ITIC has reminded ship agents and other shipping and transport intermediaries that in today’s highly competitive industry they run the risk of being sued, even when they are not at fault.
In the latest issue of its Claims Review, ITIC reports the case of a ship agent which was named as a second defendant by cargo interests in a claim for damage to significant quantities of imported aluminum. The ship agent had not been involved with the damage to the cargo, but had merely been included in the legal proceedings.
ITIC, on behalf of the ship agent, requested that the shipowner instruct its lawyers to include the defense of the ship agent’s interests, along with those of the owner. The owner’s P&I club agreed to defend the ship agent, and a judgment was handed down in favor of the defendants. But the judgment was appealed and then overturned. In the meantime, the shipowner went into administration and the P&I club was no longer in a position to support the claim.
ITIC instructed the lawyer to continue defending the ship agent. The case was then heard by an appeal court which found in favor of the claimants. This decision was appealed in the Supreme Court, which passed judgment confirming that the case filed against the agent lacked substance. The total costs incurred amounted to $95,000.
ITIC said, “This claim shows the high price of proving innocence. As with a number of claims seen by ITIC, this example illustrates the fact that you don’t need to make a mistake to be sued; and you could find yourself on the receiving end of legal proceedings, even if you are not at fault.”
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