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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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Wednesday, 10 February 16
OWNERS APPEAR WILLING TO DISPOSE OF TONNAGE THE SOONEST IT HITS THE 10 YEAR MARK - TIMOS PAPADIMITRIOU
COALspot.com: The last two months of 2015 made a case for traditional shipowners to invest in the dry bulk sector, doing so though based purely on ...
Monday, 08 February 16
DRY-BULK SHIPPING DIVING DEEP
COALspot.com: The freight markets continued to fall this past week.
The Baltic Dry Index (BDI) of dry-bulk shipping freights, a measure of glo ...
Monday, 08 February 16
DRY BULK: SHIPBROKER SEES BDI MARKET REACHING LOW POINT OF 236 POINTS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The endless pit that is the dry bulk market over the past two months, has been the issue of debate among ship owners, shipbroker and analysts alike ...
Friday, 05 February 16
COAL INDIA EYES COAL MINES IN SOUTH AFRICA - PTI
“Coal India Ltd has plans of acquiring coal mines in South Africa,” an official said. It is looking at acquiring mines in partnership w ...
Friday, 05 February 16
U.S. WEEKLY COAL OUTPUT ROSE 4.2% TO 13.6 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.6 million shor ...
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- Semirara Mining Corp, Philippines
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- The Treasury - Australian Government
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- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
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- Marubeni Corporation - India
- Leighton Contractors Pty Ltd - Australia
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- European Bulk Services B.V. - Netherlands
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- Minerals Council of Australia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- LBH Netherlands Bv - Netherlands
- Directorate General of MIneral and Coal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Sojitz Corporation - Japan
- Rio Tinto Coal - Australia
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- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
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- Georgia Ports Authority, United States
- White Energy Company Limited
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- Parliament of New Zealand
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- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Wood Mackenzie - Singapore
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- Bangladesh Power Developement Board
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- Sree Jayajothi Cements Limited - India
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- Carbofer General Trading SA - India
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
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- The University of Queensland
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- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
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- Petron Corporation, Philippines
- Mercator Lines Limited - India
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- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Renaissance Capital - South Africa
- SMG Consultants - Indonesia
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- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Romanian Commodities Exchange
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- Bhatia International Limited - India
- Malabar Cements Ltd - India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Bukit Makmur.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
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- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
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- Wilmar Investment Holdings
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- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Coastal Gujarat Power Limited - India
- Vedanta Resources Plc - India
- ICICI Bank Limited - India
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
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- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- Commonwealth Bank - Australia
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Indogreen Group - Indonesia
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Edison Trading Spa - Italy
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Orica Mining Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Global Coal Blending Company Limited - Australia
- Global Business Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
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- Africa Commodities Group - South Africa
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