Emergency Contact If I plan to undertake a charterparty with an unfamiliar entity, what steps can I take to ensure the charterer will pay their hire? Home Latest updates News If I plan to undertake a charterparty with an unfamiliar entity, what steps can I take to ensure the charterer will pay their hire? 14 Feb 2017 Download Sign up for alerts Due to the difficult conditions currently existing in the shipping market, particularly in the offshore sector, Members are increasingly contacting the Club regarding claims against Charterers for unpaid hire. Unfortunately, in some cases there is little prospect of successfully enforcing any judgment or award against Charterers, as they have few or no assets against which to enforce. In such a situation, the Club’s Legal Costs Cover, regardless of the strength of a Member’s claim against the charterer, is unlikely to respond as there is no realistic prospect of recovering the hire. Although there are other ways in which Members can pursue Charterers for unpaid hire, the most straightforward and effective solution is for Members to carry out thorough due diligence (also known as KYC or ‘know your client’) on potential Charterers before entering into any charterparty. Due diligence is an investigation of a potential charterer to determine whether any problems could arise from entering into a charterparty with them. Most importantly, this involves investigating the financial solvency and assets of a potential charterer so that: a) Members can satisfy themselves that Charterers will be able to pay hire as it falls due. b) If problems do arise, Members will be able to obtain security for any claim for unpaid hire Although the level of appropriate due diligence will vary in each case, the following are steps which the Club would expect a Member, as a prudent insured, to take. i. Make enquiries regarding the potential charterer’s reputation  The potential charterer’s reputation within the industry will be a useful gu