CH OFFSHORE LTD V INTERNAVES CONSORCIO NAVIERO SA AND OTHERS

[2020] EWHC 1710 (Comm), Commercial Court, Queen’s Bench Division, Mrs Justice Moulder, 1 July 2020

Shipbrokers – Charterparty – Commission – Duties of intermediary – Payment under charterparty dispute settlement agreement considered charter hire – Arbitration Act 1996, section 69

The claimant was the owner of two tug supply vessels Amethyst and Turquoise and the three defendants were shipbrokers. The defendants had been involved in charterparties dated 22 January 2008 whereby the two vessels were chartered to PDVSA, thereby earning a commission. They were not the broker of either party, but intermediate brokers. Commission was to be paid by the claimant out of received hire. PDVSA found itself having no need for the vessels and assigned the charter to another party, acting as guarantor. This eventually resulted in a settlement agreement between PDVSA and the claimant shipowner. The agreement did not refer to the defendants’ commission. The defendants commenced an arbitration against the shipowner for the commission and obtained an award on 14 August 2019. This was the claimant’s appeal on three questions of law: first, what duties intermediary brokers owed to the parties under English law; secondly, whether an agreement involving “secret” commission was unenforceable on the grounds of public policy or illegality; and thirdly, whether a proportion of the sum paid under the settlement agreement retained the character of charter hire so as to trigger the defendants' right to commission and consultancy fees.