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Denmark special: Bad bunker fuel causes damage worth millions – but who is liable?

Copenhagen legal firm NJORD shares with Manifold Times what the recent spate of contaminated bunkers mean for Danish shipping firms looking to recover claims.
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8 years ago

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The following article is produced by Njord Law Firm’s Shipping and Transport Department and the intended readers of the article are for Danish shipping companies looking to recover claims for bad bunkers. Readers who have additional queries are welcomed to contact the authors for any questions.

Bad bunkers: business as usual?
The shipping industry is following closely the developments regarding poor quality bunkers, the consequences and scope of which has expanded since the problems were first encountered earlier this year. The significant risk of engine failure when using bad bunkers, and the lack of a solution presents ship owners and charterer with an unacceptable risk.

Bad bunkers, however, are not new in the industry: many owners consider it to be “business as usual” when they receive poor quality bunkers from time to time. Whether it is due to mistakes in the blending of different types of fuel or other sources, the usual precautions are taken: purchases are only made from trusted bunker suppliers and bunkers are tested to ensure the quality.

However, the current problems with bad bunkers are not “business as usual”. The problems appeared in April, first at bunker deliveries in Houston, later Panama and now also in Singapore and Hong Kong. During that period more than 100 deliveries of bad bunkers have been reported, all of which are believed to be due to similar causes. Importantly, the standard ISO tests used for bunker quality assurance will not reveal the harmful substances that are causing the problems. The origin and exact content of these harmful substances is unclear. Technical reports refer to traces of shale oil from Estonia or the United States, while other reports refer to chemical waste and by-products from the timber industry. The lack of clarity is in part due to the relatively long supply chain in the bunker industry, ranging from the buyer to the contractual bunker supplier with which the purchase agreement is concluded, and from there to the physical supplier who performs the actual delivery to the ship, and even further to the parties from whom the physical supplier originally bought the bunker oil.

The consequences of using bad bunkers including clogged filters and pipes in the ship's machinery, as well as breakdown of fuel pumps and sometimes total engine shutdown. A number of Danish shipping companies have experienced problems with bad bunkers, with engine shutdown and subsequent grounding as one of the more dire examples. Such problems may result in disputes between charterers and ship owners, and/or between carriers and good-owners. The outcome of such disputes will depend on the provisions of the relevant charterparties or bill of lading, respectively.

Who can claim compensation from whom?
As a buyer of bunkers, you can take the usual precautions, including requiring bunker suppliers to account for the origin of the bunker. However, once the accident occurs, the losses can quickly accumulate. The losses include both direct physical damage to the ship and the resulting repair costs, but also financial loss in the form of off-hire or compensation claims from charterers of the ship or good-owners. In this context, bunker purchasers (both charterers and ship owners) should ensure to explore the options available for recovering their claims from the bunker suppliers.

First, the potential parties against whom a claim can be brought should be identified. So far, the industry has focused on the physical bunker suppliers and parties further up the supply chain, because the nature of the problem indicates that the harmful substances were introduced in this part of the supply chain. However, for a buyers of bunkers it will be at least as relevant to consider the possibility of bringing a claim against the contractual counterparty, ie. the contractual bunker supplier.

This is due in part to the fact that buyers of bunkers may be faced with significant challenges when bringing a claim directly against a physical bunker supplier. Generally, no agreement will have been entered into between the buyer and the physical supplier for the bunker supply. In addition, the claim will often be subject to foreign law (typically the law applicable to the place of delivery), and it will have to be commenced before foreign courts. Only rarely, the claims will be subject to Danish jurisdiction and choice of law, for example in certain circumstances where bunkers are delivered to a Danish flagged ship.

The bunker suppliers’ liability for the claim will depend on the applicable law, but will typically involve a negligence based assessment. The buyer will therefore have to prove that the physical supplier acted negligently when delivering the bad bunkers. Although these challenges may appear difficult to overcome, on the other hand, any provisions on limitation of liability in bunker supplier's terms will normally not apply as no contract has been entered into with the physical bunker supplier.

Claims against the contractual bunker supplier
The buyer's claim against the contractual bunker supplier will be subject to the provisions of the bunker supply contract. The terms vary and often contain notification clauses and limitations of liability restricting the buyer's ability to recover the claim in full. Especially the short deadlines for notifying claims have proven problematic for buyers of bunkers, as the poor quality of bad bunkers is often only discovered some time after delivery took place.

