Bunker Industry Needs Greater Transparency in its Contractual Arrangements: BIMCO

Grant Hunter, BIMCO’s Chief Officer for Legal and Contractual Affairs, says it's important all key stakeholders are involved in the review process.

The 2014 collapse of OW Bunker has created "contractual uncertainty" within the bunker industry, and contrary to what some believe, the sector now needs greater transparency on the matter, according to BIMCO.

The association says some players believe that the use of "one-sided and highly protective contracts" is the solution to this uncertainty.

"BIMCO believes that what the bunker industry needs at this time is greater transparency in its contractual arrangements through the widespread adoption of a standard bunker contract that addresses the needs and concerns of buyers and suppliers," it said.

"This can only be achieved in the long term by all the key stakeholders working together to find a solution, rather than individual companies barricading themselves behind "contractual walls."

The comments came alongside news that BIMCO is set to review its standard bunker contract, the BIMCO Terms 2015.

"We have been monitoring the fallout from the OW Bunker collapse and talking to industry players about possible commercial solutions to the various issues," said BIMCO's Chief Officer for Legal and Contractual Affairs, Grant Hunter.

"What's important is that we involve all key stakeholders in this process, which is why we are very pleased that three of the top physical suppliers and traders have agreed to participate in this project."

World Fuel Services, Dan-Bunkering, and a currently unnamed trader and physical player will represent the supply side, while shipowners will be represented by J Lauritzen, and Norden.

As Ship & Bunker reported on Friday, The International Bunker Industry Association (IBIA) will also be represented in the review, with Dan-Bunkering CEO Henrik Zederkof also being an IBIA board member.

"We won't be producing any new version of BIMCO Terms 2015 without getting feedback from the industry first - so there will be time and opportunity for interested parties to have their say," Hunter told Ship & Bunker.

The first review meeting is planned for the end of August / early September.

"The recent collapse of a major bunker supplier has sharply focused the industry's mind on how essential it is to have a solid contract in place," said J Lauritzen's Claus Kesting, who is heading the review team.

"Encouraging the industry to support and use uniform terms and conditions for bunker sales is the best way to reduce the contractual uncertainty that we currently have.

"With the backing of major physical suppliers and traders, we can work together to find a global contractual solution acceptable to sellers, suppliers and purchasers, while allowing the market to compete freely."

The outcome of the so-called "Res Cogitans" OW Bunker UK test case earlier this year has been a major reason players are only now taking a renewed look at their bunker contracts, as it set precedence in the UK that opened up ship owners to the possibility of paying twice for their bunkers.

At the time of the decision, Hunter told Ship & Bunker that they didn't want to jump to any conclusions in regard to the decision's subsequent impact on its Bunker Terms.