroker sent a draft contract to the parties. Immediately before the contract was to be signed, the shipping company invited the transport buyer to a separate meeting without the shipbroker. At the meeting, the shipper signed a contract of carriage with a subsidiary of the shipping company. The contract was virtually identical to the shipbroker’s draft, but without the commission clause. Shortly after, the shipping company terminated the agency agreement.

The original contract of carriage adopted by the shipbroker was consequently terminated and replaced by a contract of which he was not a part. Later the agency agreement was also terminated. However, the shipbroker was of the opinion that he was still entitled to commission on the shipping company’s freight charges, as he had brought about the new contract of carriage. The shipbroker therefore claimed commission equal to 2.5 per cent of the freight performed by the shipping company in 2010 and 2011 under the new contract, and he also claimed payment of DKK 7,500 for each ship call for a shorter period of time.

The contracts were due to the shipbroker

It was the assessment of the Maritime and Commercial Court that the contracts of carriage would not have been concluded if it had not been for the shipbroker and that it is common practice that commission equal to 2.5 per cent of the freight charges is payable when a shipbroker arranges a contract of carriage. On these grounds, the Court awarded the shipbroker commission for 2010 and 2011. The Court also found that the claim for DKK 7,500 for each ship call was not unusual.

As the shipping company refused to produce evidence of contracts of carriage and prices, the Court based its calculation of the claim on the shipper’s freight information and the shipbroker’s statement of commission. The Maritime and Commercial Court then found for the shipbroker, and the Supreme Court subsequently affirmed the decision.

IUNO’s opinion

The judgment shows that a shipbroker is generally entitled to commission on contracts of carriage which are attributable to him, even when the official contract has been terminated. In the case at hand, the Court has apparently attached importance to the shipbroker’s active role in the preliminary process and during the drafting of the contract between the shipping company and the shipper even though he was excluded from the process just when the contract was about to be signed.

[Judgment rendered by the Supreme Court on 22 June 2012, case no. 210/2011]

A Danish shipbroker concluded in 2007 an agency agreement with an Icelandic shipping company which gave the shipbroker the right to an agency fee of DKK 2,700 for each ship call. The same year the shipbroker arranged and adopted a contract of carriage between the Icelandic shipping company and a Danish company. The contract concerned the carriage of goods between Iceland and Denmark and was interminable for a period of one year. After this one-year period, the contract would be terminable by twelve months’ notice. According to the contract, the shipbroker was entitled to a commission of 2.5 per cent of the freight.

On expiry of the interminability period, the shipping company terminated the contract of carriage with effect from the end of 2009. For the remaining contract term, the shipping company and the shipper negotiated about a new contract of carriage which was to replace the terminated contract. In that connection, the shipbroker sent a draft contract to the shipping company. The shipping company did not comment on the draft directly but sent a proposal for amendments to the previous contract. The shipping company’s proposal for amendments did not affect the contract clause concerning commission payable to the shipbroker.

After having discussed the proposal for amendments with the transport buyer, the shipbroker sent a draft contract to the parties. Immediately before the contract was to be signed, the shipping company invited the transport buyer to a separate meeting without the shipbroker. At the meeting, the shipper signed a contract of carriage with a subsidiary of the shipping company. The contract was virtually identical to the shipbroker’s draft, but without the commission clause. Shortly after, the shipping company terminated the agency agreement.

The original contract of carriage adopted by the shipbroker was consequently terminated and replaced by a contract of which he was not a part. Later the agency agreement was also terminated. However, the shipbroker was of the opinion that he was still entitled to commission on the shipping company’s freight charges, as he had brought about the new contract of carriage. The shipbroker therefore claimed commission equal to 2.5 per cent of the freight performed by the shipping company in 2010 and 2011 under the new contract, and he also claimed payment of DKK 7,500 for each ship call for a shorter period of time.

The contracts were due to the shipbroker

It was the assessment of the Maritime and Commercial Court that the contracts of carriage would not have been concluded if it had not been for the shipbroker and that it is common practice that commission equal to 2.5 per cent of the freight charges is payable when a shipbroker arranges a contract of carriage. On these grounds, the Court awarded the shipbroker commission for 2010 and 2011. The Court also found that the claim for DKK 7,500 for each ship call was not unusual.

As the shipping company refused to produce evidence of contracts of carriage and prices, the Court based its calculation of the claim on the shipper’s freight information and the shipbroker’s statement of commission. The Maritime and Commercial Court then found for the shipbroker, and the Supreme Court subsequently affirmed the decision.

IUNO’s opinion

The judgment shows that a shipbroker is generally entitled to commission on contracts of carriage which are attributable to him, even when the official contract has been terminated. In the case at hand, the Court has apparently attached importance to the shipbroker’s active role in the preliminary process and during the drafting of the contract between the shipping company and the shipper even though he was excluded from the process just when the contract was about to be signed.

[Judgment rendered by the Supreme Court on 22 June 2012, case no. 210/2011]

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