Failure to communicate leads to US$60,000 AWRP dispute

In its latest Claims Review, International Transport Intermediaries Club (ITIC) shed light on a case where a failure in information transfer sparked a dispute over the payment of an Additional War Risk Premium (AWRP).

The situation unfolded as a tanker was contracted for a voyage featuring an option to call at an AWRP area. Per the terms of the charterparty (CP), the charterer was liable to pay the AWRP if the vessel ventured into the specified area.

Crucially, the shipowner was obligated to obtain an AWRP quotation and transmit it to the charterer for approval “as soon as possible” and “before the owner pays the AWRP”. The shipowner fulfilled this obligation by passing on the necessary information to the ship broker.

However, when the owner notified the charterer of their AWRP claim, it became apparent that the ship brokers had failed to convey the initial quotation. Consequently, the charterers refused to pay the AWRP.

ITIC argued that the decision to enter the AWRP area was a conscious one, and the delayed notification did not cause any losses as the quotation aligned with market standards. 

Therefore, the delayed notification was not causative of any loss to the charterers. Despite these efforts, the charterers maintained their stance, citing a breach of the CP terms by the owners – which was technically correct.

The breach rendered the shipowner eligible for a valid claim against the ship broker. Ultimately, the broker had to reimburse the US$60,000 AWRP to the owners, which was covered by ITIC.

Mark Brattman, Claims Director at ITIC, emphasized the significance of attention to detail in such a transaction, stating: “This case really highlights the importance of attention to detail, especially when it comes to passing on crucial information. 

“Unfortunately, such oversight can lead to financial losses and even disputes between the parties involved. Having Professional Indemnity insurance can offer a safety net in such situations. Therefore, prevention is key, but having expert support is just as crucial.”

Photo credit: iStock/ itakayuki

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