—— Case of Dispute over Intermediary Contract between Jiangsu Yufeng Maritime Engineering Co., Ltd. and Mr. Wei 

Key Word：Brokerage contract; Intermediary fee conditions; Vessel leasing; Actual performance; Purpose frustrated

Case Summary:

In 2021, in order to undertake the installation of wind turbines for offshore wind power projects, Mr. Wei negotiated the lease of offshore wind turbine lifting vessels with Jiangsu Yufeng Maritime Engineering Co., Ltd. (hereinafter referred to as "Yufeng Co., Ltd."). The parties agreed that once Yufeng Co., Ltd. facilitated the leasing contract for the engineering vessels, Mr. Wei would pay an intermediary fee of CNY 3 million per month. The contract also stipulated that if Mr. Wei, using the trading platform provided by Yufeng Co., Ltd., circumvented the direct signing of contracts with the shipowners, he would still be required to pay the full amount of the compensation. Following negotiations by Yufeng Co., Ltd., the shipowners of the engineering vessel "Haixin Lifting 1" entered into a ship leasing agreement with Mr. Wei's cooperating company, Jiangsu Zhenyuan Electric Power Technology Co., Ltd. (hereinafter referred to as "Zhenyuan Co., Ltd."). However, the shipowners did not arrive at the Shengsi No. 2 wind farm construction site as agreed and received a letter of contract termination from the project department. Subsequently, Zhenyuan Co., Ltd. temporarily relocated the engineering vessel to the Xiangshan No. 1 wind farm for construction. However, after adapting to sea conditions, the project department sent a letter stating that the vessel's performance did not match the conditions in the construction area, rendering it incapable of completing the wind turbine installation task. Yufeng Co., Ltd. filed a lawsuit, seeking payment of the intermediary fee as per the agreement.

Judgment:

After careful examination, the court determined that the parties had a dispute regarding the payment conditions for the intermediary fee in the intermediary contract at issue. The contract stipulated that, once Yufeng Co., Ltd. facilitated the engineering vessel leasing contract, Mr. Wei was obligated to pay Yufeng Co., Ltd. a monthly fee of CNY 3 million. Considering the contractual provisions for monthly payments and the length of the leasing period, it was evident that the clause did not imply a "pay upon conclusion" interpretation of the intermediary fee. Instead, the payment of the intermediary fee should be determined based on the actual performance of the leasing contract . In this case, the engineering vessel did not arrive at the construction site as scheduled, leading to the termination of the construction contract by the project department. After changing the construction site, the vessel was forced to leave due to its own performance limitations, rendering it incapable of completing the wind turbine nacelle installation task. Mr. Wei's purpose for leasing the vessel for offshore wind turbine installation was not realized. Therefore, the ship leasing contract was never properly executed, and the conditions for paying the intermediary fee were not met. The court, in the first-instance judgment, rejected Yufeng Co., Ltd.'s litigation request. Following the judgment, neither party appealed.

Significance:

Offshore engineering, as a strategic emerging industry with high technological content and strong technological innovation, relies on the support and guarantee of maritime engineering equipment. In the competitive market for maritime equipment (vessels), securing engineering vessels that match the project is a crucial aspect for the timely completion of offshore wind power projects, and yet the lessee need to pay high rent ,even high intermediary fees linked to the leasing period. These vessel leases are associated with high costs, and intermediary contracts often stipulate high intermediary fees, which are linked to the leasing period. In this case, the court, through the systematic interpretation of contract terms, clarified the fact that specialized offshore engineering vessels fail to meet the agreed conditions and cannot actively participate in maritime engineering project construction, then reject the intermediary's request for payment of high fees. The judgment result protects fairly and reasonably the parties' legitimate rights and interests and provides judicial support for the orderly development of maritime engineering construction and the maritime equipment leasing market.