Very Interesting & Informative Video:
Very Interesting & Informative Video:
WORTH READING BY ALL THOSE INVOLVED IN BUNKERS (BUYERS OR SELLERS):
After the financial collapse of OW Bunker Group on November 7, 2014, numerous claims by physical suppliers in risk to remain unpaid due to their counterparty’s bankruptcy, have been brought in different jurisdictions worldwide. Consequently, Owners and Charterers are currently exposed to competing claims for unpaid bunkers both by OWB or their assignees ING and by physical suppliers, with the possibility of arrests. Our firm recently handled claims brought by the physical supplier SEKA against the Owners of the vessels CE/BREEZE and PANAGIA ARMATA in personam (since maritime liens and subsequent in rem proceedings are not recognized under Greek law) and the judgments –which are believed to be the first- found in favor of Owners.
In October 2014, Owners instructed the Piraeus office of OW Malta to provide the vessels with certain quantities of bunkers and OW Malta confirmed the order which resulted to a contract for the sale of the agreed bunkers, through the exchange of the relative documents (sale confirmation and invoice coupled with OW standard terms and conditions). Since OW Malta operated as a trader and did not possess physical premises for the storage of bunkers, it instructed SEKA to physically supply the agreed bunkers to the said vessels. The purchase of the bunkers was completed through the respective exchange of documents (purchase confirmation, bunker sale confirmation and invoice together with SEKA’s standard terms and conditions which did not include a retention of title clause). Following OW’s filing for bankruptcy, SEKA asked for direct payment of the price from Owners, by forwarding them the relevant invoice addressed to the Owners and/or Managers and/or Charterers and/or Master and/or OW Malta.
SEKA’s case against Owners is that it supplied bunkers to the vessels under a contract entered into through the Owners’ authorized agent, OW Malta. The basis of this argument lies in the fact that SEKA’s invoices are addressed both to OW Malta and the Owners and that SEKA’s standard terms identify as jointly and severally liable for the payment both the party that gave the order and the one for whose the benefit the order was made.
SEKA also supports that even if OW was not an authorized agent of the Owners to conclude the bunker sale agreement, both the vessel port agents who contacted SEKA for the arrangements of the supply and the chief engineer who signed the Bunker Delivery Receipt (BDR) in so doing, acted as agents for the purchase of the bunkers binding the Owners.
The Owners’ primary basis for disputing liability was that no contract has ever been concluded between them and SEKA directly. The contracts for the bunkers were separate and distinct as between Owners and OW Malta and OW and SEKA. OW was a separate legal entity that contracted on its own name and for its own account operating as a fuel trader giving credit to buyers. Owners also contended that a unilateral identification of their liability against SEKA in SEKA’s invoice or its standard terms is not binding on them, since they were notified later -SEKA’s invoice has been sent to them after OW bankruptcy- and they have not accepted these terms since they were not party to the contract between OW and SEKA.
Furthermore, in compliance with ING’s request, acting as assignee of OW entities, Owners have already paid the OW invoice price for the bunkers supplied to their vessels directly to ING, having OW’s consent.
Owners further argued that simple signing of the BDR by their chief engineer as well as their agent’s actions for the bunker supply are not enough to prove the conclusion of a contract on behalf of the Owners.
Finally, Owners in support of their above arguments mentioned that OW Bunker deliveries involved a variety of physical bunker suppliers operating in Greece and therefore they were not aware of the physical supplier that would provide the bunkers at the agreed date (i.e. SEKA, EKO or others).
Piraeus First Instance Court Decision
The claims were brought in security measures proceedings and the judgments have been handed down on December 2015 for CE BREEZE and January 2016 for PANAGIA ARMATA. The judge rejected SEKA’s case and found in favor of Owners. Particularly, the court held that in the said case two separate and distinct agreements have been made, one between OW Malta and Owners and another one between OW Malta and SEKA. In arriving at its decision, the court appears to have taken into consideration that these two contracts include different terms as to the purchase price, credit period, jurisdiction and applicable law and the mere sending of the invoice to the Owners or the signing of the BDR by the chief engineer does not establish liability of the Owners. The court also held that OW did not act as agent of the Owners and had no authority to enter into an agreement on their behalf, but as a separate entity acting in its own name.
This decision is in line with the longstanding recognition of privity of contract by Greek case law and protects Owners from unexpected exposures to physical suppliers’ demands for payment, especially in cases where they have already paid off the price either to OW or ING. Hearings in the merits of the case are expected to take place this year, where a binding authority will be issued. However, considering other jurisdictions as well (see the Valero decision of the United States District Court for the Eastern District of Louisiana, Belgian court case) such claims (either on a maritime lien basis in rem or in personam proceedings) will hardly succeed due to the absence of contractual relationship between Owners and physical suppliers. Meanwhile, the shipping industry remains on hold for the RES COGITANS outcome, the hearing of which in the Supreme Court tοοκ place in late March 2016.
