Are Intermediary Brokers Regarded As Agents And Owe Fiduciary Duties To The Parties To A Charterparty?

• Published date: 02 December 2020
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Contracts and Commercial Law, Arbitration & Dispute Resolution
• Law Firm: ONC Lawyers
• Author: ONC Lawyers

Introduction

It is trite that agents owe fiduciary duties to their principals, and an agent means one who holds power to affect the legal relations of his principal. In CH Offshore Limited v Internaves Consorcio Naviero SA, Maritima Altair Petromar SA, Lamat Offshore Marine Inc. [2020] EWHC 1710 (Comm), the court discussed whether intermediaries are agents and whether they owe any fiduciary duties.

Case background

The Plaintiff in the case was the owner of two vessels (the "Vessels") and its brokers were known as Seascope in the judgment. PDV Marina SA ("PDVSA") invited tender to enter into charterparties for two vessels from a number of entities which it considered might be interested and which included a company controlled by one of the Defendants. The invitation was in turn passed on to Seascope and the Plaintiff provided a proposed bid accordingly.

There were several rounds of negotiations but all bids pursuant to the tender expired as none of the bids complied fully with the requirements of the tender. However, one of the Defendants enquired whether PDVSA was still interested in the bid from the Plaintiff which had expired. Having obtained confirmation from the Plaintiff that it was interested in renewing its proposal to PDVSA, Seascope provided a proposal to the Defendants who then submitted it to PDVSA. PDVSA later informed one of the Defendants that the offer had been accepted subject to details, and negotiations continued.

One of the Defendants later learned that PDVSA was looking to charter a second vessel and the Plaintiff offered the second vessel to one of the Defendants through Seascope and that Defendant passed the offer to PDVSA. Subsequently, the agreements for commission between the Plaintiff and the respective Defendants were signed (the "Agreements"), and the Plaintiff and PDVSA signed the charterparties for the Vessels.

However, it was later discovered that a company within the PDVSA group has already entered into an agreement for two different vessels with another company so the Vessels were not needed. When no instalments of hire were made, the Plaintiff demanded redelivery of the Vessels. There were disputes as to the unpaid commissions under the Agreements and the matter went to arbitration. In essence, the Plaintiff alleged that the rate of hire paid by PDVSA under the charterparties was inflated by secret commissions, which were siphoned off by the Defendants in breach of the obligations owed to the Plaintiff.

The key issue...