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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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Friday, 18 December 15
WHEN IS A MASTER ENTITLED TO REFUSE DAMAGED CARGO? A REMINDER - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
A master’s authority to clause bills of lading issued by or on his behalf can sometimes become the cause of disagreeme ...
Friday, 18 December 15
CHINA GROWTH SHOCK TO HIT ENERGY, SHIPPING, STEEL MOST - FITCH
Energy, shipping and steel would be the hardest-hit sectors in Asia-Pacific (APAC) in the event of a sharp slowdown in Chinese growth, says Fitch R ...
Friday, 18 December 15
WEEKLY U.S. COAL PRODUCTION REMAINS FLAT ACROSS ALL BASINS
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.1 million shor ...
Thursday, 17 December 15
THE LOW DEMAND AND EXCESS COAL OUTPUT, KEEP THE FOB INDONESIA COAL SWAPS UNDER PRESSURE
COALspot.com: Indonesian coal swap for delivery Q1 2016 rose month on month and decline slightly week over week. For the week ended December 11, 20 ...
Thursday, 17 December 15
GLADSTONE PORT COAL RECORD LOOMING, EXPORTS UP 12% - GLADSTONE OBSERVER
COAL exports from Gladstone's port have taken a leap, with more than seven million tonnes leaving the wharves in November.
That increase i ...
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- The Treasury - Australian Government
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Tata Chemicals Ltd - India
- Agrawal Coal Company - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Star Paper Mills Limited - India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- ASAPP Information Group - India
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Mercator Lines Limited - India
- Rio Tinto Coal - Australia
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Petron Corporation, Philippines
- Indika Energy - Indonesia
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Energy Development Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- SMG Consultants - Indonesia
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- GMR Energy Limited - India
- Planning Commission, India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Parliament of New Zealand
- Posco Energy - South Korea
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Antam Resourcindo - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Madhucon Powers Ltd - India
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
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