Source: HSN & Karmela Mavrochi, Partner, Costas Georgopoulos & Partners. Attorneys-at-law) 6.4.2016
On February 8, 2016, in Valero Marketing & Supply Co. v. M/V ALMI SUN, the United States District Court for the Eastern District of Louisiana held that a bunker fuel supplier did not have a maritime lien against the vessel to which it supplied bunkers based on the relationship between the supplier, the intermediary contractor, and the vessel. Valero is one of the multitude of cases arising from unpaid bunker invoices due to the bankruptcy of O.W. Bunker USA and its foreign affiliates in the fall of 2014. Similar cases are pending across the country in which both fuel suppliers and various O.W. Bunker affiliates, through their alleged assignee, ING Bank, are seeking payments from vessels for previously-supplied fuel. Some of the vessel owners have preemptively filed interpleader actions in which they have deposited the value of the fuel into the registry of the court in an attempt to prevent double payment for the fuel. Others have had their vessels seized and are proceeding as defendants in a limited capacity on behalf of their vessel. Valero represents the latter scenario.
In Valero, the owner of the M/V ALMI SUN contracted with O.W. Bunker Malta to supply fuel to the vessel. O.W. Bunker Malta, through O.W. Bunker USA, contracted with Valero to supply the bunker fuel in Corpus Christi, Texas. Valero subsequently supplied 200 metric tons of marine bunker fuel to the vessel worth $124,388.24. O.W. Bunker never paid Valero for the fuel and the vessel never paid O.W. Bunker for the fuel. Valero sued the vessel in rem, and her owner made a limited appearance in the case to defend Valero’s lien claim.
The vessel owner filed a motion for summary judgment seeking dismissal of Valero’s claim based on the argument that Valero did not have a maritime lien against the vessel. In holding that Valero did not have a maritime lien against the M/V ALMI SUN, the court first reiterated that there are three requirements for the formation of a maritime lien for necessaries, which attaches as an operation of law and not by contract. The three requirements are: 1) the party provided necessaries, as defined by the Commercial Instruments and Maritime Liens Act (“CIMLA”) and related jurisprudence; 2) the necessaries were provided to a vessel; and 3) the claimant provided the necessaries on the order of the owner or a person authorized by the owner. The first two elements were clearly satisfied in this case and not in dispute. It was the third element that was at issue in Valero and that remains at issue in the other pending cases.
The court held that Valero did not provide necessaries on the order of the owner or a person authorized by the owner because the owner did not specifically direct O.W. Bunker to hire Valero, as is required for a maritime lien to attach in the United States Court of Appeals for the Fifth Circuit pursuant to Lake Charles Stevedores, Inc. v. M/V PROFESSOR VLADMIR POPOV, 199 F.3d 220 (5th Cir. 1999). The district court was similarly not persuaded by Valero’s argument that it had a maritime lien based on the shipowner’s ratification of the selection of Valero to provide the bunkers. Valero argued that the fact that the shipowner and master knew the bunker fuel would be supplied by a domestic company and were notified that it would be Valero, that the master was given instructions to coordinate with the supplier (Valero), and that the ship’s agent and Valero’s agent ultimately coordinated the supply of bunkers shows that the shipowner ratified the selection of Valero as the fuel supplier and ratified its maritime lien. The district court rejected Valero’s ratification argument, reasoning that the Fifth Circuit rejected the same argument based on similar facts in Lake Charles Stevedores because the shipowner had not selected the supplier.
Finally, the court rejected Valero’s argument that O.W. Bunker Malta could not have a maritime lien because it is a foreign company and CIMLA was enacted to protect American suppliers. The court agreed with Valero’s assessment of the purpose of CIMLA to generally protect American suppliers but stated that it could not overlook the third requirement of CIMLA, that the necessaries be provided on the order of the owner or a person authorized by the owner, simply because O.W. Bunker Malta is a foreign company and Valero is domestic. The court granted the shipowner’s motion for summary judgment and dismissed Valero’s claims with prejudice. The appellate period has not yet run on the court’s judgment, and it is anticipated that the fuel supplier will appeal to the Fifth Circuit.
The district court’s dismissal of the fuel supplier’s lien claim in Valero marks the first dismissal with prejudice by any court in the country of a physical supplier’s lien claim arising out of the O.W. Bunker fallout. Other courts have denied summary judgments filed by both vessel owner interests and fuel suppliers, but to date, no other court has held that a physical supplier did not establish a maritime lien in the myriad of O.W. Bunker litigation. This decision may lead to similar results in the other pending cases around the country. The significance of the decision is that it prevents the shipowners from being subject to potential double payment for the bunkers to its contractual counterparty and the physical supplier (like Valero). Additionally, it likely relegates the physical suppliers to pursue claims in the O.W. Bunker bankruptcy litigation instead of circumventing bankruptcy to directly pursue shipowners.
