When do shipbrokers have authority?

Urania Shipping Company Ltd -v- Nordtrade SIA & another (IDA) [2025] EWHC 1835 (Comm) 

This was a successful application to set aside a default judgment against a shipbroker, which alleged that it was not the broker of the charterparty fixture in question.  

The Court found that there was a real prospect of success in the argument that an affiliated company within the same group of companies was, in fact, the actual broker of the transaction. 

The allegations against the broker were that it was in breach of its warranty of authority and/or liable in deceit. Whether those allegations are well-founded will ultimately be decided at trial but the initial analysis in this case highlights the importance of determining when shipbrokers (in-house and external) might have authority to agree binding contracts – and when they might not. 

The background facts 

The claimant owner of the vessel in question was a Liberian-registered company. The two defendants were part of the Nordtrade Group of shipping and logistics companies. D1, Nordtrade SIA (NL), was a Latvian company. D2, Nordtrade Tasimacilik TIC. AS (NT), was a Turkish company. 

A voyage charterparty was purportedly entered into by the claimant and a Turkish company, BFT Wood Products Agriculture Food Machinery Medical Industry and Foreign Trade LLC (BFT). 

On 24 March 2023, a clean fixture recap, confirming all subs lifted, was sent from a Nortrade EU email address, referring to a charterparty of the same date, naming BFT as the charterer and receiver, for the carriage of bulk wood pellets from St Petersburg to Turkey. 

The sender of the recap was stated to be Aivars Enkuzens of Nordtrade Ltd, Shipping Department, “as broker only.” Both a Russian and a Latvian telephone number were provided. However, “Nordtrade Ltd” did not exist. It was subsequently submitted that this was a translation of NL’s Latvian name. 

The fixture recap followed a series of emails on 23 and 24 March 2023, alleged by the claimant to include warranties of authority to act on BFT’s behalf, written by Mr Enkuzens using the email address and footer provided in the recap.  

A signed copy of the charterparty was circulated on or about 30 March 2023, which identified NL as the shipbroker and BFT as the charterer. The two purported signatures on behalf of BFT were identical to each other and to an earlier contract of sales of goods by BFT dated August 2022 (there was, however, some suggestion that the signatures had been scanned and copied on).  

NT’s subsequent evidence was that NL had brokered two previous charterparties for BFT, via Mr Makhonko, in respect of two vessels, Balkan Marmara and Navis-6, both of which had been performed by BFT. The claimant did not, however, accept the version of events presented in evidence on behalf of NT and it contested Mr Makhonko’s role. 

In respect of this voyage charterparty, two cargoes were loaded between 11 and 19 April. A letter of indemnity (LOI) was subsequently issued, purportedly on behalf of BFT, due to some discrepancy between ship and shore figures. The LOI appeared to have a scanned BFT signature and stamp, though the signature appeared to be different from the one which appeared on the purported charterparty. 

On 25 April 2025, the vessel’s managers issued a freight invoice that was not paid in due time and remained unpaid when the vessel arrived in Turkey on 4 May 2023. The claimant declined to bring the vessel into berth and it waited at anchorage off the Turkish coast. Eventually, the notify party identified on the bills of lading put NT in funds and the freight was paid in three tranches. The use of NT’s account was explained as being for practical reasons only. 

The claimant still refused to berth the vessel because it was waiting for settlement of its demurrage invoices. NT argued that the charterparty provided for payment of demurrage after completion of discharge. 

On 26 July 2023, Mr Peker of BFT issued a declaration stating among other things that BFT was not a party to any recap or charterparty. On 28 July 2023, Mr Peker subsequently stated that BFT had not signed any recap or charterparty. However, the evidence showed that BFT had in fact acquired the whole cargo as sub-purchaser from the notify party. 

In August 2023, BFT agreed to pay the claimant a sum in order to get the cargo discharged and released. However, BFT only paid part of the sum agreed and about US$425,000 remained outstanding. 

The claimant commenced proceedings against the defendants, alleging that they had purported to conclude the charterparty as brokers for BFT and that they were in breach of their warranty of authority and/or liable for damages in deceit. No evidence was presented, however, that either of the defendants knew that BFT had not authorised the charterparty. 

