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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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Monday, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
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- VISA Power Limited - India
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- Barasentosa Lestari - Indonesia
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- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
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- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Intertek Mineral Services - Indonesia
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
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- Neyveli Lignite Corporation Ltd, - India
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- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
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- Global Business Power Corporation, Philippines
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- Singapore Mercantile Exchange
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- IEA Clean Coal Centre - UK
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- The University of Queensland
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- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
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- GN Power Mariveles Coal Plant, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
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- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Bayan Resources Tbk. - Indonesia
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Parliament of New Zealand
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Makarim & Taira - Indonesia
- Orica Australia Pty. Ltd.
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Gujarat Sidhee Cement - India
- Eastern Coal Council - USA
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- Medco Energi Mining Internasional
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- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Indogreen Group - Indonesia
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- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
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- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
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- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
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- AsiaOL BioFuels Corp., Philippines
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Karbindo Abesyapradhi - Indoneisa
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Australian Commodity Traders Exchange
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Economic Council, Georgia
- Eastern Energy - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- CNBM International Corporation - China
- London Commodity Brokers - England
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Vedanta Resources Plc - India
- Cigading International Bulk Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
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- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
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