Protection from Unpaid Bunker Claims

GT North of England P&I club has warned its shipowner members to protect themselves from the increasing risk of claims for charterers’ unpaid bunkers. The advice comes in the latest issue of the club’s loss-prevention newsletter Signals.

According to Mark Robinson of the club’s freight, demurrage and defence department, “The recent downturn in the shipping markets and the world economy has unfortunately led to some charterers going out of business. One consequence is that a number of bunker suppliers, who contracted with these charterers to supply fuel to time-chartered ships, have been left unpaid – and they are now turning their attention to the ships’ owners.”

North said that even though the obligation to provide and pay for fuel under a time charterer rests with the defaulting charterer, and that the owner is not a party to the bunker supply contract, owners and their ships are vulnerable to action in many jurisdictions.

“A notable example is the USA, where a supplier of ‘necessaries’ to a ship, which includes bunkers, may have a lien over the ship itself and therefore the ability to take action against the owner to recover the charterer’s debt,” said Robinson.

Furthermore the club warns owners they cannot assume they are protected by charterparties such as NYPE, which contain provisions specifically prohibiting charterers from creating liens over their ships.

“Unfortunately the mere existence in the charterparty of such a provision is not in itself sufficient to protect an owner against any lien the supplier may have,” said Robinson. “The provision will only be effective where it has been expressly drawn to the attention of the supplier of goods or services to the ship before the supply actually takes place.”

North is thus advising its members to give suppliers notice of prohibition-of-lien clauses by registered letter before any supply is made. “Receipts or other papers submitted by suppliers should also be stamped to the effect that the supply is solely for the account of the charterer and that no lien against the vessel can arise,” said Robinson. Recommended texts for both the letter and stamp are published in Signals.

North currently insures some 350 member groups from around the world, with a total P&I entry of 3750 vessels of 95 million GT. The club is based in Newcastle-upon-Tyne, UK with regional offices in Hong Kong, Piraeus and Singapore.