Many professionals depend for their livelihood on accreditation by industry bodies – but is the relationship between them a contractual one? The High Court addressed that burning issue in awarding substantial damages to a shipping inspector whose accreditation was removed following an unfair disciplinary process.
The inspector, a highly experienced former sea-going captain, was accredited by an independent body which represents the interests of over 100 companies, including oil majors, and is devoted to ensuring that oil, chemical and gas tankers do not set to sea in an unsafe condition. He said that he had undertaken over 1,000 vessel inspections over a 12-year period without a single complaint.
Following a disciplinary hearing, however, his accreditation was removed on the basis that he had dishonestly falsified the number of hours he spent on four such inspections. He denied any wrongdoing and launched proceedings against the body, seeking reinstatement of his accreditation and damages for alleged breaches of contract and natural justice.
Ruling on the matter, the Court found that an implied contractual relationship existed between the body and the inspector. The body’s rules contained a framework of rights and duties of sufficient certainty to have contractual effect. Inspectors were expected to display the highest levels of reliability and integrity and their accreditation depended on compliance with those rules.
The Court concluded that the disciplinary process employed by the body was deeply flawed, was wholly unfair on him and amounted to a breach of contract and a serious contravention of the principles of natural justice. He was awarded £126,841 in damages to reflect his loss of earnings arising from the removal of his accreditation.
The Court declined to issue a mandatory injunction on the basis that it was confident that the reputable body would voluntarily restore his accreditation in the light of the judgment.
