Americas News
Latest OW Bunker Dispute Case Was Wrongly Decided: ING Lawyer
Bruce G. Paulsen, a partner at law firm Seward & Kissel acting on behalf of ING Bank (ING) in the US, says Judge Robert L. Hinkle was wrong in his decision last week in Martin Energy Services LLC v. M/V Bravante IX et al, the latest verdict to come as part of some 50 bunker payment dispute cases in the US stemming from the 2014 collapse of OW Bunker.
"There are procedural issues in this case that make it different from the others, and putting aside the procedural issues, we think the case is wrongly decided," Paulsen told Ship & Bunker.
As Ship & Bunker previously reported, Hinkle's decision in the interpleader was contrary to those made by judges in several other cases with the seemingly similar circumstances of a bunker buyer contracting with OW Bunker for fuel, who in turn contracts with a physical supplier for the actual delivery.
In this case, Hinkle ruled that the physical supplier was entitled to a maritime lien and that the monies be distributed as if there had been no bankruptcy of OW Bunker at all - that is, the physical supplier would get the majority of the monies, and OW Bunker assignee ING would get the small trader's margin OW would have otherwise made.
In previous decisions as part of separate OW Bunker cases, the Judges have found that by contracting through OW Bunker the physical suppliers were not entitled to a lien, as they were not providing the bunkers on the order of the owner or a person authorised by the owner - which is one of the requirements for a lien under the US Commercial Instruments and Maritime Lien Act (CIMLA).
Despite the case appearing to be similar to many of the other OW Bunker cases before judges in the US, a closer examination reveals it had some important differences.
Not a Lien Case
"The background here is that Boldini was having a series of OSVs built in Panama City, Florida. Once built, they would buy fuel so the vessel could make its maiden journey to Brazil where it would then be employed. The vessel to which the fuel was provided in this case is Bravante VIII, but as that vessel had already left US waters, action was taken to attach a different vessel, M/V Bravante IX," Paulsen explained Ship & Bunker.
"So this is not a lien case at all, because the ship to which the bunkers were delivered was simply not present. Providing the necessaries to one vessel, Bravante VIII, does not give you a lien against the Bravante IX, because it is a different vessel."
Also notable in Hinkle's decision was his suggestion that there may not be just one, but two maritime liens in play.
Presumably, one lien would be held by the physical supplier for its invoice total and OW / ING would have entitlement to a separate lien for the trader margin; however, despite raising this as a concept, Hinkle did not come to a clear conclusion on the matter.
The issue of a maritime lien aside, Hinkle also departed from earlier judgments in deciding that a contract had been formed between the physical supplier, Martin Energy Services LLC (Martin), and the bunker buyer at the time of delivery.
"There are three main points we disagree with as a matter of law. The first is that he found Martin was entitled to the lien, where there was no vessel to have a lien against," said Paulsen.
"Second is the issue of contract. It was found there was a direct contract formed by way of delivery of the fuel, and we do not believe that makes sense. Third, he found Martin was entitled to recover under quantum meruit, the idea that there would otherwise be an unjust enrichment, and we do not see that as being the case."
Prior to bankruptcy, ING headed a syndicate that extended a $700 million credit facility to OW Bunker that at all times was secured against its invoice totals.
As Paulsen has previously explained to Ship & Bunker, ING is simply seeking to recover on the receivables that secured its line of credit.
Having been given 30 days to file a response to the verdict, Paulsen says the bank is now considering its options.
