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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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Saturday, 26 December 15
FOB INDONESIA COAL SWAPS KEEP DROPPING
COALspot.com: Indonesian coal swap delivery Q1 2016 declined month on month and week over week.
According to AsiaClear OTC coal swap's rep ...
Friday, 25 December 15
WEEKLY US COAL PRODUCTION ESTIMATES DIP 8.5%
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 14.7 million shor ...
Thursday, 24 December 15
Q3' 16 FOB RICHARDS BAY COAL SWAP SHED US$ 0.60 PER TON OVER WEEK, AND STANDS AT US$ 43.25 PER TON
COALspot.com: Q1’ 2016 API4 FOB Richards Bay Coal swap decline month over month and slightly up week over week.
The Q1’ 2016 FOB R ...
Thursday, 24 December 15
GLOBAL MARINE FUEL REGULATIONS COULD SHOCK REFINING AND OIL MARKETS - OPEC | HELLENIC SHIPPING NEWS
IMO regulations call for global standards for sulphur content in marine fuel to be tightened to 0.5% from its present 3.5%. There is uncertainty ov ...
Thursday, 24 December 15
DRY BULKERS' VALUES ARE PLUNGING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk carriers’ values are falling across the board, as the fall of freight rates is taking its toll, as is to be expected. In fact, accor ...
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- Rashtriya Ispat Nigam Limited - India
- The University of Queensland
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- Ambuja Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Kepco SPC Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Bhushan Steel Limited - India
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- The Treasury - Australian Government
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Malabar Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Ministry of Mines - Canada
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Chettinad Cement Corporation Ltd - India
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Ministry of Finance - Indonesia
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Interocean Group of Companies - India
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- MS Steel International - UAE
- Gujarat Sidhee Cement - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Attock Cement Pakistan Limited
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Bulk Trading Sa - Switzerland
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Riau Bara Harum - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Coalindo Energy - Indonesia
- The State Trading Corporation of India Ltd
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- Jaiprakash Power Ventures ltd
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
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