Due to some procedural oversight, NT failed to acknowledge service of the proceedings and default judgment was entered against it. It subsequently sought to have the default judgment set aside.  

The Court has the power to set aside a default judgment if the defendant has a real prospect of defending the claim or there is some other good reason why the defendant should be permitted to defend the claim. 

At the time of the set aside hearing, the claimant had still not been able to serve the proceedings on NL.  

The Commercial Court decision 

NT contended that the broker was NL, not NT, and that BFT did authorise the entry into the charterparty and that Mr Peker’s declarations were untrue or incorrect. 

Alleged warranty of authority by NT

The claimant argued that the warranties of authority were contained in the e-mails and recap fixture sent by Mr Enkuzens. In the claimant’s view, “Nordtrade Ltd” referred to the companies identified on the website nordtrade.eu, which included both defendants.  

The claimant further submitted that the formal charterparty document, circulated on or about 30 March 2023, which named NL as the broker: (i) could not supersede the fixture recap, because it was unauthorised, (ii) could not supersede earlier warranties of authority provided on 23 March 2023 at the time at which the contract was purportedly concluded, and (iii) could not be relied on to construe those earlier warranties of authority.  

However, the Court thought it was arguable that the more natural interpretation of any warranty of authority contained in the communications sent on behalf of ”Nordtrade Ltd“ was that it was given by a single entity, rather than two entities in the same group. Absent any reason to believe that NT rather than NL was the entity in question, that in itself indicated that NT had a realistic prospect of resisting the claim.  

Furthermore, while “Nordtrade Ltd“ might fairly be regarded as a loose translation of NL’s company name, that could not be said of NT, whose name when translated included the word “Transport” or “Transportation”. In reality, the documents provide no cogent basis on which to conclude that NT, as opposed to NL, gave any warranty of authority. 

The Court added that, while the charterparty might not be admissible strictly as an aid to construction of the fixture recap and surrounding emails, it could arguably be taken into account as an indication of the identity of the warranting party. 

Alleged lack of authority

The Court also thought that NT had a realistic prospect of defeating the argument that BFT did not authorise the entry into the charterparty.  

Among other things, both the charterparty and the LOI were stamped and signed on behalf of BFT. The Court was not persuaded by suggestions that the signatures were forged. 

There was also a potentially plausible explanation for the Peker declarations, namely an attempt to acquire the cargo without having to pay demurrage. 

The Court added that evidence that the Nordtrade group had previously dealt with BFT via Mr Makhonko was important and raised a triable issue, namely whether there may have been authority conferred or evidenced by a course of dealing.  

The Court concluded that the default judgment should be set aside. 

Comment 

The Court only found that NT’s defence had a real prospect of success, rather than actually deciding the matter. However, its preliminary analysis of the issues raised, and how it dealt with them, is useful for shipbrokers, their clients and all persons seeking to formalise contractual agreements and relationships (such as charterparties and ship sale and purchase agreements) via e-mails, messaging Apps when formalising recaps and all other terms in correspondence of any form. 

In particular, it remains important for shipbrokers to consider if they have authority to bind a client whom they represent, which specific entity they do represent and what practical and procedural safeguards they have in place to protect both themselves and their clients. Failing to do so could mean that the shipbroker is held liable (even personally) if there is ambiguity or it can be shown that the shipbroker did not have authority to bind their client. 

It will be interesting to see what the outcome at the eventual trial is. In the meantime, shipbrokers should ensure that the identity of the shipbroking company is clear and unambiguous and that the correct company name is used.  

Shipbrokers should also ensure that they clearly and expressly document their authority (or the absence of such authority) to act on behalf of their clients. Maintaining written confirmation of authority and/or using standardised e-mail signatures can help to avoid uncertainty. Given the increased scrutiny on shipbrokers’ roles in both charterparties and ship sale and purchase transactions, understanding how the English courts interpret shipbroker identity and authority to act will become ever more important – especially in a digital age with a huge variety of communication tools now in play.