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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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Tuesday, 01 March 16
CAN BULKCARRIER SUPPLY CUTS RESTORE SOME BALANCE? - CLARKSONS
The easing in bulkcarrier deliveries and the accelerated pace of demolition in recent years has seen bulkcarrier fleet growth slow from a rapid 17% ...
Monday, 29 February 16
BALTIC INDEX INCHES UP THIS PAST WEEK AS SMALLER VESSELS LEND SUPPORT
COALspot.com: The freight markets rose slightly this past week.
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Monday, 29 February 16
LOSS OF EARNINGS IN THE WAKE OF A COLLISION - GARD
KNOWLEDGE TO ELEVATE
A shipowner’s loss of earnings can form a significant part of a collision claim. Awareness of the ways of calculati ...
Friday, 26 February 16
U.S WEEKLY COAL PRODUCTION UP SLIGHTLY
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 25 February 16
DRY BULKERS ARE SCRAPPED AT RECORD PACE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The newbuilding market is at a lull these days, as ship owners are focusing on two fronts, getting rid of excess dry bulk tonnage and snapping up b ...
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- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Marubeni Corporation - India
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- McConnell Dowell - Australia
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Formosa Plastics Group - Taiwan
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- PTC India Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Xindia Steels Limited - India
- Parliament of New Zealand
- The University of Queensland
- SMG Consultants - Indonesia
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- The State Trading Corporation of India Ltd
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Riau Bara Harum - Indonesia
- Indogreen Group - Indonesia
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Renaissance Capital - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- CNBM International Corporation - China
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Planning Commission, India
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Australian Commodity Traders Exchange
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Karaikal Port Pvt Ltd - India
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