Ethics in Shipping Business

Everyone knows what ethics are until you ask them to define them. The word itself comes from the Greek, it translates almost exactly into the Latin word for Morals, and Philosophers have been writing learned theses on these subjects since the written word emerged.

Some equate ethics to the difference between good and evil or right and wrong or virtue and vice, but not exactly any of these. The Cockney cynic, on the other hand, gives the following definition “Ethics is what you get found out not complying with” but perhaps a kinder definition comes from a nineteenth century English novelist who coined the phrase “Do as you would be done by”.

Not only is ethical behavior tricky to define, it is also a moving target. We are prepared to accept some business practices today, which would have been considered quite unethical by our forebears a hundred years ago.

In some parts of the world the practice of unofficial payments made to individuals in order to obtain preferential treatment is accepted, if not entirely approved of. In other countries this would be utterly condemned.

People tend to gain our understanding of ethics from the environment in which we work, from our elders and betters, from our colleagues and competitors alike – in short from the business community of which we are all a part. The law looks after the problems of crime, tort or breaches of contract but one needs the mutual trust of the unwritten law in order to keep the wheels of our particular industry turning.

Examples are probably the easiest way to look at the subject. Take a chartering situation where several shipbrokers are competing with one another to get the charterer to work through one of them.

Obviously, the sure way for this to come about is if a suitable owner opens the bidding with a firm offer. One way of achieving this would be for a shipbroker to present to the owner a fabricated offer, pretending that this emanated from the Charterer. He would, of course, ensure that the pseudo offer was not one that there was any risk of the owner accepting ‘clean’ but attractive enough for the owner to make a counter offer which the cheating shipbroker can then carry to the Charterer as if the owner had started the negotiations; that sort of procedure is clearly unethical.

That example also shows the clear division between what is unlawful and what is unethical. If the fabricated offer had indeed been accepted clean, the Charterer whose name had been used would almost certainly repudiate the contract and the owner would then have had a clear legal case against the errant shipbroker for ‘breach of warranty of authority’.

As however the unethical broker was cunning enough to make sure his offer would not be acceptable, there is no contract to repudiate, no damages to claim so no legal case to bring against him.

Ethics in shipping go much further than this one example because principals must be able to trust their agents and shipbrokers and vice versa and of course, brokers have to be able to trust each other. In a sale and purchase situation, for example, it is expected that the principal will always work through the shipbroker who first mentioned the workable business. You will hear in your legal studies how a Bill of Lading is evidence of a contract; the contract almost always is just a telephone conversation.

Ethics demand that one resists the temptation simply to take the easy way out and to use lies to explain away situations where one knows that no contrary proof is possible. That sort of temptation, not to exert oneself to do the best possible, can occur in any aspect of shipping business.