Source: Jones Walke LLP/HSN
Here is the full 286-pages PDF report. Happy reading (and thanks to the World Bank) :
For those interested only in the MENA region, here is the 31-pages PDF report covering the region ( Libya showing over 35% growth in 2016 ? ..In as much as one hopes so, this is wishful thinking to say the least !!!)
Here is the 401-pages comprehensive report on the collapse of OW Bunker – a major scandal in the maritime industry that has changed the bunker business of ever !.. Just click the name to open the PDF file.
Our thanks to Halling-Overgaard – Sølvkær Olesen – Henriksen, Advocates, Aarhus, Denmark (http://www.fhplaw.dk)
The Vitol Group (“Vitol”) and Sargeant Marine (“Sargeant”), the world’s largest asphalt trading, storage and transportation business, today announced that Vitol will be acquiring a 50 percent interest in Sargeant Marine for an undisclosed sum.
Here is the full press release:
The demand from Nigeria for ship-owners to sign a “letter of comfort” before loading at Nigerian oil terminals has caused a lot of uncertainty in the global shipping and oil markets, pushing up West African Suezmax freight rates, and it is beginning to apply brakes on spot trading activity in the Nigerian crude oil market, trading sources said.
Two weeks ago, state Nigerian National Petroleum Corp. put into a place a requirement that tankers entering Nigerian oil facilities sign a letter of comfort that critics said exposes vessel owners to responsibilities outside their control.
NNPC released a template of the letter of comfort last week, asking tanker owners to guarantee that they will not indulge in any illegal activity.
But ship-owners and maritime lawyers have said that due to vague language and legal issues relating to “indemnity” in the letter, there was little chance they could sign it.
A lack of clarity and dialog with the Nigerian authorities has caused this uncertainty, leading to a firming of freight rates and causing a furor amongst traders and ship-owners active in the Nigerian oil market.
Some ship-owners have created their own template for a letter of comfort and are in discussions between charterers, terminal and NNPC to use this version of the letter for the time being.
“It is sort of impeding spot trading- and a knock-on effect on freight. It’s a completely nonsensical proposal and the market reacts accordingly,” said a crude trader active in the Nigerian oil market. He added there had been meetings between oil majors and the Nigerian government on this issue and that there might be a grace period.
“But there might be a compromise between all of them,” the trader said. “It’s not clear on what will happen but spot trading is on hold.”
West Africa-UK Continent route freight rates, basis 130,000 mt, have risen by more than Worldscale 10 points since September 16 and shipping sources have said a tanker was placed on subjects at an even-firmer w72.5 Monday for a voyage on the route loading October 12. This is close to a five-week high, Platt’s data showed.
So far, a majority of ship-owners have been unwilling to sign NNPC’s letter of comfort. They say their refusal comes on the back of advice received from legal sources and Protection and Indemnity [P&I] clubs.
As uncertainty regarding the NNPC situation still persists, there is currently reluctance among many ship-owners to offer their ships for Nigerian loadings, and those that do are asking for higher freight rates.
“Until we are given some sort of clearance or the OK from our P&I club we will try and avoid Nigeria,” said a shipowner with multiple Suezmaxes on the current West African position list. “No doubt money talks though so we will see owners going there, but with a premium [on the freight].”
Though ship-owners refuse to sign the NNPC letter, loading in Nigeria has continued as normal, according to shipping sources.
“Vessels are being cleared [to load] without the letter; it just seems to be a procedural problem for the charterers at the moment,” said a second Suezmax owner.
Some shipping sources, however, said NNPC were beginning to accept alternative letters to the one they originally wrote last week.
“As far as I know,” said a charterer recently active in the Nigerian Suezmax market, “NNPC are now accepting the following letter from the owners: ‘Owners confirm that Master and crew will not knowingly participate in any unlawful or prohibited activity whatsoever while in Nigerian territorial waters and all activities will be carried out in compliance with orders received from Charterers.’ Progress is definitely being made.”
A spokesman from NNPC was unavailable for immediate comment.
A spokeswoman at Shell, one of the major terminal operators in Nigeria, declined to comment. A spokesman for ExxonMobil, another major terminal operator in Nigeria was also unavailable for comment.
SLOWDOWN IN ACTIVITY
This issue has also begun to impact activity on the Nigerian crude markets, with some regular buyers staying away from buying on the spot market until there is further clarity.
