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Tuesday, 08 December 15
HOW TO MITIGATE LEGAL RISKS WHEN PURCHASING BUNKERS - LESSONS LEARNED FROM THE OW BUNKER COLLAPSE - THE SWEDISH CLUB
 KNOWLEDGE TO ELEVATE
About a year has passed since OW Bunker & Trading A/S filed for bankruptcy. The collapse shows that there are significant risks for shipowners and charterers in using intermediaries for the supply of bunkers. On the one hand the intermediary issues an invoice in capacity as the contractual supplier and should be paid for the bunkers. On the other hand do physical suppliers in some jurisdictions have an independent right to claim the vessel for unpaid bunkers. As a result, there is an inherent risk for competing claims against vessels to the extent the intermediary fails to pass on the payment to the physical supplier.
The collapse of OW Bunker has not only generated disputes involving competing claims against vessel owners by contractual suppliers and physical suppliers, but also charterparty disputes between owners and charterers. The Club’s FD&D lawyers presently handle about 40 cases involving disputes following the collapse of OW Bunkers. The total sum of these disputes is in excess of USD 20 million. The legal issues are complex and case specific. For instance, it has been argued that OW Bunker or their assignees cannot claim payment at all under English law since they never owned the bunkers for which they issued an invoice. This argument was recently dismissed by the English Court of Appeal, see the Club’s Member Alert of 23 October 2015. In addition, a court decision in one country may not apply in another country. Therefore, as of today, no universal solution to the underlying dilemma with competing claims is in sight.
The OW Bunker collapse has generated important lessons for the future. The following steps may be taken by owners and charterers in order to bring contractual clarity in relation to the supply of bunkers, as well as mitigate the risk for competing claims:
Insert BIMCOs non-lien clause in the charterparty, see Special Circular from BIMCO.
Prior to ordering bunkers, the supplier should be provided with the following notice (this is linked to the above non-lien clause):
To: Bunker Sellers (Name, address and contact details)
Take note that we, (Charterers: Name, address and contact details) are today (date) ordering (specification of) bunkers for supply at (port or place) on or about (date) on our account and our credit to MV/MT………… on charter to us and that the bunkers to be supplied to the Vessel are solely for our account as Charterers and that neither the Vessel, the Owners nor the Master is a party to the bunker supply contract and no lien, encumbrance or any rights shall arise on the Vessel.
Yours faithfully
Charterers of MV/MT………
Avoid any reference on the Bunker Delivery Receipt to the physical supplier’s own Terms and Conditions in order to avoid creating a direct contract between the vessel owner and the supplier.
Stamp and sign the Bunker Delivery Receipt with the following wording:
Vessel…………………
This bunker supply is for account of vessel’s time charterers, Messrs………………
I herewith declare that neither owners / bareboat charterers nor the vessel are responsible for payment of this supply and no lien or other claim against the vessel can therefore arise.
Date:
……………………………………………………………
Master / Chief Engineer
Explore possibilities to take out insurance to protect against the risk of charterer (or bunker intermediary) insolvency
As mentioned above, the use of a bunker intermediary will entail an enhanced risk in relation to the supply of bunkers. Members may therefore consider agreeing to only deal with physical bunker suppliers directly and, if so, a provision to that effect should be inserted in any time charterparty.
In the event an intermediary is used the following precautionary steps can be taken:
Endeavour to ensure that the intermediary has an appropriate credit insurance.
Endeavour to agree to pay the intermediary the profit element only by way of paying the physical supplier separately, or by way of making one payment to the intermediary which is split into two; the intermediary receives the profit element as principal and the substantive sum as agent for the physical supplier. At least the first alternative needs to be expressed in the contract with the intermediary.
Endeavour to ensure that the ultimate buyer has the longest credit period in the contractual chain by way of a term in the contract with the intermediary that the intermediary has to first pay their supplier in full for the bunkers before the ultimate buyer is obliged to pay them.
Finally, a word of caution. There is no magic answer which will eliminate all legal risks in relation to the supply of bunkers. All situations differ and there are different parties involved in supply chains. However, the above constitute steps that owners and charterers can take to try to mitigate those risks as much as possible, in appropriate circumstances. It is acknowledged that the steps may be difficult to take in practice.
Source: The Swedish Club | Hellenic Shipping News
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Monday, 04 April 16
INDONESIA CS57 COAL INDEX SLIDES SLIGHTLY WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin fell 0.07 percent week over week to averaging $38.88 per ton on this past Friday, ac ...
Monday, 04 April 16
CAPE INDEX JUMPED 70% WEEK ON WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
The freight market was ...
Friday, 01 April 16
ASSESSING THE DRY BULK MARKET AT ROCK BOTTOM - CLARKSONS
While the opening months of the year are typically a weak period for the dry bulk market, the downturn so far this year has been severe. Earnings h ...
Friday, 01 April 16
NINE AM - TIME TO GET AN INDONESIAN LANGUAGE VERSION OF YOUR CHARTERPARTIES - CLYDE & CO
KNOWLEDGE TO ELEVATE
For several years, Indonesian law (Article 31, Law Number 24 of 2009) has required that memoranda of understanding (" ...
Friday, 01 April 16
U.S. COAL PRODUCTION UP SLIGHTLY WEEK OVER WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.6 million shor ...
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- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- The University of Queensland
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
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- PTC India Limited - India
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
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- Eastern Energy - Thailand
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- Central Electricity Authority - India
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- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
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- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
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- International Coal Ventures Pvt Ltd - India
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- CIMB Investment Bank - Malaysia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
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- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Indian Oil Corporation Limited
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Leighton Contractors Pty Ltd - Australia
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
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- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Australian Coal Association
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Semirara Mining Corp, Philippines
- Simpson Spence & Young - Indonesia
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Attock Cement Pakistan Limited
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Heidelberg Cement - Germany
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Power Finance Corporation Ltd., India
- Indian Energy Exchange, India
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
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- McConnell Dowell - Australia
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- Mintek Dendrill Indonesia
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