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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, 18 January 16
Q1'16 CFR SOUTH CHINA COAL SWAP CLOSED AT $ 42.50 PER TON; UP 1% MONTH OVER MONTH
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery rose US$ 0.43 (1.02%) per ton month over month.
A commodity swap is ...
Friday, 15 January 16
FOB INDONESIA COAL SWAPS FIRM SLIGHTLY LAST WEEK
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month over month and week over week.
According to AsiaClear OTC coal swap's r ...
Friday, 15 January 16
SHIPPING: 2016 STARTED WITH MISERY ACROSS THE BOARD FOR SHIP OWNERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As one would have expected, the dry bulk market starter the new year where it left off in 2015, plunging to never seen before depths, as the market ...
Friday, 15 January 16
U.S. WEEKLY COAL PRODUCTION ROSE ACROSS ALL BASINS: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.4 million shor ...
Thursday, 14 January 16
FOB RICHARDS BAY COAL SWAP FOR Q3 DELIVERY CLOSED $5.90 LOWER THAN Q1 PRICE
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap up month over month and week over week.
The Q1’ 2016 FOB Richards Bay Coal ...
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- Bhushan Steel Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Ministry of Finance - Indonesia
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Planning Commission, India
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Karaikal Port Pvt Ltd - India
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- European Bulk Services B.V. - Netherlands
- Gujarat Mineral Development Corp Ltd - India
- PTC India Limited - India
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Independent Power Producers Association of India
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Port Waratah Coal Services - Australia
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Riau Bara Harum - Indonesia
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Formosa Plastics Group - Taiwan
- Electricity Authority, New Zealand
- Alfred C Toepfer International GmbH - Germany
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Karbindo Abesyapradhi - Indoneisa
- Coalindo Energy - Indonesia
- Power Finance Corporation Ltd., India
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- VISA Power Limited - India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Simpson Spence & Young - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Global Business Power Corporation, Philippines
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dalmia Cement Bharat India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Tata Chemicals Ltd - India
- ICICI Bank Limited - India
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
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