Physical Bunker Suppliers are "Working on a Sales Paradigm that No Longer Exists"

by Ship & Bunker News Team
Thursday September 8, 2016

Physical bunker suppliers are working on a sales paradigm that simply no longer exists, industry veteran Marc Gawthrop has warned.

"For many years we worked on the principal of the maritime lien, that if the buyer does not pay then the vessel is arrested and costs can be recovered. That world no longer exists," Gawthrop, managing director at Arbutus Point Marine Ltd, told Ship & Bunker.

"Today, physical suppliers who do not deal directly with the buyer are now surrendering 100% security of their receivables to traders at the ship's manifold."

This new reality has been highlighted by several recent court decisions stemming from the 2014 collapse of OW Bunker.

In the UK's so-called "Res Cogitans" test case, the UK Supreme Court found that OW Bunker assignee ING Bank was entitled to be paid 100 percent of the bunker bill by ship owners PST Energy 7 Shipping LLC, but it at least left the door open for physical suppliers to mount their own claim for the bunkers - which if successful would lead to the bunker buyer effectively paying twice for the same bunkers.

The outlook in the US is even gloomier, as it would appear affected suppliers have no route at all to recover their bunker costs; several decisions this year have all concluded that physical suppliers who dealt with an intermediary such as OW Bunker are not entitled to a maritime lien as under the U.S. Commercial Instruments and Maritime Lien Act (CIMLA), one of the criteria for the lien to hold is that the bunkers must be supplied "on the order of the owner or a person authorised by the owner."

Earlier this year, Adrian Tolson, Senior Partner, 20|20 Marine Energy told Ship & Bunker the situation could have significant implications on both financing and credit decisions within the bunker industry.