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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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Thursday, 04 February 16
CAPESIZE: WEST AUSTRALIAN TO CHINA HAS BEEN CONCLUDED AT US$ 2.85 PMT AND THE C3 MARKET REMAINS INACTIVE - FEARNLEYS
Capesize
As everyone is getting ready for the Chinese new year, already depressed rates are under further pressure.
According to Fearnleys, ...
Wednesday, 03 February 16
DRY BULK MARKET CONTINUES TO BE UNDER PRESSURE - INTERMODAL
The Dry Bulk market continues to be under pressure, with the BDI remaining in search of even the slightest support, which seems to be delaying more ...
Tuesday, 02 February 16
RECORD EXPORTS THROUGH SOUTH AFRICA'S RICHARDS BAY COAL TERMINAL MADE AT EXPENSE OF SMALLER RIVALS, IHS SAYS
Five percent increase in coal exports through South Africa’s dominant Richards Bay Coal Terminal in 2015 unlikely to accelerate country&rsquo ...
Tuesday, 02 February 16
SETTING ASIDE, STRIKING OUT AND APPEALS TO THE COURT OF APPEAL IN SHIP ARRESTS - RAJAH & TANN ASIA LLP
KNOWLEDGE TO ELEVATE
The Singapore Court of Appeal once again has had to grapple with ship arrest, setting aside and appeals to the Court unde ...
Monday, 01 February 16
DRY BULK SUFFERS FROM POSEIDON'S POTENT PRONGS - CLARKSONS
It has been a grim start to 2016 for the bulkcarrier market, with the Baltic Dry Index sliding to new record lows on almost every day of the year s ...
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- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- PTC India Limited - India
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Directorate Of Revenue Intelligence - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- India Bulls Power Limited - India
- Orica Australia Pty. Ltd.
- Petron Corporation, Philippines
- VISA Power Limited - India
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhushan Steel Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Chettinad Cement Corporation Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Bhatia International Limited - India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement PLC, Thailand
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Economic Council, Georgia
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Wilmar Investment Holdings
- White Energy Company Limited
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- GVK Power & Infra Limited - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Rashtriya Ispat Nigam Limited - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Holcim Trading Pte Ltd - Singapore
- Commonwealth Bank - Australia
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Central Java Power - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Energy Link Ltd, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Goldman Sachs - Singapore
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
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