Bunker quality disputes have traditionally focused on whether or not the bunkers supplied to a vessel accorded with the contractual charterparty specification. Claimants in such disputes would have the dual burden of proof to show not only that the respondent suppliers of the bunkers (normally the charterers) had supplied bunkers outside of the contractual specification, but also (often a more difficult burden to overcome) that the off-spec quality of the bunkers supplied actually caused the damage to the vessel's main engine. Whilst the first burden of proof was often easy to establish through ever more sophisticated sample collection at the vessel or barge manifold and sampling procedures, the second burden of proof would almost inevitably require extremely complicated expert evidence of both an engineering and chemical nature. With a less than perfectly maintained and regularly overhauled main engine and component parts, it was often easy for the bunker supplier (be it charterers or the ultimate physical supplier of the bunkers) to raise alternative possibilities as to the cause of the damage (e.g. improperly maintained purifiers, improper bunker management through co-mingling of bunkers, cylinder liners exceeding their life expectancy/ running hours). The burden of proof was a “burden” in a very real sense and this dissuaded “have a go” litigants from proceeding with less than cast iron cases.
Recent bunker quality disputes have become ever more complicated and the focus has very much been on the dual obligation of bunker suppliers/charterers not only to supply bunkers which are on spec, but also fit for the purpose (and for the specific engine onboard the vessel supplied) intended. The "fitness for purpose test" was brought to the fore in an arbitration successfully pursued by the author of this article, the basis of the allegation of lack of fitness for purpose being their poor ignition quality of the fuel supplied. In that particular arbitration, the Tribunal held that on a balance of probabilities the main engine damage must have been caused by some aspect of the bunkers supplied, and that on the balance of probabilities, that aspect was the poor ignition quality of such bunkers.
Whilst the above mentioned arbitral decision was welcomed by the author of this article and his clients, it did rather drive a coach and horses through the standard burden of proof tests and checks established under English law. Claimants had not been rigorously required to prove that a specific quality of the bunkers (be it ignition quality or anything else) had caused the specific damage concerned, as the Tribunal focussed on ignition quality as the likely cause absent any other more likely explanation. This arbitral decision was followed by many others in owners' favour focusing on ignition quality and unfitness for purpose as the battleground and encouraged owners to attribute any and all engine damage to alleged poor quality of bunkers. Bunker disputes are notoriously expensive and complicated to run which, in turn, encouraged charterers and/or bunker suppliers to settle these claims rather than risk an adverse finding as a matter of fact (never unappealable) in arbitration. An American style litigation culture was therefore initiated.
In another recent arbitral decision involving the author of this article (but this time on charterers' behalf) the floodgates were firmly closed by a very sensible Tribunal adopting an extremely rigorous approach on burden of proof. In that particular arbitration, owners thought to claim huge damages for physical damage to the main engine and consequential loss of time on an extremely scant and dubious evidential basis. Hoping to ride the fitness for purpose wave created by previous arbitral decisions, they were abruptly stopped in their tracks after a lengthy hearing by an Award which found that they had failed to discharge the burden of proof.
The above development is a welcome one and will cause owners and/or disponent owners to think again before they embark on costly bunker claims without the necessary evidence to succeed and discharge the burdens of proof placed upon them. Furthermore, and importantly, it will also encourage claimants' insurers to take a much more cautious approach to the question of cover for these disputes or face potentially huge exposure on costs in the event that the claim should fail.
With thanks to Mark O'Neil of Reed Smith Richards Butler for preparing this article.