“It is proving quite tricky – there are talks between the oil majors and NNPC, looking at mutual agreeable wording [for the letter] – it’s a question of who wants liability,” said another Nigerian crude oil trader. “In essence, what NNPC wants is agreeable but it’s a matter of legal wording that suits everyone.”
Due to this ambiguity, there has been some hesitation in buying Nigerian crude and fixing ships loading there, some traders said. One regular buyer said this could potentially become “a big issue” and that some buyers were not moving Nigerian barrels before it is resolved.
Another Nigerian crude trader, however, was less pessimistic, saying ship-owners were working together with terminal operators and NNPC to redraft the letter of comfort and that it has so far not had a negative impact on the market.
“This situation could have been worse but there is some [encouraging] discussion going on between the operators and ship-owners to work something out,” he said.
Shipowners calling at Nigerian terminals have taken steps to protect themselves against any possible losses arising from disputes with NNPC, and a charter party clause created by The International Association of Independent Tanker Owners (Intertanko), is their primary means of protection.
The Intertanko Nigerian clause — which was seen by Platts — states that “To the best of Owner’s knowledge, the vessel is not at the date of this charter-party subject to any ban by Nigerian Authorities from calling at and/or using any Nigerian ports, places or terminals, or sailing within Nigerian waters, whether arising out of any previous calls by the vessel or any other vessel owned or controlled by Owners or otherwise.”
The clause also states that the responsibility for providing NNPC with out-turn data from the discharge port — which may include an independent cargo survey — rests with the charterer of a vessel, rather than the shipowner. If there are any expenses incurred or time lost in obtaining the out-turn data, it will be for the charterer’s account.
Intertanko has also said that is continuing to advise caution in any trade in Nigeria and it also recommends that banned ships stay away from the country despite the lifting of a ban.
This letter of comfort episode appeared two weeks after Nigeria took steps to review a controversial blacklist for oil tankers loading at its ports. NNPC announced the lifting of the ban on more than 100 tankers from entering Nigerian oil facilities and territorial waters almost two months after it imposed the embargo without any official explanation for the move.
Interesting article issued by Tatham Macinnes LLP of the UK (and with our Thanks to them):
Please open this PDF:
Oil and shipping sources reacted cautiously Thursday to a document that said that state-owned Nigerian National Petroleum Corporation has banned 113 oil tankers from entering Nigerian oil facilities and territorial waters.
The document was signed by Gbenga O. Komolafe, the group general manager of NNPC’s crude oil marketing division.
It stated that NNPC has prohibited 113 tankers “from engaging in crude oil/gas loading activities in any of the terminals within the Nigerian territorial waters until further notice.”
The letter dated July 15 was addressed to terminal operators in Nigeria. The tankers were listed in an attached spreadsheet.
“The affected vessels have also been barred from movements within the Nigerian territorial waters forthwith,” it said. “Finally, enforcement of the above directives takes immediate effect pending a notice to the contrary by Government, please.”
Sources at NNPC did not respond when approached for comment.
There was initial skepticism from some quarters about the veracity of the document, and oil and shipping companies were gathering information throughout the afternoon to try and verify it.
“We have been informed about [the ban] and it seems terminal operators will have to take that into account,” said an active buyer and seller of Nigerian crude oil.
Shipping and trading sources said the NNPC’s grievance with the shipping companies stems from issues surrounding outturns figures related to the crude oil exports at the port of discharge.
Sources said there have been a few incidents between Nigerian authorities and their crude oil buyers on differences between the volume of crude that was discharged, compared to the volume on the bill of lading.
“We hear it is about the outturn figures, as there are sometimes differences between the loading and discharge figures, especially with certain countries,” said a trader active in the West African crude oil market.
“We are currently gathering information,” said a source with a shipowner that would be impacted by the potential ban.
“A lot of market players have received the document and we have to take it seriously. The NNPC are asking for outturn figures but the receivers of the cargoes have this information, not the shipowners. They need to approach the cargo receivers, not the vessel owners,” he added.
Other sources said the ban could be related to “settling dues” such as port and maritime fees. The majority of Nigerian crude cargoes are lifted on Suezmax and VLCC tankers.
“We suspect it is part of a fallout from the level of scrutiny that NNPC is currently under,” a Nigerian crude oil trader said.
He added this may be part of the new government’s drive to target “vessels that have not paid dues or have been involved in incidents with the Navy.”
“In this new administration such lapses are being corrected,” he added.
Some sources said the Nigerian Maritime Administration and Safety Agency (NIMASA), had previously issued advice to vessel operators and owners to comply with International Maritime Organization directives to countries to phase out vessels that do not meet international standards.
They said some of the vessels in the list might fall into the category of tankers that did not meet the IMO standards.