Asia/Pacific News
OW Bunker Fallout in Singapore is Bad News for Ship Owners: Shook Lin & Bok
In assessing the impact of the OW Bunker insolvency and subsequent court proceedings in different global jurisdictions, Shook Lin & Bok notes that the Singapore High Court believes interpleader relief for ship owners faced with demands for payment from OW Bunker entities and physical suppliers is inappropriate.
This means the owners are potentially liable to both the OW Bunker entities (as a contractual debt under the bunker supply contracts) as well as to the physical suppliers for, essentially, to same bunkers.
Writing in the law firm's March 2016 Client Update, Shook Lin partner Probin Dass writes that that "certain" ship owners took the view that they were liable to pay the OW Bunker entities – the party they had contracted with – for the supply of bunkers; however, faced with competing demands from the physical suppliers, they sought a judicial determination from the court.
Dass states, "Unfortunately for the ship owners, the rules giving the court the power to deal with such applications very closely circumscribe the power of the court to do so."
In explaining his dismissal of interpleader relief, Justice Steven Chong held that none of the physical suppliers' claims were adverse to the contractual claims of the OW entities: these claims and those of the OW entities against the ship owners were for different liabilities and, therefore, interpleader relief was inappropriate.
Dass notes that during the Singapore court proceedings, counsel for one of the physical suppliers argued that the OW entities were not entitled to claim payment because the retention of title clauses in the contracts between the OW entities and the ship owners meant that property in the bunkers was never transferred to the ship owners.
In response, counsel for the OW entities argued that because such contracts were not contracts for the transfer of property in the bunkers but instead were contracts for the transfer of bunkers for immediate consumption.
Dass points out that while Justice Chong did not have to decide the point, "A Singapore judge may have to decide this point in the future and, if so, the decision of the Supreme Court will no doubt be referred to as persuasive authority. "
It is doubtful, however, that a court decision in one country will influence proceedings in another: this point was hammered home in December by transport and energy legal specialist Hannah Verhoeven, who, in the aftermath of court cases regarding OW Bunker in the United Kingdom and Canada, wrote that it is "unlikely" the decisions will have much bearing on the proceedings pending in the Netherlands.
