Americas News
Will Physical Suppliers See Any Positive Outcome from Remaining OW Bunker US Maritime Lien Cases?
A series of U.S. court cases that could fundamentally change traditional thinking over who holds the maritime lien in bunker disputes are unlikely to result in any positives for physical suppliers, Bruce G. Paulsen, a partner at law firm Seward & Kissel, has told Ship & Bunker.
The 50 or so cases in question all stem from the collapse of OW Bunker, with the most significant recent developments being the three rulings last month by Judge Forrest meaning decisions in a total of five of the cases have now been made.
All five have 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.
Under the U.S. Commercial Instruments and Maritime Lien Act (CIMLA), a lien requires that the claimant provided the bunkers "on the order of the owner or a person authorised by the owner."
This also means that OW bunker, and ING Bank as their assignee, is entitled to a lien as it did deal directly with the buyer, and thus is able to pursue any related outstanding bunker bills.
"We certainly have a strong trend, and I'm pleased about the trend," Paulsen, who is acting on behalf of ING in the US, says of the decisions to date.
Among the total, some 30 interpleader cases have been brought together in the New York Southern District Court, summary judgments for which were all briefed in July.
While it is yet to be decided whether oral arguments will be heard, Paulsen expects the initial round of decisions in conclude in six to eight months.
"There could of course be appeals after that," he notes, but regardless expects little change from the trend that has now been set.
"All the cases are slightly different in that there are subtly different degrees of contact between the vessel owner and physical supplier, but it's usually about the logistics of getting the fuel to the ship. As we've seen that's not enough to satisfy CIMLA for a lien," says Paulsen.
"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."
If the cases do play out as Paulsen expects, the impact on the US bunker industry could be significant.
As Adrian Tolson, Senior Partner, 20|20 Marine Energy, has previously explained to Ship & Bunker: "Bunker credit based on U.S. Maritime Law has always been underpinned by the basic Maritime Lien. The assumption was always that if you issued a BDR you had the lien.
"Particularly in the U.S., supplier bank financing deals have built into them the security of the receivables based on liens. Based on these decisions, if you are a bank you will be questioning and controlling the credit decisions suppliers make much more than in the past."
