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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, 31 December 15
2016 FOB NEWCASTLE COAL SWAP RALLY TO CLOSE AT $37.98/TON
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery rose another $1.48 per ton (4.05%) this past week compared to the sam ...
Wednesday, 30 December 15
FINAL DEALS OF THE YEAR TAKING PLACE, AS SHIP OWNERS PREPARE FOR 2016 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The Holidays’ investment lull has taken a grip over the newbuilding and S&P market for second hand vessels, as shipbrokers are reporting ...
Tuesday, 29 December 15
CFR SOUTH CHINA COAL SWAPS ROSE MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.68 (1.64%) per ton month over month.
A commodity swap is ...
Monday, 28 December 15
Q2' 15 U.S. STEAM COAL EXPORTS TOTALED 7.0 MMST; DOWN 16.9% FROM Q1 2015 - EIA
COALspot.com: U.S. coal production during second quarter 2015 totaled 211.1 million short tons.
According to EIA’s preliminary quarterly ...
Monday, 28 December 15
NOVEMBER NEWCASTLE COAL EXPORTS DECLINED 11.87%; THE AVERAGE PRICE OF COAL EXPORTS ROSE 1.37%
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $1.120 billio ...
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- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Malabar Cements Ltd - India
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Global Green Power PLC Corporation, Philippines
- Electricity Authority, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- CNBM International Corporation - China
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Ministry of Transport, Egypt
- Pipit Mutiara Jaya. PT, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Meenaskhi Energy Private Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Energy Development Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- Savvy Resources Ltd - HongKong
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Sakthi Sugars Limited - India
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- Vijayanagar Sugar Pvt Ltd - India
- New Zealand Coal & Carbon
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Commonwealth Bank - Australia
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Thiess Contractors Indonesia
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- IHS Mccloskey Coal Group - USA
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
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