Another US Court Ruling Finds a Physical Bunker Supplier is Not Entitled to a Maritime Lien

Wednesday's decision is the latest in a string of similar decisions made this year.

Another U.S. court decision Wednesday found that a physical supplier is not entitled to a maritime lien as part of its efforts to recover unpaid bunker costs.

It is the latest in a string of similar decisions made this year.

Court documents seen by Ship & Bunker show the case, heard by Judge William E. Cassady in the Southern District of Alabama, involved a $700,000 MGO stem by Mobile-based physical supplier Radcliff / Economy Marine Services (Radcliff) to Technip's pipe laying vessel m/v Deep Blue.

At the end of October 2014, the Chief Engineer of Deep Blue sent a bunker stem request to Technip's EPC Helpdesk, who in turn contacted A/S Dan Bunkering, World Fuel Services, and OW Bunkers UK Ltd., for quotation, before settling on the offer from OW Bunker.

"There can be no doubt that the winning bid of OW Bunkers UK was informed by the quote supplied by Radcliff/Economy Marine Services to OW Bunker USA Inc.," Judge Cassady wrote, adding that "the Sales Order Confirmation sent by OW Bunkers UK to Technip reflected the physical supplier of fuel to be Radcliff."

In November 2014 OW Bunker filed for bankruptcy, before either OW Bunker or Radcliff had been paid.

In December 2014 Radcliff initiated arrest proceedings against Deep Blue that resulted in Technip paying a cash bond into the registry of the Court totalling $705,529.50 as a substitute for arrest. 

In April 15, 2015, ING Bank (ING) as OW Bunker's assignee, filed its interest in the case.

CIMLA

As Ship & Bunker has previously discussed, under the U.S. Commercial Instruments and Maritime Lien Act (CIMLA) there are three requirements for a valid maritime lien:

1. the party provided the necessaries, in this case, the bunkers, as defined by CIMLA and related jurisprudence,
2. the necessaries were provided to a vessel, and that
3. the claimant provided the necessaries on the order of the owner or a person authorised by the owner.

While referencing the O'Rourke Marine Services versus M/V Cosco Haifa and M/V Cosco Venice ruling, a similar OW Bunker related case heard in New York earlier this year, Judge Cassady found that CIMLA's third criteria had been met, and as such Radcliff was not entitled to a maritime lien.

"No evidence was offered in the trial of this matter establishing that Technip "directed" Radcliff to be its physical supplier of the bunker stem or was in any manner involved in the selection of Radcliff as physical supplier of fuel. Instead, the evidence is clear that Technip awarded the fuel supply contract to OW Bunkers UK for provision of the bunkers - without any knowledge that Radcliff's "dealings" with OW Bunker USA informed the price quoted to the vessel owner by OW Bunkers UK - and only learned that Radcliff would be the physical supplier of the fuel stem one hour after the contract award to OW Bunkers UK," Judge Cassady wrote.

Radcliff also argued that the actions of Deep Blue's Chief Engineer in coordinating the delivery of the fuel stem, accepting the fuel onboard, and signing the bunker certificate was enough to create a maritime lien.

However, Cassady said this argument failed as the Chief Engineer in this case did not himself order or purchase the bunkers; "instead, he can only be regarded as having "initiated" the process ... "coordinated" the delivery of the bunkers through emails to and from Radcliff's General Manager and then signed the Bunker Certificate.

"Moreover, in "coordinating" the delivery of the fuel stem, Radcliff's general manager admitted that the "logistical" emails did not constitute some type of contract negotiation, and courts have held that such coordination and acceptance does not rise to the level of ratification."

A Lien for ING

As in previous cases, Cassady also found that ING Bank, as asaignee of the now defunct OW Bunker, was entitled to a maritime lien.

The decision came despite Radcliff arguing that OW Bunker has no maritime lien because they failed to meet the first requirement for a lien under CIMLA - that is, that the party provided the necessaries.

This criteria could only be satisfied, Radcliff argued, when they were paid for the fuel.

This argument was dismissed by Judge Cassady, who said that OW Bunker is entitled to a maritime lien because it took the order from Technip (the owner of the vessel) and the necessaries (i.e. bunkers) were ultimately furnished to the vessel.

Judge Cassady again referenced the earlier O'Rourke case to highlight the fact that it was not relevant that OW Bunker did not itself deliver the bunkers: "[T]he party contractually obligated to supply fuel to a vessel is entitled to a maritime lien, despite the fact that it caused another supplier to actually deliver the ordered fuel to the vessel."

Wednesday's decision joins five others that have all concluded that the physical suppliers in question are not entitled to a maritime lien as they did not deal directly with the vessel owners and their agents.

There are still around 50 similar OW Bunker related cases in the US yet to be decided, and earlier this month, Bruce G. Paulsen, a partner at law firm Seward & Kissel who is acting on behalf of ING in the US, told Ship & Bunker he thought it was unlikely that any of the cases would find in favour of the physical supplier.

"Judges decide cases on the law and the facts. Based on the facts and the law so far, the cases have reached the right conclusion and I can't see any legal reason why the remaining cases would come to a different conclusion," he said.