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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, 18 January 16
Q1'16 CFR SOUTH CHINA COAL SWAP CLOSED AT $ 42.50 PER TON; UP 1% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.43 (1.02%) per ton month over month.
A commodity swap is ...
Friday, 15 January 16
FOB INDONESIA COAL SWAPS FIRM SLIGHTLY LAST WEEK
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month over month and week over week.
According to AsiaClear OTC coal swap's r ...
Friday, 15 January 16
SHIPPING: 2016 STARTED WITH MISERY ACROSS THE BOARD FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As one would have expected, the dry bulk market starter the new year where it left off in 2015, plunging to never seen before depths, as the market ...
Friday, 15 January 16
U.S. WEEKLY COAL PRODUCTION ROSE ACROSS ALL BASINS: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 14 January 16
FOB RICHARDS BAY COAL SWAP FOR Q3 DELIVERY CLOSED $5.90 LOWER THAN Q1 PRICE
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coal ...
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- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Orica Mining Services - Indonesia
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Baramulti Group, Indonesia
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Ambuja Cements Ltd - India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Meenaskhi Energy Private Limited - India
- IEA Clean Coal Centre - UK
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Formosa Plastics Group - Taiwan
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhatia International Limited - India
- Central Electricity Authority - India
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Metalloyd Limited - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Central Java Power - Indonesia
- SN Aboitiz Power Inc, Philippines
- White Energy Company Limited
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- CNBM International Corporation - China
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- The University of Queensland
- Indogreen Group - Indonesia
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Parliament of New Zealand
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Independent Power Producers Association of India
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- Therma Luzon, Inc, Philippines
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Planning Commission, India
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Indian Oil Corporation Limited
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Global Business Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Commonwealth Bank - Australia
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