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From the Brig

OW

Bunkers

Lessons to be learned

S
ome readers will be familiar with the collapse of the OW OW Bunkers not only failed but also resulted in damages for
Bunker group of companies. At the time of its collapse wrongful arrest.

OW was one of the largest companies in Denmark (inObvious parallels can be drawn between the OW affair
turnover terms) and a leader in global bunker supply.and the recent insolvency of Neptun Shipstores in Germany.

The collapse came from nowhere and certainly took evenWhilst smaller in scale, the Neptun insolvency will affect
close watchers of the bunker supply sector by surprise. many more ISSA members than the OW insolvency. The legal

One issue in particular is now exercising lawyers andissues that will arise will be broadly the same. Can suppliers
Judges all around the world:seek payment from owners, in the absence of payment from

Q. Can a physical supplier who has not been paid by OWNeptun? As may be seen from above, the answer is that with
Bunker (who effectively acted as a trader, who bought from the careful management it may be possible!

physical supplier and sold to the owner or charterer) arrest the It may be several years before all of the OW cases have
worked their way through. However, what is abundantly
vessel to recover their money, despite the contract being with
OW Bunker and not the owner.clear already from some of the decisions we have seen is the

The fallout from the OW case graphically highlightsimportance of using terms and conditions that give suppliers
that this question is answered in different ways in different the best chance of a recovery when things go wrong. For

countries. This has led to physical suppliers “forum shopping” example, in Australia a contract incorporating the ISSA
for the jurisdictions most sympathetic to their claims.Conditions would enable an arrest even where the supply was

For example a recent decision of the Appeal Court in the made at the request of an intermediary and not the owner.
United Arab Emirates has conirmed the physical supplier’s This means that those entitled to use the ISSA Conditions

entitlement to arrest the vessel supplied where they of Sale should ensure that they have prominent reference
contracted with OW rather than owners. In Australia, the on your quotations, delivery receipts and invoices. Most

court recently gave a decision granting an arrest on the basisimportant is to tell your customers in your quotations that
that it recognised a foreign law clause in the contract of your quote is subject to the ISSA Conditions. All too often

sale, which granted the supplier a maritime lien forsuppliers who approach us for help fail to undertake these

its claim. If the court had applied Australian law basic steps and in some cases this makes inding solutions to
then no arrest would have been possible. their problems more dificult, or less effective.

On the other hand, in Singapore,There is nothing to lose and much to gain by incorporating the
a recent decision favoured the new ISSA Conditions of Sale, and we urge ISSA members to do so.

ship owner and an attemptThe OW Bunker story also comes as a salutary reminder
to arrest the owner’s that the continuing existence of trading partners should never

vessel by a physicalbe taken for granted. Always prepare and plan for the worst.
supplier who Credit lines should be kept under constant and careful review.

sold toWarning signs should be taken seriously, and credit maintained
at levels that do not jeopardise the future of your own

business should payment not be made. It is also important to

understand your place within the supply chain and assess the
risks accordingly. Are you selling to the ship owner, or to some

other party in the supply chain? If you are not selling to the
owner, what is your security for payment of your dues? u

By ISSA’s legal expert Bruce Hailey

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The SHIP Supplier Issue 67 2015