International Transport Intermediaries Club (ITIC) says it has seen a noticeable increase in claims against ship managers by shipowners who are going through difficult financial times.

In the latest issue of its Claims Review, ITIC notes that, as result of their financial difficulties, owners resist paying for the full maintenance of their ships and also end up owing ship managers not only for their own fees but also for disbursements paid on owners’ behalf. When ship managers try to collect the funds due, they are faced with a claim for negligence in the management of the ship. In ITIC’s experience, once shipowners fail to put managers in funds, the situation rarely improves, and usually deteriorates. The resulting claims are time-consuming and costly to defend.

ITIC says that it is of the utmost importance that ship managers’ records and correspondence with shipowners are clear and in good order. By way of illustration it cites a dispute between the manager and owner of a ship involving a balance of funds owed to the manager. It was agreed that those funds would be put into an escrow account. The matter remained idle for five months, until the owner raised a claim against the ship manager, through its lawyers, for alleged negligence. The owner claimed that the ship manager was in breach of its duty to maintain the ship in an efficient, employable state and that, as a result, it had suffered significant losses. The claim put forward by the ship owner was in excess of $17m and included alleged losses in respect of the vessel’s future employment, expenses paid by the shipowner for repairs/spares/drydockings, reduction in the vessel’s market value, and other additional damages.

Tags: International Transport Intermediaries Club (ITIC)