Decision on shipbrokers’ informative obligations

A recent judgment by the Genoa Court of Appeal examined the extent and nature of the informative duties imposed on shipbrokers under Italian law.

The case concerned the potential liability of a shipbroker in the conclusion of a charter contract in light of certain statements made by the shipbroker to the contracting parties. In particular, during the negotiations, the broker told the charterers that the shipowners were “German owners and they are very punctual and precise but very strict in their terms”.

The charter was concluded, but remained unperformed by the owners, as no vessel arrived at the loading port.

As a result, the charterers claimed damages from the shipbroker, alleging that:

  • they had concluded the charter relying on the above statement (assuming therefrom the owners’ financial stability); and
  • the broker’s statement contrasted with its duty to provide material information regarding the contract under Article 1759 of the Civil Code.

The Genoa Court of Appeal confirmed the first-instance judgment and rejected the claim put forward by the charterers. The court held that a shipbroker’s informative duties do not include an obligation to conduct specific and detailed investigations into the contracting parties’ financial status and commercial reliability.

Further, according to the court, the broker’s statement as reported by the charterers amounted to a generic declaration about the shipowners’ previous accuracy in performing their contractual obligations and could not be construed as a guarantee of their future capability to perform the recently agreed charter contract.

Dardani Studio Legale said that the Genoa Court of Appeal’s decision was significant for a number of reasons.

First, it applied to shipbrokers the principles outlined by the Italian courts for general brokerage activities (in particular, real estate brokerage for which the case law is richer and more consistent). Consequently, a general and uniform legal framework has been extended to shipbrokers.

Second, in its reasoning and reference to general case law on brokers’ duties, the court specified shipbrokers’ informative obligations by drawing the distinction between:

  • a positive obligation – namely, the duty to communicate material circumstances which are known or should be known by a broker; and
  • a negative obligation – namely, the duty not to divulge material information that is false or which has not been verified by a broker.

In both cases, the reference is to brokers’ ordinary due diligence (ie, to ascertain factual circumstances and verify information), which does not include carrying out particular investigations into the contracting parties or the deal in general, unless a specific assignment to that purpose has been conferred on the broker.