OW Bunker: No Way For Shipowners to Pre-Empt Arrests Under UAE Law

Al Tamimi & Company suggests there are ways for shipowners who have had their vessels arrested to reduce legal expenses.

In focusing on the United Arab Emirates (UAE) to assess the on-going consequences of the O.W Bunker (OWB) legal saga, Middle East-based law firm Al Tamimi & Company (AT&C) notes that unlike Singapore and Canada, there is no legal provision under the UAE's civil law legal system for interpleader relief actions - meaning  shipowners who wish to pay their bunker invoices still have no way to pre-empt arrests.

However, the law firm adds that shipowners who have had their vessels arrested can reduce legal expenses by joining the intermediary or physical supplier in the proceedings: "At this stage, the shipowner can request the court to receive the debt amount into court and for the court to decide whether the intermediary or the [physical supplier] is entitled to it.

"The shipowner can then, in practice, reduce its involvement in the case by not attending hearings or making any submissions."

AT&C says this is the best way to compel the intermediary and the physical supplier to litigate and resolve the competing claim, in a region where shipowners have been historically liable for contracts concluded by the master on behalf of the vessel.

In assessing whether it's business as usual for the UAE bunkering community, the law firm doesn't provide a clear answer; instead, it states that OWB demonstrates the risks involved when ordering bunkers through intermediaries, and that protection and indemnity (P&I) clubs are urging shipowners to deal directly with physical suppliers, thus eradicating any risk of double payment demands; however, "We consider it likely that shipowners with wider geographical trading limits may be slow to implement such changes, because intermediaries often have access to markets that shipowners do not."

AT&C also notes that "whilst there are some legal solutions on the table [in improving the bunker ordering and payment process], few are commercially viable."

It concludes, "If intermediaries and physical suppliers could better align themselves in their approach to debt recovery, then this would certainly represent progress."

These sentiments fall in line with those of The Swedish Club, which in February stated that owners and charterers "take a fundamental risk" in purchasing bunkers through intermediaries.

It based its contention on the UK Court of Appeal concluding that the bunker supply contract between OW Bunker and the bunker buyer was not a contract for the sale of goods, with the matter currently under final review by the UK Supreme Court.