Americas News
US Court Decision Bolsters ING's Claim for Payment of Outstanding OW Bunker Bills
While a decision by Judge Valerie E. Caproni last week in the New York Southern District Court spelled further bad news for physical suppliers as part of the ongoing fallout from the 2014 collapse of OW Bunker, it has also bolstered ING Bank (ING)'s claim for payment.
As in previous decisions, Caproni found that the physical suppliers in question did not meet the criteria for a maritime lien under the U.S. Commercial Instruments and Maritime Lien Act (CIMLA).
"We are very pleased with the decision, and we believe it is the right decision," Bruce G. Paulsen, a partner at law firm Seward & Kissel and acting on behalf of OW Bunker assignee ING, told Ship & Bunker.
That in itself was good news for ING, who has made competing claims for maritime liens as it looks to recover monies owned to it as part of a $700 million credit facility it provided OW Bunker that was secured by their accounts receivable.
But of additional significance was Caproni's analysis of last October's "Temara II" decision.
In that case, and unlike the decisions before it, Judge Forrest ruled that OW Bunker / ING did not meet the criteria for a maritime lien.
Caproni, however, indicates that the circumstances leading to Forrest's decision were not the same as those in the cases before her on Monday, and critically in Temara II a full documentation of the supply chain was lacking.
"In Temara II the full contract chain was not before the court, so there was no evidence that OW Bunker took any downstream financial risk. In essence, Judge Forrest said that the supply chain must be fully documented so the court can understand where the risk lies," Paulsen told Ship & Bunker.
"Judge Caproni found that Temara II was limited to its facts and that it was distinguishable from the others."
Indeed, this was a difference well noted by Caproni in Monday's decision.
"By contrast, in this case O.W. has submitted sales confirmations documenting each discrete transaction, and the parties to these cases agree that O.W. bore financial risk in the transactions and O.W. was liable to the Vessel Interests in the event [the physical suppliers] failed to deliver," she wrote.
"The fact that O.W., by virtue of its bankruptcy proceedings, is no longer required to satisfy its debt to the Physical Suppliers does not alter the analysis. The potential for a maritime lien is intended to encourage parties to agree to provide necessaries to vessels. Considered ex ante, at the time O.W. agreed to provide necessaries and entered into its arrangement with the Physical Suppliers and Vessel Interests, it bore the risk of non-payment by the vessels and the risk that the Physical Suppliers would not deliver."
There are currently some 50 outstanding OW Bunker related cases yet to be resolved in the US.
Following Monday's decision, ING's motions for summary judgement in those cases remain pending and the bank has until January 16 to inform the court on how it intends to proceed.
