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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, 22 November 15
INDIA COULD PROVIDE SILVER LINING FOR SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The rise of India as a global player in the shipping market could be just a couple of years away, as the country has the potential to become a seco ...
Friday, 20 November 15
U.S. COAL PRODUCTION FOR THE WEEK ENDING NOVEMBER '14; NO CHANGE FROM LAST WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.5 million shor ...
Friday, 20 November 15
NO IMPROVEMENT SEEN IN NEAR-TERM COAL DEMAND; SWAPS CLOSE LOWER
COALspot.com: Indonesian coal swap for delivery Q1 2016 declined month on month and flat on week over week. Price of coal seen no improvements this ...
Friday, 20 November 15
CHANGING CRUDE SUPPLY TRENDS MAY HELP EUROPEAN REFINERS - FITCH RATINGS
COALspot.com: Changes in global oil supply trends, including high Russian production, the expected renewal of Iranian heavy crude exports and the p ...
Thursday, 19 November 15
CHINA STEEL PRODUCTION CAPACITY TO PEAK IN 2016 - FITCH RATINGS
COALspot.com: Fitch Ratings today says that China's steel production capacity is likely to peak in 2016, with capacity elimination over the nex ...
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- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Deloitte Consulting - India
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Ceylon Electricity Board - Sri Lanka
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Vizag Seaport Private Limited - India
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- LBH Netherlands Bv - Netherlands
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Metalloyd Limited - United Kingdom
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Videocon Industries ltd - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- The University of Queensland
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Coal and Oil Company - UAE
- Parliament of New Zealand
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Directorate General of MIneral and Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Bulk Trading Sa - Switzerland
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Goldman Sachs - Singapore
- Parry Sugars Refinery, India
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Aditya Birla Group - India
- Uttam Galva Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- India Bulls Power Limited - India
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Jaiprakash Power Ventures ltd
- Thai Mozambique Logistica
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