The English law test on who was entitled to payment for bunkers stemmed before the collapse of OW Bunkers was decided in May 2016 when the UK Supreme Court handed down its judgment in the Res Cogitans litigation (see 'Supreme Court Ruling on the "Res Cogitans" - OW Bunkers').
However, as discussed in an earlier article on the Club’s website – 'OW Bunkers - A Global Perspective' - there have been developments in other jurisdictions, one of those being New York.
By way of recap, a number of Owners and Charterers filed interpleader lawsuits in New York’s US Federal Court as early as December 2014 requesting clarification as to whether OW (rather ING to whom OW’s claim for payment had been assigned) or the physical supplier were entitled to be paid under outstanding bunker invoices. The court chose to focus on three test cases (collectively referred to as the “NuStar” test cases) namely Clearlake Shipping Pte Ltd. v O.W. Bunker (Switzerland) SA, No. 14-CV-9287 and Nippon Kaisha Line Ltd. v. O.W. Bunker USA, Inc., No. 14-CV10091), and Hapag-Lloyd Aktiengesellschaft v U.S. Oil Trading, LLC, No. 14-CV-99494. In these cases, the physical supplier and OW/ING claimed a right to the interpleader funds under the US Commercial Instruments & Maritime Lien Act (CIMLA); namely that “the claimant provided the necessaries on the order of the owner or a person authorised by the owner”.
In January 2017 a New York Federal judge ruled that OW had maritime liens over bunkers supplied as they had provided necessaries for the purposes of CIMLA. Whilst the judge sympathised with the physical suppliers, the contractual position could not be ignored. The physical suppliers provided bunkers to the vessels on the direction of OW, and there were no contracts between the physical suppliers or any of the vessel interests. An argument was raised that the signing of bunker receipts by the chief engineers of the vessels could amount to a separate and distinct contract, but this was rejected. The contracts all clearly described OW as either the buyer or the seller.
It is thought that this judgment will affect some 30 cases filed in New York and, perhaps, cases elsewhere in the US District Court system. Whilst the New York Southern District ruling is not binding, it is considered persuasive authority. This also follows the English law authority in establishing that OW/ING are the rightful recipients of payments under relevant bunker invoices, and will no doubt bolster ING’s efforts to recover outstanding sums due.
Article by Emily McCulloch
