Americas News
Petition Filed Requesting a Rehearing of Key OW Bunker Payment Case
A petition has been filed in the US Court of Appeals requesting the rehearing of a key case in the ongoing OW Bunker legal saga in the US.
Physical suppliers and ING Bank, as assignee of the now defunct OW Bunker, have been battling for a number of years to recover monies for transactions that took place around the time of the former bunkering giant's collapse in 2014.
The case in question involves bunkers delivered to M/V Temara by physical supplier CEPSA via intermediary OW Bunker. Originally heard in 2016, Judge Forrest of the Southern District of New York found at the time that neither the physical bunker supplier or OW Bunker were entitled to a maritime lien.
Earlier this month that decision was partially reversed by an Appeal Court opinion that found ING Bank was in fact entitled to a lien. It also agreed with the original finding that CEPSA was not entitled to a lien.
J. Stephen Simms of Simms Showers LLP, who represented physical bunker supplier CEPSA in the case, said the opinion was "fundamentally wrong" as it failed to take into account OW Bunker's own terms, and in particular Clause L.4(a).
L.4
As noted by the Appeal Court at the time, the "L.4" clause made OW's own terms "fluid" by providing that:
"These Terms and Conditions are subject to variation in circumstances where the physical supply of the Bunkers is being undertaken by a third party which insists that the Buyer is also bound by its own terms and conditions. In such circumstances, these Terms and Conditions shall be varied accordingly, and the Buyer shall be deemed to have read and accepted the terms and conditions imposed by the said third party."
In determining who has a valid maritime lien, the U.S. Commercial Instruments and Maritime Lien Act (CIMLA) has three requirements that must all be met:
- the party provided the necessaries, in this case, the bunkers, as defined by CIMLA and related jurisprudence,
- the necessaries were provided to a vessel, and that
- the claimant provided the necessaries on the order of the owner or a person authorised by the owner
Physical suppliers in OW Bunker cases such as M/V Temara have generally been denied a lien as they did not provide the bunkers on the order of the vessel, but rather acted on instruction from intermediary OW Bunker.
While parties who fail this test therefore cannot gain entitlement to a Maritime Lien through other means, such as simply writing it into the terms of a contract, Simms says this is not how the "L.4" clause should be interpreted.
"The Opinion mistakes that CEPSA claims that L.4 creates a maritime lien. That is not what CEPSA argued in its briefs, or at oral argument," he wrote in the Petition.
"OW, through L.4, provided that CEPSA would have rights to recover in rem from the Vessel. This is because, through L.4 OW assigned to CEPSA OW's maritime lien rights against the Vessel for CEPSA's $217,859.49 of marine fuel. Alternatively it was because OW acted as CEPSA's agent to facilitate CEPSA's provision of the $217,859.49 of marine fuel to the Vessel, on the "Buyer's" order."
One of the key issues in this, and most of the other OW cases, is that had it not gone bankrupt, OW Bunker would never have received the full payment of $217,859.49 for the bunkers. Rather, OW Bunker would have received only a small commission on this amount for its services, with the vast majority going to CEPSA to pay for the physical bunkers.
"The result inequitably and unjustly awards $217,859.49 of CEPSA's marine fuel to ING, which paid nothing for it," says Simms.
Instead, Simms argues that there should be two maritime liens arising from the same transaction, "CEPSA's for the $217,859.49 of its marine fuel, and ING assigned the remaining re-sale commission."
While the M/V Temara case is just one of several to still reach its full conclusion, the tide certainly seems to be turning against physical supplier and in favour of ING Bank.
In all, ING is looking to recover some $700 million it had provided OW Bunker as working capital loans.
