London Arbitration 7/13
The Tribunal was required to decide whether the parties to the arbitration had in fact concluded a fixture. At the time they were both interested in doing so, and negotiations took place through an experienced broker who acted as an intermediary. Charterers argued that the broker had actual authority to conclude fixtures on behalf of Owners, or at least that she had implied actual or ostensible authority to do so.
This submission was rejected. The broker’s authority was to pass on messages from one party to the other, as was usual in the case of an intermediate broker. That would include passing on offers, but there was nothing to suggest that the broker had any authority to accept offers on behalf of either party in the absence of being given express authority to do so. That, again, was entirely normal. There was no usual authority vesting in a broker to commit principals to a contract.
The Tribunal also considered the content of the material emails. Charterers’ position was that they had sent an email to Owners with various “subjects”, all of which they were entitled to lift. When they subsequently did so, they argued that the fixture was concluded. However, those “subjects” had never been agreed to or accept by Owners as being “subjects” on the basis of which negotiations should proceed.
Indeed, these points were not “subjects” at all, but conditions unilaterally imposed by Charterers which amounted to an offer or counter-offer which was never accepted by Owners. When Charterers purported to lift those “subjects”, they were in fact making another offer to Owners, which again was never accepted.
This case reinforces the usual position of a broker, who will generally not have authority to conclude a fixture unless that authority is expressly given to them.
Parties should be careful in fixture correspondence to ensure that their intentions are expressed clearly. If a particular proposal is unacceptable, rather than simply not responding, the party which made the proposal should be told so that neither party mistakenly believes that a contract has been concluded. Lack of clarity in negotiations can lead to costly litigation which, in many circumstances, can be easily avoided.