Judge Denies Vessel Arrest in $3.4M Bunker Dispute Stemming From Former OW Bunker Singapore Subsidiaries

Wednesday January 6, 2016

A U.S. court has denied a request from ING Bank (ING) to seize a Panamax bulk carrier belonging to Fujian Ocean Shipping Co. Ltd. (Fosco) as part of a $3.4 million dispute over unpaid bunkers sold by OW Bunker Singapore subsidiaries OW Bunker Far East and Dynamic Oil Trading (DOT), court documents filed on January 4, 2016 and obtained by Ship & Bunker show.

ING, as the holder of OW Bunker and DOT's accounts receivables against Fosco, went to federal court in Louisiana to obtain a Rule B attachment against the 81,800 dwt  M/V Zheng Yao as part of $3,422,604.94 it is seeking from Fosco for unpaid bunkers plus associated interest, and administrative fees.

King, Krebs & Jurgens, ING's lawyers, alleged that Fosco bought the fuel for five different vessels through OW Bunker Far East and DOT between August and November of 2014 but have not yet met the bank's payment demands.

The lawyers argued that the single vessel business entity of Zheng Yao Shipping Group Ltd. (which owns the Zheng Yao) shares the same business address and is wholly owned by Fosco, and therefore it is "a mere alter ego of Fosco such that this Court should disregard the corporate separateness of two entities."

They further argued that ING "is entitled to attach all of Fosco's property within this District, including, but not limited to, the Zheng Yao to satisfy OW Bunker's claims, as well as other costs taxable to Fosco as a result of ING's having to bring this action."

But District Judge Nannette Jolivette Brown denied the request to seize the vessel, which data from VesselsValue.com shows is currently anchored in the Mississippi River, on the grounds the plaintiff "alleges only two specific facts to support its claim that Zheng Yao Shipping is a mere alter ego of Fosco."

According to Brown, a prima facie claim for alter ego liability would only work if "specific factual allegations were made from which alter ego status can be inferred; conclusory allegations are insufficient."

She wrote, "Without more, the Court cannot find that plaintiff has stated a prima facie claim against defendant supporting a writ of attachment."

Ship & Bunker understands that ING is expected to file amended papers.

Valuations from VesselsValue.com indicate the 2014-built Zheng Yao, whose newbuilding contract was worth almost $75 million in 2008, is currently valued at $15.6 million.

Earlier this week Ship & Bunker published an examination of the relationship between DOT and the former Singapore top 10 bunker supplier Tankoil Marine Services, after a new report from OW Bunker trustee Soren Halling-Overgaard declared that their business relationship made no commercial sense.