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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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Tuesday, 26 January 16
Q3'16 CFR SOUTH CHINA COAL SWAP DROPPED BELOW $41 A TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.82 (1.94%) per ton month over month.
A commodity swap is ...
Tuesday, 26 January 16
OUTLOOK FOR GLOBAL OIL MARKETS - OPEC SECRETARY GENERAL
Opening address by HE Abdalla S. El-Badri, OPEC Secretary General, at the Chatham House Conference: Middle East and North Africa Energy 2016, Theme ...
Monday, 25 January 16
5700 GAR COAL INDEX CLOSED $ 50.08 PER TON, $0.20 LOWER FROM LAST WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 1.35 percent week over week to averaging $39.39 per ton on this past Friday, ...
Monday, 25 January 16
SHOULD A DEFAULTING PARTY BE ENTITLED TO AN INNOCENT PARTY'S SAVING, FOLLOWING THEIR BREACH OF CONTRACT? - THE NEW FLAMENCO REVISITED
KNOWLEDGE TO ELEVATE
This case was addressed by the club in our of January 2015, when the High Court decision became available. The background ...
Monday, 25 January 16
DRY BULK SHIPPING: A MISERABLE START TO A NEW YEAR, WHERE THE MARKET STRUGGLES TO GROW AT ALL - BIMCO
The global production of steel dropped in 2015 compared to 2014, to a larger extent outside China, as China exported its surplus of steel to destin ...
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- Bahari Cakrawala Sebuku - Indonesia
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- London Commodity Brokers - England
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Interocean Group of Companies - India
- Mintek Dendrill Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- Africa Commodities Group - South Africa
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- New Zealand Coal & Carbon
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Sical Logistics Limited - India
- Coalindo Energy - Indonesia
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Minerals Council of Australia
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Mjunction Services Limited - India
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Central Electricity Authority - India
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Australian Coal Association
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- VISA Power Limited - India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Bulk Trading Sa - Switzerland
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- LBH Netherlands Bv - Netherlands
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
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