Three More Decisions Go Against Physical Suppliers Claiming for Unpaid Bunkers in the US

Monday August 29, 2016

Three more decisions filed in the New York Southern District Court have all gone against physical suppliers claiming for unpaid bunkers.

All three cases are part of the fallout from the 2014 collapse of O.W. Bunker, and add to the decisions made earlier this year that also found the physical suppliers in question did not meet the criteria for a maritime lien as per the U.S. Commercial Instruments and Maritime Lien Act (CIMLA).

Specifically, CIMLA requires the bunkers be provided on the order of the owner or a person authorised by the owner, but in the cases in question the suppliers were all deemed to have provided the bunkers through an intermediary.


The first of the three decisions, which were all made by District Judge Katherine B. Forrest and filed August 24, 2016, was a re-run of O'Rourke Marine Services (O'Rourke) versus M/V Cosco Haifa and M/V Cosco Venice.

O'Rourke, having already been denied the lien in April by the now-retired Judge Shira Scheindlin, filed a motion for reconsideration arguing, among other things, that Scheindlin's decision was "manifestly erroneous and that it reflected too much haste on her part to clean up her docket prior to her retirement."

The supplier also claimed not to have had a sufficient opportunity to argue its case as Judge Scheindlin had not had oral argument, and among the errors was that O'Rourke retained title to the bunkers by way of the OW Bunker Group Terms and Conditions.

Having reviewed Judge Scheindlin's decision, Forrest found the original ruling to be correct.

"As this Court finds that Judge Scheindlin's decision did not contain any manifest errors of law, it is unnecessary to do more than state that fact and deny the motion," Judge Forest wrote.


The second case was brought by Aegean Bunkering (USA) LLC (Aegean), who is claiming $981,708.20 for unpaid bunkers delivered on October 31, 2014 to M/T Amazon, a vessel owned by Jasper Exporting Limited (Jasper).

In this instance, Jasper acted through its management agent, Dynacom Tankers Management Limited (Dynacom), to place an order with OW Malta for bunkers, who then contracted with OW USA, who in turn contracted with Bergen Bunkers, AS (Bergen).

Finally, Bergen contracted with Aegean.

While numerous aspects of the case were explored by Judge Forrest, Aegean was ultimately denied the lien as it failed to show it dealt directly with the buyer.

"Aegean has failed to proffer sufficient evidence to raise a triable issue as to whether it was acting on the order of the owner or a person authorized by the owner. No facts support any direct communication or interaction between Aegean and Jasper, Dynacom, OW Malta, or OW USA," Judge Forrest wrote.


The third and final case concerned physical supplier CEPSA International B.V. (CEPSA) and the Cimpship Transportes Maritimos, S.A. (Cimpship)-owned M/V Temara, which at the time was chartered by Copenship Bulkers A/S (Copenship).

Copenship contacted OW Bunker for the bunkers, who then engaged OW USA, who in turn contracted with CEPSA to physically supply the bunkers.

CEPSA issued an invoice in the amount of $217,859.49 to OW USA, which it was noted did not reference any other party.

As in the other cases, the Court found that CEPSA did not meet the criteria for a maritime lien due to dealing only with an intermediary, and was therefore not entitled to claim for payment for the bunkers.

"[I]t is evident and beyond dispute that the contract between CEPSA and OW USA was just that: a contract between two parties without any indication or expectation that either party were thereby binding a distinct principal. Therefore, CEPSA provided the bunkers not on the orders of the TEMARA's owner or someone authorized by the owner, but instead on the orders of a subcontractor. Such an action does not create a maritime lien," Judge Forrest wrote.

Many more similar cases in the U.S. have yet to be heard, and these latest decisions are presumably not only bad news for the physical suppliers in question but potentially many other U.S. players.

As Adrian Tolson, Senior Partner, 20|20 Marine Energy told Ship & Bunker back in April, we could be set for a real shake up of U.S. bunker supplier financing.