Americas News
Another Twist in OW Bunker Cases as Judge Orders Physical Supplier Be Paid, Says ING Would Otherwise Be Getting A "Windfall"
A US Judge has delivered another twist as part of some 50 bunker payment dispute cases stemming from the 2014 collapse of OW Bunker, having seemingly gone against several earlier decisions that ruled physical suppliers were not entitled to a maritime lien, and ING Bank (ING) as OW Bunker's assignee was the correct party to be paid.
Last Thursday in the Florida Northern District Court, Judge Robert L. Hinkle ordered in the interpleader Martin Energy Services LLC v. M/V Bravante IX et al that the monies be distributed as if there had there been no bankruptcy of OW Bunker.
Specifically, in this case, that means Martin Energy Services will receive $286,200 for delivery of the actual bunkers, and ING is to receive the $3,900 margin that OW would have made from the deal.
"As a matter of common sense and simple fairness, anyone seeking to do justice in this situation would distribute the fund in precisely this way, achieving the parties' intended result," Hinkle wrote.
"Giving the entire $290,100 to ING would provide it a windfall — a payment far beyond anything it could have achieved from the underlying transaction."
Perhaps most notably, Hinkle found physical supplier Martin did meet the criteria for a maritime lien.
Maritime Lien
As Ship & Bunker has previously discussed, CIMLA has three requirements that must all be met for a valid maritime lien:
- the party provided the necessaries, in this case, the bunkers, as defined by CIMLA and related jurisprudence,
- the necessaries were provided to a vessel, and that
- the claimant provided the necessaries on the order of the owner or a person authorised by the owner.
So far as part of the US OW Bunker proceedings, physical suppliers have been denied a maritime lien as it has been judged that by contracting through an intermediary, i.e. OW Bunker, they did not "provide" the bunkers on the order of the owner or a person authorised by the owner.
The case at hand was seemingly no different; the shipowner, Brazil's Boldini Ltd, initially contacted O.W. Brasil and then contracted with O.W. Middle East, which in turn contracted with O.W. USA, who then entered into a contract with Martin to deliver bunkers to M/V Bravante VIII.
"The transaction was structured not as a sale of fuel by Martin to Boldini but as a sale by Martin to O.W. USA, a sale by O.W. USA to O.W. Middle East, and a sale by O.W. Middle East to Boldini. O.W. Brasil functioned only as a broker," explained Hinkle.
The Judge even noted earlier cases where such a transaction chain was deemed to be insufficient in meeting the requirements of a Maritime Lien under CIMLA, but Hinkle viewed matters differently.
"As a matter of ordinary English, it is difficult to assert that Martin did not deliver the fuel 'on the order of' the captain and the engineer, if not also [Boldini's local agent in Panama City, the Hirth Agency]," he wrote.
"Martin delivered the fuel when, where, and how the captain and engineer directed. So a plain reading of the statute suggests that Martin acquired a maritime lien."
Despite this view being contrary to decisions by other Judges, Hinkle stressed that his was the "sensible" legal interpretation.
"The law usually makes sense. In this case, as in most, the parties disagree on the applicable law. It turns out that here, as in most cases, the law makes sense," he wrote.
Also notable is Hinkle's assertion that it would have been a "windfall" for ING had it been awarded the entire $290,100 - precisely what ING lawyer Bruce G. Paulsen told Ship & Bunker it would not have been.
ING extended a $700 million credit facility to OW Bunker that at all times was secured against its invoice totals.
"ING is seeking to recover on the receivables that secured the credit extended by the lending syndicate to the OW Bunker group prior to its collapse. There is no windfall here," Paulsen told Ship & Bunker last year.
