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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, 28 March 16
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COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities continued to rose this week.
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Thursday, 24 March 16
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Thursday, 24 March 16
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- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
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- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
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- Bangladesh Power Developement Board
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- Parliament of New Zealand
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- Wood Mackenzie - Singapore
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- GAC Shipping (India) Pvt Ltd
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- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
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- Mjunction Services Limited - India
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- South Luzon Thermal Energy Corporation
- Coal and Oil Company - UAE
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- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Barasentosa Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kobexindo Tractors - Indoneisa
- Africa Commodities Group - South Africa
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
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- Kohat Cement Company Ltd. - Pakistan
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- Krishnapatnam Port Company Ltd. - India
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- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Videocon Industries ltd - India
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
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- Siam City Cement PLC, Thailand
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Directorate Of Revenue Intelligence - India
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- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Ministry of Finance - Indonesia
- Samtan Co., Ltd - South Korea
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Oldendorff Carriers - Singapore
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