Bunker disputes – Bankruptcy of OW Bunker A/S and associated companies

We are receiving numerous enquiries regarding the fallout from the bankruptcy of OW Bunker A/S and certain associated companies.

At this stage, some companies are in formal bankruptcy proceedings, with the Court protection that usually entails, but others are not. 

At the time of writing, there is no record of a Winding-Up Petition having been presented to the Hong Kong Court in respect of O.W. Bunker China Ltd (a Hong Kong company), although at least one High Court Writ has been issued against the company.  Under Hong Kong law, once a winding-up order is made (or provisional liquidators appointed) no action can be commenced or pursued against the company without permission from the Court.

Most of the claims we have seen so far involve competing demands for payment in respect of the same bunker stem.  Demands may be made by (among others):

• The contracting OW Bunker company (or a Court-appointed representative of such company)
• An assignee of OW Bunker (there are reports that rights have been assigned to at least one bank)
• The physical supplier of the bunkers (claiming, for example, a maritime lien or under a retention of title clause)

There is no simple answer to the problems which shipowners and charterers face when competing claims are made for payment, save that advice should be taken on the specific circumstances of each case before making any payment.  The relevant factors to be considered include:

• The place of delivery of the bunkers
• The status of the contracting OW Bunker company
• Whether any notice of assignment has been given
• The identity of the physical supplier
• The terms of the bunker supply contract, in particular the law and jurisdiction provisions
• Where a ship might be arrested

Any payment to one party without consent of the other(s) gives rise to the risk of a double payment.  It may be possible to reach a negotiated settlement with the competing claimants.  If that is not possible then in certain jurisdictions the shipowner or charterer may be able to invoke the Court's assistance by way of, for example, interpleader action. 

Where a vessel is on time charter, a shipowner faced with a claim should also consider its rights of recourse against the time charterer.