There is a Fundamental Risk for Owners and Charterers When Purchasing Bunkers Through Intermediaries: The Swedish Club

Anders Leissner, director, corporate legal and FD&D for The Swedish Club

If anything has clearly emerged from the convoluted legal proceedings involving marine fuel supplier OW Bunker, it's that owners and charterers take a fundamental risk in purchasing bunkers through intermediaries, says Anders Leissner, director, corporate legal and FD&D for The Swedish Club.

Writing in the Club's latest Triton publication, Leissner cites the October decision by the UK Court of Appeal in the so-called Res Cogitans test case, which said that the bunker supply contract between OW Bunker and the bunker buyer was not a contract for the sale of goods.

Leissner says the decision at first glance "is hard to digest" because it leaves both OW Bunker and its assignees, ING bank, and the physical bunker supplier, to pursue the vessel owner for unpaid bunkers.

However, he argues that the Court of Appeal "might have opened up Pandora's Box if they had undermined the right to claim payment under similar contracts involving a credit sale."

He says that until the case is referred back to the arbitration tribunal, "owners and charterers are regretfully left to fight duplicate claims in the best way they can, using whatever remedies there are at hand, such as making deposits in courts and commencing interpleader action"- which is an expensive course of action that does not provide full protection.

Leissner concludes that while it might be easy to blame OW Bunker and ING bank for the problems caused to owners and charterers receiving duplicate claims, "the problem actually manifests itself when a different party not being the contractual counter party – the physical supplier – pursues a claim against the vessel, despite the fact that the contractual supplier has been paid.

"The Res Cogitans decision – so far – illustrates that there is a fundamental risk for owners and charterers when purchasing bunkers through intermediaries."

Despite the complexity of the OW Bunker proceedings, John Kissane, partner at Watson Farley & Williams LLP, said last June that the legal disputes could ultimately help clarify U.S. law as to whether it is the bunker broker or the physical supplier who has the maritime lien.