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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, 19 November 15
Q3' 16 RICHARDS BAY COAL SWAP CLOSED 9% LOWER THAN Q1' 16 DELIVERY PRICE
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, 19 November 15
RATES FOR CAPES KEPT MOVING SOUTH - INTERMODAL
COALspot.com: With the BDI currently standing at less than 30 points above the historical lows marked in February this year and with activity acros ...
Wednesday, 18 November 15
MARKET (SHIPPING) INSIGHT - THEODORE NTALAKOS
Supply VS Demand
According to data from the IMF, global growth for 2015 is projected at 3.1 percent, 0.3 percentage point lower than in 2014, ...
Tuesday, 17 November 15
KOMIPO INVITES BIDS FOR (SEMI) ANTHRACITE COAL FOR SEOCHEON POWER PLANT
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 70,000 Metric Tons of (Semi) Anthracite for Ja ...
Tuesday, 17 November 15
FOB NEWCASTLE COAL SWAPS FALL: Q1'16 SLID 11.45% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $4.75 per ton (11.45%) month over month to US$ 36.75 per ton. The swap ...
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- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Posco Energy - South Korea
- Pendopo Energi Batubara - Indonesia
- Bhoruka Overseas - Indonesia
- Xindia Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Planning Commission, India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Commonwealth Bank - Australia
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Parliament of New Zealand
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Electricity Generating Authority of Thailand
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Independent Power Producers Association of India
- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Baramulti Group, Indonesia
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Ministry of Mines - Canada
- Siam City Cement PLC, Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Mining Services - Indonesia
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- MS Steel International - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Port Waratah Coal Services - Australia
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- Gujarat Mineral Development Corp Ltd - India
- Economic Council, Georgia
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Borneo Indobara - Indonesia
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
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