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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, 23 December 15
SHIPPING MARKET INSIGHT - PANOS MAKRINOS
As we are heading towards the end of the year we could argue that most of those involved in the shipping industry share mixed feelings for 2015. Th ...
Wednesday, 23 December 15
FOB NEWCASTLE COAL SWAP CLOSES FIRM
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery up $0.45 per ton (1.22%) month over month to US$ 37.20 per ton. The swap wa ...
Tuesday, 22 December 15
3800 GAR INDEX CLOSED AT US$ 22.03 PER TON; DOWN 0.15% W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.03 per ton (-0.07 %) week over week.
According to the CS (i) coal (system generated ...
Monday, 21 December 15
Q3' 2016 CFR SOUTH CHINA COAL SWAP CLOSED SLIGHTLY LOWER COMPARE TO Q1'16 CLOSING PRICE
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery up US$ 0.20 (0.48%) per ton month over month.
A commodity swap is a ...
Sunday, 20 December 15
THE FREIGHT RATES FROM INDONESIA TO INDIA IS EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The BDI facing all time low's this week. The bulk dry index closed at 477 points on 18 December 2015.
The cape index was als ...
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- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Power Finance Corporation Ltd., India
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Binh Thuan Hamico - Vietnam
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Heidelberg Cement - Germany
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Larsen & Toubro Limited - India
- Economic Council, Georgia
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- Aditya Birla Group - India
- Central Electricity Authority - India
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- Chamber of Mines of South Africa
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Indonesian Coal Mining Association
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Siam City Cement - Thailand
- Makarim & Taira - Indonesia
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Malabar Cements Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Minerals Council of Australia
- Ministry of Mines - Canada
- Bangladesh Power Developement Board
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- MS Steel International - UAE
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
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