U.S. Court of Appeals Upholds WFS' Maritime Lien in Dispute Over Unpaid Singapore Bunker Bill

by Ship & Bunker News Team
Wednesday April 27, 2016

A maritime lien placed against a U.S.-owned and Panamanian-flagged vessel has been enforced by the United States Court of Appeals, clearing the way for further legal proceedings involving World Fuel Services Singapore (WFS Singapore).

Court records seen by Ship & Bunker show that the case, which was decided earlier this month, pertains to a bunker delivery made in November of 2012 by Singapore fuel supplier Transocean Oil, subcontracted by WFS Singapore, to the U.S.-owned M/V Bulk Juliana, which at the time of the transaction was chartered by a German company.

R.L. Vicente, master/chief engineer of the vessel, signed the Bunker Delivery Notes and affixed the vessel's stamp to each receipt of the bunkers; WFS Singapore then issued an invoice to the vessel and her owners for the sale, and when the payment wasn't forthcoming, the company in August of 2013 filed a complaint in the Eastern District of Louisiana seeking the arrest of the vessel, then docked in New Orleans.

In September of that year, after the arrest warrant had been issued, Bulk Juliana claimed ownership of the vessel, posted security to release it, and claimed WFS Singapore had no maritime lien under the law of Singapore; no legal basis to assert a lien; and that the arrest was wrongful and improper.

WFS Singapore argued that the lien was valid because the contract contained a General Maritime Law of the United States choice-of-law provision that allowed the defendant to bind the vessel through the purchase of the bunkers; it also argued that even if Singapore law governed the formation of the contract, the parties' United States choice-of-law provision would still be valid.

The district court held that because the General Maritime Law of the United States choice-of-law provision was valid under Singapore law, U.S. law controlled the dispute.

In its decision, the Court of Appeals found that the district court "did not err in holding that the General Terms, including the U.S. choice-of-law provision, were valid and enforceable under Singapore law and were validly incorporated into the contract."

The Court noted that "based on the parties' valid choice of U.S. law and the holdings of this circuit and others, [the defendant] as time charterer had authority to bind the vessel in rem for its purchase of bunkers, and the lien is enforceable in U.S. courts."

Further, "The bunker confirmation email specified that the buyer is 'presumed' to have authority to bind the vessel with a maritime lien; the contractual language within WFS Singapore's U.S. choice-of-law provision amplifies that: 'The General Maritime Law of the United States shall apply with respect to the existence of a maritime lien.'"

Last November, World Fuel Services made headlines for attempting to recover almost $500,000 in mostly bunker related debts by having the authorities seize the MV Nova Star, operated by troubled U.S. ferry company Nova Star Cruises.