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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, 14 December 15
CFR SOUTH CHINA COAL SWAP IS STILL SLIDING
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 0.93(2.18%) per ton month over month.
A commodity swap ...
Sunday, 13 December 15
THE LOW VESSEL DEMANDS PUSHED DOWN BALTIC DRY INDEX FURTHER DOWN
COALspot.com: The low vessel demand across nearly all vessel sizes pushed the Baltic Exchange’s main sea freight index further down in this F ...
Sunday, 13 December 15
DRY BULK RATES KEEP ON FALLING AS LOW VESSEL DEMAND IS STILL THE NORM - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market nowadays is in an endless downward spiral, which as it turns out is unable to recover, at least as long as the current balance ...
Friday, 11 December 15
US COAL PRODUCTION UP 7.7% IN WEEK ENDED DECEMBER 5, 2015
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 10 December 15
LIENING CARGO - WHICH LIEN CLAUSE APPLIES TO THE BILL OF LADING? : WIKBORG REIN | HELLENIC SHIPPING NEWS
KNOWLEDGE TO ELEVATE
In a dry bulk market where a charterer is not paying freight or hire, its counterparty is often left to consider whether ...
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- Videocon Industries ltd - India
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- Ministry of Transport, Egypt
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- The Treasury - Australian Government
- ICICI Bank Limited - India
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- Indonesian Coal Mining Association
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- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
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- India Bulls Power Limited - India
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- Carbofer General Trading SA - India
- GAC Shipping (India) Pvt Ltd
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- Romanian Commodities Exchange
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- Xindia Steels Limited - India
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- Attock Cement Pakistan Limited
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- Metalloyd Limited - United Kingdom
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- PowerSource Philippines DevCo
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- Edison Trading Spa - Italy
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- Renaissance Capital - South Africa
- Pendopo Energi Batubara - Indonesia
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- AsiaOL BioFuels Corp., Philippines
- PTC India Limited - India
- Goldman Sachs - Singapore
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- Mercuria Energy - Indonesia
- Sical Logistics Limited - India
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Central Electricity Authority - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Bharathi Cement Corporation - India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
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- Coal and Oil Company - UAE
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- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Port Waratah Coal Services - Australia
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- SMG Consultants - Indonesia
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- Kalimantan Lumbung Energi - Indonesia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
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- TeaM Sual Corporation - Philippines
- Minerals Council of Australia
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- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Deloitte Consulting - India
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
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- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
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- GVK Power & Infra Limited - India
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Heidelberg Cement - Germany
- Planning Commission, India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Australian Commodity Traders Exchange
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Tamil Nadu electricity Board
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Australian Coal Association
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