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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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Friday, 27 November 15
FOB RICHARDS BAY COAL SWAPS UP FROM LAST WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 up week over week and month over month.
The Q1’ 2016 swa ...
Thursday, 26 November 15
ITALY'S STEAM COAL IMPORTS EXPECTED TO REACH 16 MILLION TONS AND COKING COAL IMPORTS TO AMOUNT TO 4 MILLION TONS - ASSOCARBONI
ASSOCARBONI LOOKS AT COAL FROM A DIFFERENT ANGLE
- “Coal has made huge steps towards environmental sustainability, making itself t ...
Thursday, 26 November 15
DRY BULK MARKET WILL REBOUND EVENTUALLY, BUT THINGS WILL BECOME EVEN WORSE BEFORE THEY IMPROVE SAYS SHIPBROKER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the dry bulk market’s benchmark, the Baltic Dry Index (BDI) reached an all-time late last week and has failed to rebound significantly eve ...
Thursday, 26 November 15
Q3'16 FOB NEWCASTLE COAL SWAP FALLS 27.5% SINCE 20 FEB 2015
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $5 per ton (12.05%) month over month to US$ 36.50 per ton. The s ...
Wednesday, 25 November 15
INDIA'S POWER GENERATORS FACE LOW, FALLING UTILISATION RATE - FITCH
COAlspot.com: Fitch Ratings says in a new report that the utilisation rate of India's thermal power generation capacity continued to decline in ...
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- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- ASAPP Information Group - India
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Sarangani Energy Corporation, Philippines
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- ICICI Bank Limited - India
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Mercator Lines Limited - India
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- TeaM Sual Corporation - Philippines
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- Semirara Mining Corp, Philippines
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Altura Mining Limited, Indonesia
- Indika Energy - Indonesia
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Siam City Cement PLC, Thailand
- Singapore Mercantile Exchange
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Star Paper Mills Limited - India
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Posco Energy - South Korea
- VISA Power Limited - India
- Central Electricity Authority - India
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Thai Mozambique Logistica
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- LBH Netherlands Bv - Netherlands
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- Semirara Mining and Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Ministry of Finance - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
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