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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, 01 February 16
INDONESIA'S SECOND LARGEST COAL MINER ADARO ENERGY HAS PRODUCED 51.46 MT IN 2015; 8% LOWER COMPARED TO FY14
COALspot.com: Adaro Energy, the Indonesia’s second largest coal producer by volume has produced 51.46 Mt in 2015, 8% lower compared to ...
Sunday, 31 January 16
BDI CONTINUED ITS FALL AND CLOSE AT A FRESH RECORD LOW ON FRIDAY
COALspot.com: The Baltic Dry Index, which gauges the cost of shipping dry bulk including iron ore, cement, grain, coal and fertilizer, continued it ...
Friday, 29 January 16
INDONESIAN BENCHMARK COAL PRICE SETTLES DOWN $ 0.31, OR 0.58%, AT $ 53.20 A TON
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price further down in January 2016. HBA has slumped by 0.58 ...
Friday, 29 January 16
U.S. COAL PRODUCTION OFF 2 PERCENT FROM LAST WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 milli ...
Thursday, 28 January 16
COAL REMAINS THE NO.1 FUEL FOR POWER GENERATION - EXXONMOBIL
COALspot.com: Energy demand trends from 2010 to 2040 are expected to vary significantly around the world, as countries move along very different tr ...
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- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- The University of Queensland
- Parry Sugars Refinery, India
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- Price Waterhouse Coopers - Russia
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Meenaskhi Energy Private Limited - India
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Georgia Ports Authority, United States
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Grasim Industreis Ltd - India
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Banpu Public Company Limited - Thailand
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- MS Steel International - UAE
- Ceylon Electricity Board - Sri Lanka
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Bhatia International Limited - India
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Kepco SPC Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Thai Mozambique Logistica
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Economic Council, Georgia
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- SN Aboitiz Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
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