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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, 12 February 16
DRY BULK MARKET'S FORTUNES STILL TIED WITH CHINA'S ECONOMY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given ...
Friday, 12 February 16
COAL PRICES ARE EXPECTED TO DECLINE 13% IN 2016 TO $50 ATON, ON CONTINUED WEAK DEMAND AND OVERSUPPLY - WORLD BANK
COALspot.com: Thermal coal prices fell 9 percent in the fourth quarter on continued weak demand, high stocks, and surplus production, World Bank sa ...
Friday, 12 February 16
U.S. COAL PRODUCTION OFF 5.4% FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 12.9 million shor ...
Thursday, 11 February 16
GLOBAL NEWBUILDING ORDERBOOK IS SHRINKING ON A DAILY BASIS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
2016 has started right where 2015 left off when it comes to newbuilding ordering activity, i.e. there are slim pickings to be had from shipyards ar ...
Wednesday, 10 February 16
SOUTH AFRICA IS HOPING TO SHIP MORE COAL TO INDIA IN 2016
COALspot.com: South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal in 2015, industry officials ...
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- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- McConnell Dowell - Australia
- CIMB Investment Bank - Malaysia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- VISA Power Limited - India
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- Binh Thuan Hamico - Vietnam
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Attock Cement Pakistan Limited
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Borneo Indobara - Indonesia
- Parry Sugars Refinery, India
- White Energy Company Limited
- Heidelberg Cement - Germany
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- Chamber of Mines of South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Agrawal Coal Company - India
- Maharashtra Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Kalimantan Lumbung Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- SN Aboitiz Power Inc, Philippines
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Price Waterhouse Coopers - Russia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Coal and Oil Company - UAE
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Makarim & Taira - Indonesia
- Orica Mining Services - Indonesia
- Medco Energi Mining Internasional
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Bahari Cakrawala Sebuku - Indonesia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- London Commodity Brokers - England
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Bhushan Steel Limited - India
- Australian Coal Association
- Planning Commission, India
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Mintek Dendrill Indonesia
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Georgia Ports Authority, United States
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
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