IBIA: Industry Needs to Ensure Fair Play in Bunkering

After the UK Supreme Court dismissed the latest appeal against the subsidiary of the ill-fated marine fuel supplier OW Bunker, the industry-wide cooperation was urged to ensure fair play when contracting bunkers, according to the International Bunker Industry Association (IBIA).

Namely, the Supreme Court ruled that the owner of the vessel Res Cogitans, the Greek company Product Shipping & Trading (PST), should pay OW’s assignee ING Bank, in a case where OW acted as a trader rather than the physical supplier. The case did not directly address whether the physical supplier, which was never paid by OW, also has a right to make a claim against the vessel owner, leaving the status of supplier with outstanding payments unresolved, IBIA said.

According to the association, the Res Cogitans ruling in the UK, along with rulings emerging from other countries in connection with the OW insolvency, highlights the need for continued, effective industry-wide cooperation to develop sales terms which are fair and fully understood by each participant in the fuel sale process.

IBIA expects that the various legal outcomes relating to OW will encourage focus and cooperation between all parties, including lenders, to develop greater uniformity and predictability of bunker sales and credit practices.

Looking at the various outcomes of legal proceedings evident in the wake of OW’s demise so far, IBIA’s legal working group has highlighted a decision (pending appeal) by the Federal Court of Canada in the Canpotex case which might point to a more fair and balanced way forward.

In the Canpotex case, the current ruling suggests all parties in the sales chain should get only what they originally bargained to get, meaning OW would only be entitled to its trader margin with the rest of the payment going directly to the physical suppliers. The ultimate buyer would only make one payment corresponding to the sum contracted for the fuel supplied.