World News
No Acceptable Way for Bunker Terms to Protect Against "OW Bunker" Double Payment Problem: Clyde & Co
After an extensive review of BIMCO's standard bunker contract, it has been concluded that there is no acceptable way to protect bunker buyers from the double payment problem that infamously plagued the industry following the collapse of OW Bunker.
As in any normal bunker transaction chain involving an intermediary, the buyer would have paid OW, who would have paid the physical supplier less its margin.
However, buyers who had outstanding invoices at the time OW Bunker's collapse found themselves being asked for payment for the full amount from both the physical supplier and ING Bank as the assignee of the bankrupt OW Bunker.
The issue came to a head when a 2016 ruling by the UK Supreme Court in the so-called "Res Cogitans" OW Bunker UK test case found that ING was eligible to be paid as a contractual debt, leaving the physical supplier open to claim for payment for the actual bunkers, and the buyer at risk of effectively paying twice for the same bunkers.
The situation prompted BIMCO to review its standard bunker contract, with the resulting Bunker Terms 2018 approved in New York earlier this month.
"After wide consultation and a thorough examination of possible solutions, it was concluded that there is no legally and commercially workable OW Bunker type protective clause that would be widely accepted by the industry," says James Kennedy, Senior Associate, Clyde & Co, who was among the numerous parties who participated in the Terms' review process.
"Instead, the Bunker Terms 2018 will be accompanied by advice and guidance to better protect parties against double payment, by helping the industry to focus on better risk management, understanding of contractual terms, and know-your-counterparty due diligence before entering into a contract."
Kennedy's full comments on the new Terms can be found here:
https://www.clydeco.com/insight/article/bimco-releases-new-bunker-terms-2018
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 625.00 | 9.00 | 732.00 | 15.00 |
| Rotterdam | 577.50 | 3.50 | 739.50 | 1.00 |
| Houston | 595.00 | 0.50 | 767.00 | 4.50 |
| Fujairah | 628.50 | 4.00 | 878.50 | 11.00 |
| Global 20 Ports Average | 645.50 | 0.50 | 827.00 | 5.00 |
| Global 4 Ports Average | 606.50 | 0.50 | 779.50 | 0.50 |
| Global Average Bunker Price | 703.50 | 4.00 | 886.00 | 6.00 |
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