A mutual shipping insurance association The Shipowners’ Club has warned its members to exercise caution and undertake enhanced due diligence when entering into new fixtures with unknown charterers, especially those that involve trade to countries where sanctions may apply or where there is limited judicial redress.
If a new charterer or fixture is not properly vetted the consequences can be costly in both reputational and financial terms.
When considering new business or fixtures the Club advises the members to take a number of steps before entering into new contracts, such as enquiring, through brokers and other shipping contacts, about the reputation of the charterer, as well as referring to sites such as BIMCO/IMB databases for positive or negative information gathered on charterers or agents.
The carriers should also carry out credit reference and status checks, and consider choice of jurisdiction and choice of law clauses in the charter-party.
The Club also suggests investigating whether the contracting parties and/or individuals or proposed areas of trade may be subject to sanctions, and, where appropriate, to consider requesting charterers to provide a written guarantee underwriting their obligations to owners, typically issued by a parent company.