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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, 11 November 15
VESSEL VALUES ARE DOWN BY AT LEAST 20% SINCE MID-AUGUST - INTERMODAL
I had promised not to spend another broker’s insight focusing on the dry bulk side. However, the sale of the M/V Churchill Bulker (179,362 dw ...
Tuesday, 10 November 15
SELF-HEATING OF COAL HAS EMPHASISED THE IMPORTANCE OF CHECKING THE ACCURACY OF SHIPPER'S DECLARATIONS - GARD
Recent incidents involving self-heating of coal has emphasised the importance of checking the accuracy of shipper’s declarations for all type ...
Tuesday, 10 November 15
API 5 FOB NEWCASTLE COAL SWAP SLIDES CONTINUE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.55 per ton (8.50%) month over month to US$ 38.20 per ton. The swap ...
Monday, 09 November 15
BUNKER PRICES TO KEEP SLIDING THIS WEEK, EXPERT SAYS - MARINE BUNKER EXCHANGE
The oil price volatility has continued this week. Two dollars up one day and the next day two dollars down. The oil market has been trading on the ...
Monday, 09 November 15
CFR SOUTH CHINA THERMAL COAL SWAP FOR Q3' 16 CONTRACT DECLINED US$ 4 PER TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.35 (9.03 %) per ton month over month.
A commodity swa ...
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- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Medco Energi Mining Internasional
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- LBH Netherlands Bv - Netherlands
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Agrawal Coal Company - India
- PowerSource Philippines DevCo
- Renaissance Capital - South Africa
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Kaltim Prima Coal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Bhatia International Limited - India
- Cigading International Bulk Terminal - Indonesia
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- San Jose City I Power Corp, Philippines
- London Commodity Brokers - England
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- Kideco Jaya Agung - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Bukit Baiduri Energy - Indonesia
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Minerals Council of Australia
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Borneo Indobara - Indonesia
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Global Green Power PLC Corporation, Philippines
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jindal Steel & Power Ltd - India
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- PNOC Exploration Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Economic Council, Georgia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- The University of Queensland
- The State Trading Corporation of India Ltd
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- GMR Energy Limited - India
- Sindya Power Generating Company Private Ltd
- Neyveli Lignite Corporation Ltd, - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- PTC India Limited - India
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
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