Ship agents’ remuneration is almost invariably an agency fee. Regardless of whether the ship is tramp ship, tanker, liner ship or specialized ship, the agent has look after all the needs of the ship and crew. Ship agents’ precise duties will naturally be different depending on the ship, cargo and locality but the reason why the agent is there will always be the same; that of looking after all the needs of the ship and crew while the ship is:
- Arriving at the port
- Staying in the port
- Departing from the port
Identifying ship’s principal is a vital first step for the port agent because the agent will be expected to expend substantial amounts of money during the time the ship is in port and establishing where this money is coming from has to be a priority.
Ship agent will be seen as representing the ship to the outside world. However, legally and financially, ship agent nomination must be specifically spelled out in order to not to distinguish shipowners and disponent shipowners (time charterers) when the ship is on time charter. Time charters invariably include a clause about who pays for what, such words as:
“…Charterers shall provide and pay for all fuel, towage and pilotage and shall pay agency fees port charges…(etc)”.
In sum, the ship principal for whom the agent is acting must be the one who pays the agency fee. However, the actual shipowner may want things done for which the disponent shipowner (time charterer) is not responsible such as repairs or crew changes
Ship agent is representing the ship and when the ship is on time charter, this situation is a dilemma. Disponent shipowner (time charterer) is expected to instruct the ship agent to act in all ways as if his principal was in fact shipowner of the ship but it is not always as easy as that.
First, when the disponent shipowner (time charterer) makes the appointment with the agent, there is no direct contractual relationship between the agent and the actual shipowner. This may not be too important when such routine duties as the agent carries out for the ship, which are not the disponent shipowner’s (time charterer’s) concern. However, it becomes rather different if such tasks are extensive and complex when a direct contract is more appropriate from the legal point of view and the expenditure of the agent’s time and expertise is well beyond the value of the fee agreed between the disponent shipowner (time charterer) and the agent. Range of ship agent’s tasks can be spelled out and an appropriate fee can be agreed between the actual shipowner and the agent appointed by the disponent shipowner (time charterer). This situation may not be that easy when the instructions from the actual shipowner create a conflict of interest with the disponent shipowner (time charterer). A skillful ship agent can often handle such a situation without causing either party any distress but both sides must be made aware of the agent’s position.
If it becomes a case of justice not only being done but being seen to be done then the ship agent has to revert to working exclusively for his principal – disponent shipowner (time charterer). Actual shipowner will have to appoint a separate ship agent.
Some badly drafted voyage charter-party forms are incorporated the clauses “vessel to be consigned to charterer’s agents at port of loading or discharging”. More responsible compilers of charter-party forms put in such a clause is “Owners to appoint agents nominated by the charterers at port of loading or discharging“. Regardless of whether the appointment of the agents is or is not influenced by the charterer the port agent always represents the shipowner or disponent shipowner (time charterer).
Charterer want something in exchange for insisting upon his right to make the nomination of ship agents but any agent who cannot handle the dichotomy such a situation may create should decline appointments directed to him by charterers. Legally, the ship agent always represents shipowner or disponent shipowner (time charterer). In many cases, charterers stipulate that they should nominate the ship agents at loading or discharging port for several different reasons:
- In tanker charter-party forms, it is usual to find a charterers’ agents clause. Oil companies’ major refinery jetties cost many millions of dollars to operate and the companies are keen to have the ships using them represented by ship agents who understand oil trade. By nominating a ship agent who is an expert in tanker agency the company is sure of receiving communications it can trust and an agent who knows the specific business. Shipowners seldom try to resist such ship agent appointments, because shipowners also benefit through being represented by a ship agent who is an expert in the trade, furthermore the charterers do not want to ruin their reputation to risk nominating agents who would attract complaints from shipowners.
- Protect trade secrets. For example, in the coal trade, many ship agents where coal is imported are connected with one of the importers. No charterer would want to risk a ship owner appointing one of the charterer’s competitors as the ship’s agent, hence their insistence on the right to nominate who shall be appointed. Inevitably the charterer expects a quid pro quo from the ship agent being nominated, which is usually in the form of keeping a supervisory eye on the charterer’s interests. There is seldom, if ever, any contractual relationship between the charterer and the agent he nominates although there are cases where the charterer demands a share of the agent’s fee as a sort of introducing commission. Ship agent who is nominated by a charterer has to ensure there is no conflict of interest and, if there is an area of possible dispute between charterer and shipowner, that the agent maintains a completely even-handed
When shipowners are by no means satisfied with the ship agent’s ability to avoid favoring the nominating charterer. In this situation shipowner is left with having to appoint a supervisory or protecting agent who usually charges something in the region of half a normal agency fee for the task of looking after the shipowner’s interest. Supervisory/protecting agent would expect to deal with the domestic requirements of the ship, such as stores, cash, crew travel and so on. Supervisory/protecting agent will need to keep in close contact with the charterers’ agents over such matters as working times and statements of fact (SOF) in order to ensure the shipowner’s interests are protected. Except in tanker trades where shipowners would probably be just as happy to appoint the expert agent. Generally, shipowners dislike the stipulation of charterer’s agents thoroughly. It is usually conceded without much argument even when the market favors shipowner. There seems to be no record of a shipowner having conceded the clause in the charter but then subsequently refusing to appoint the nominated agent for some reason. Probably it has happened but charterers have understandably kept quiet about it. It could hardly be a breach of a condition, so it would be a question of proving damages and one wonders how that would be argued. One of the many reasons why a shipowner dislikes charterers’ agent clause is that there may be no opportunity to check on the financial stability of the nominated agent but shipowner is still expected to remit a substantial sum of money in advance of the ship’s call (Port DA – Port Disbursement Account).