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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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Friday, 19 February 16
INDONESIAN HBA HITS A NEW LOWS BELOW $51 A TON AS OVERSUPPLY, LOW DEMAND WOES PERSIST
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further deep in February 2016. HBA has slumped second time t ...
Friday, 19 February 16
U.S. WEEKLY COAL PRODUCTION ROSE 2.6% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.2 million shor ...
Thursday, 18 February 16
INDIA NEEDS INTERNATIONAL SUPPORT ON HIGH EFFICIENCY COAL - WORLD COAL ASSOCIATION
Speaking at a conference in New Delhi today, World Coal Association Chief Executive Benjamin Sporton said the critical role of coal in driving econ ...
Thursday, 18 February 16
CHINA COAL SECTOR - 2015 RESULTS BLEAK, 2016 UNLIKELY TO BE ANY BETTER - FITCH
COALspot.com: China Coal Sector’s Financial Woes to Worsen in 2016.
Fitch Ratings says that the 2015 full-year result previews issued by ...
Thursday, 18 February 16
PANAMAX RATES OUT OF ECSA WERE STILL GAINING A PREMIUM OVER THE REST OF THE MARKET - INTERMODAL
The BDI moved further down last week, fact that hardly took anyone by surprise as the lunar year holidays in Asia on top of the already depre ...
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- Parliament of New Zealand
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Toyota Tsusho Corporation, Japan
- Mjunction Services Limited - India
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Sidhee Cement - India
- Aboitiz Power Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Bahari Cakrawala Sebuku - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- GMR Energy Limited - India
- IEA Clean Coal Centre - UK
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Uttam Galva Steels Limited - India
- CIMB Investment Bank - Malaysia
- Indogreen Group - Indonesia
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Tata Chemicals Ltd - India
- Global Business Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Tamil Nadu electricity Board
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Georgia Ports Authority, United States
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Larsen & Toubro Limited - India
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- White Energy Company Limited
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Wilmar Investment Holdings
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Videocon Industries ltd - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Simpson Spence & Young - Indonesia
- Edison Trading Spa - Italy
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- IHS Mccloskey Coal Group - USA
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Economic Council, Georgia
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
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