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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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Sunday, 10 January 16
LNG BUNKERING IN ASIA: FUELING A PROMISING FUTURE? - REED SMITH
The requirement of a mandatory reduction of sulphur content in bunker fuel proposed by the International Maritime Organisation (IMO) poses a challe ...
Saturday, 09 January 16
BALTIC DRY INDEX SINKS 10% WEEK OVER WEEK TO AN ALL-TIME LOW OF 429 POINTS
COALspot.com: The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, decline around 10% we ...
Friday, 08 January 16
FOB INDONESIA COAL SWAP FOR DELIVERY H1'16 REMAIN FLAT AS DEMAND DROPS OFF
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month, flat week over week. The price for coal has been in a Dull Market sinc ...
Friday, 08 January 16
FOB RICHARDS BAY COAL SWAP FOR Q2'16 DELIVERY CLOSED UP $0.13 AT $45.50 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Friday, 08 January 16
WEEKLY US COAL PRODUCTION DECLINES 1.6% TO 11.7 MMST, SAYS EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 11.7million short ...
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- Semirara Mining and Power Corporation, Philippines
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- Semirara Mining Corp, Philippines
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- Eastern Energy - Thailand
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Petron Corporation, Philippines
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- Bhushan Steel Limited - India
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- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Directorate General of MIneral and Coal - Indonesia
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- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Standard Chartered Bank - UAE
- Intertek Mineral Services - Indonesia
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
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- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
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- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
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- Directorate Of Revenue Intelligence - India
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- OPG Power Generation Pvt Ltd - India
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- Tamil Nadu electricity Board
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
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- Essar Steel Hazira Ltd - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- Aboitiz Power Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Indonesian Coal Mining Association
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- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
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- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- White Energy Company Limited
- Anglo American - United Kingdom
- Edison Trading Spa - Italy
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Minerals Council of Australia
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- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
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- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Eastern Coal Council - USA
- Leighton Contractors Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Ministry of Finance - Indonesia
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
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- Bukit Asam (Persero) Tbk - Indonesia
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- Parry Sugars Refinery, India
- Singapore Mercantile Exchange
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