Advance Freight

It should also be noted that a broker will have great difficulty in pursuing a claim against a shipowner, for example, for non-payment of brokerage. Under English Law the broker is unable to sue for his brokerage as he is not a party to the contract between charterer and shipowner and if brokerage is due but unpaid, the broker must obtain the support of one party to claim against the other. Help might be at hand through underwriters of professional indemnity insurance schemes or through the offices of bodies such as the Baltic Exchange or BIMCO, the defaulting shipowners perhaps being shamed into paying their dues if faced with adverse publicity resulting from non-payment. It can, however, become a tricky situation for the broker(s) concerned. Some shipowners are better than others at paying brokerage, settling sums as and when they become due – e.g. paying 90% of brokerage once 90% freight has been received. Others are extremely tardy, only paying the first and only sum of brokerage months after completion of the voyage(s) concerned and, of course, even longer after the fixture was confirmed. Also, in some cases charterers negotiate that the full, 100% of address commission and, perhaps, brokerage, is deductible from any advance freight paid to a shipowner. It is also important for brokers to enter their entitlement to brokerage into the charterparty signed by both principals because then at least a miscreant shipowner cannot deny being aware of brokerage due. FONASBA have produced a standard form of agreement (recommended by BIMCO) to be made between the shipowner and the broker under which the owner agrees to pay the broker the commissions due under the relevant Charterparty. This form creates a separate contract between the owner and broker under which the broker could sue for his brokerage under English Law.