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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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Wednesday, 16 December 15
FOB RICHARDS BAY COAL SWAP SLUMP 5.5% FROM LAST MONTH
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 decline month over month and week over week.
The Q1’ 2016 &nbs ...
Wednesday, 16 December 15
MARKET INSIGHT - KATERINA RESTIS
On Friday 4th of December the meeting of OPEC was held in Vienna, Austria. Since its last meeting, oil and product stock levels have continued to r ...
Tuesday, 15 December 15
THE GOVERNMENT DECLARED THERMAL COAL BENCHMARK PRICE CRASHING ONCE AGAIN
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price down to below 2009 level. HBA has slumped by 1.69% mo ...
Tuesday, 15 December 15
API 5 FOB NEWCASTLE COAL SWAP FIRM W-W; WEAK M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $.13 per ton (0.35%) month over month to US$ 37.07 per ton. The swap w ...
Monday, 14 December 15
5000 GAR CS (I) COAL INDEX DECLINE US$ 0.04 PER TON W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.04 per ton (-0.10 %) week over week.
According to the CS (i) coal (system generated ...
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- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Planning Commission, India
- Tamil Nadu electricity Board
- Kobexindo Tractors - Indoneisa
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Coal and Oil Company - UAE
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Electricity Authority, New Zealand
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Oldendorff Carriers - Singapore
- San Jose City I Power Corp, Philippines
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Kohat Cement Company Ltd. - Pakistan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Sical Logistics Limited - India
- PNOC Exploration Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Attock Cement Pakistan Limited
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Electricity Generating Authority of Thailand
- Minerals Council of Australia
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Ambuja Cements Ltd - India
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Goldman Sachs - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
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