Charterer’s agents

Charterer’s agents. In charterparties covering a fixture on an f.i.o. (free in and out) basis, which implies that the loading and discharging expenses are for the charterer’s account, charterers often insist upon the right to appoint their agents to attend to the ship’s business at “both ends” (i.e., loading and discharging ports) at a fee.

The argument for the charterers is that by appointing their own agents as ship’s agents – in fact, the agents act in a dual capacity – maximum cooperation will be ensured between both parties. From the shipowners’ point of view such a condition is not attractive, because of the possibility that if there is a conflict of interest between charterers and shipowners, it is natural to expect that the charterers’ agents will be more concerned about protecting the charterers’ interests than owners’ interests. in other words, the charterers’ agents will think twice before taking any action which may prejudice the relations with their principals. In order to protect their interests, shipowners often appoint in such cases supervisory agents (sometimes known as “protecting agents”) to whom the master can apply for impartial advice in case of any clashing of interests. It is true such a procedure involves payment of a double agency fee, but this extra expenditure may be fully justified, although, of course, much depends upon the standing and integrity of the agents appointed by the charterers:

The Chamber of Shipping of Britain once issued a circular to its members along the following lines:

“It may be of interest to members generally to learn of a recent experience of an owner following the insolvency of charterers’ agents abroad. As a result of this experience it is the intention of the owner concerned to press very strongly in the future for the right to employ his own agents and, where this is not possible, to endeavour to seek from the charterers a guarantee to the extent of any moneys properly advanced to agents which are subsequently proved to have been misapplied. The charter entered into called for the employment of charterers’ agents but, as owners so often find prudent and indeed necessary in cases of this nature, the owner appointed his own agent in the loading port to act in a supervisory capacity and remitted to that agent money for disbursements. The supervisory agent placed the charterers’ agents in funds and the ship was duly loaded and cleared. It later transpired, however, that the charterers’ agents became insolvent and ceased to trade, the supervisory agent being unable to ascertain whether or not the remittances had been properly applied. The practical result is that there are unpaid bills outstanding against the ship and it seems highly likely that the balance of the cash has either been misappropriated or will be swallowed up in the bankruptcy proceedings. The consequence could have been even more serious as it is understood that similar cases have occurred in which the ship has been arrested on a subsequent call at the port in question and the owner required to meet unpaid accounts despite the fact that the money had previously been made available by the owner’s agent.”


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