The terms and conditions should be reviewed in detail. For claims against suppliers with foreign law and jurisdiction clauses, advice from local lawyers should be obtained. Many Danish bunker suppliers include Danish choice of law and jurisdiction clauses in their standard terms. Claims against such bunker suppliers may be brought before the Danish courts, which may be advantageous for buyers for various reasons.

In order to succeed in a claim against a contractual supplier under Danish law, the buyer of bunkers must prove that the supplier has breached the bunker supply contract, for example by delivering bunkers that did not comply with the specifications in the contract. In this respect, obtaining and securing evidence is essential, including bunker samples and documentation for the use of bad bunkers (and the consequences thereof) by the ship.

In relation to the current problems with bad bunkers, the challenge for buyers is that the bad bunkers often comply with the agreed specifications for the delivered product, because the harmful substances do not show up in the standard ISO quality tests applied in the industry.

Even so, a claim could still be brought under the contract if the bunkers did not comply with any statements made or information provided about the bunkers by the bunker supplier. The same applies if the bunkers were not fit for purpose. Delivery of bad bunkers could therefore, depending on the factual circumstances, constitute a breach of contract, regardless of whether the bunkers delivered comply with the agreed specifications. However, the buyer’s claim would still be subject to any liability limitations in the bunker supply contract.

Product liability
Alternatively, a buyer could also bring a claim in contract under the Danish legal principles on product liability rules. The principles are based on Danish case law and require that the product (1) is defective and (2) has caused damage to something other than the product itself, in order for the buyer to succeed in showing that the bunker supplier acted negligently. This would be the case for bad bunkers that cause damage to a ship's engine.

Although the contractual bunker supplier would not necessarily be the “manufacturer” of bunker oil in the traditional terminology of Danish product liability rules, contractual bunker suppliers will be considered as intermediaries, who will be liable to the same extent as the actual manufacturer under the Danish rules on product liability.

In addition, a Danish court will adopt a narrow interpretation of contractual limitation of liability clauses – and be more willing to set them aside – for claims based on the principles of product liability, compared to ordinary claims in contract. In addition, Danish law provides claims under the principles of product liability are not subject to any notification period. Therefore, any notification period set out in the contractual bunker suppliers terms and conditions must specifically state that they cover claims based on the rules regarding product liability – otherwise, such clauses are unlikely to be applied by the courts. Buyers should therefore carefully review the contracts in this regard in assessing whether claims can be recovered under the principles on product liability.

Contacts:
ULLA FABRICIUS
Attorney at law, Partner, Copenhagen
Direct: (+45) 77 40 10 12 
Mobile: (+45) 40 40 93 59 
[email protected]

CHRISTIAN BENEDICTSEN-NISLEV
Attorney at law, Partner, Copenhagen
Direct: (+45) 77 40 11 47 
Mobile: (+45) 27 79 32 70 
[email protected]

Photo credit: NJORD
Published: 29 August, 2018
 

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Vessel Arrest

Malaysia: MMEA detains two vessels over suspected illegal ship-to-ship transfer off Johor

Other than the vessels, MMEA also seized a cargo of oil, bringing the total value of the seizure to MYR 260 million (USD 61.9 million).
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3 days ago

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September 3, 2026

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Malaysia: MMEA detains two vessels over suspected illegal ship-to-ship transfer off Johor

The Malaysian Maritime Enforcement Agency (MMEA) detained tugboat and dredger suspected of conducting an unauthorised ship-to-ship (STS) transfer in Malaysian waters.

The two Malaysian-registered vessels were detained at around 3.20am on Wednesday by an MMEA patrol boat after the agency received public information about two suspicious vessels seen operating alongside each other about 1.4 nautical miles northwest of Tanjung Buai.

MMEA Tanjung Sedili Zone Acting Director Maritime Commander Mohd Najib Sam said further inspection found that the tugboat was operated by five crew members, including its skipper, comprising Malaysian and Indonesian nationals aged between 26 and 58.

The dredger was operated by 13 crew members, including its skipper, all Malaysian nationals aged between 22 and 51.

“Further inspection also found a quantity of oil cargo believed to be without any documents relating to ownership and delivery,” Najib said.

Both vessels and the oil cargo have been seized for further investigation. The total value of the seizure, including the two vessels and the oil cargo, is estimated at MYR 260 million (USD 64 million).

The case is being investigated under Section 491B(1)(K) of the Merchant Shipping Ordinance (MSO) 1952 for allegedly conducting ship-to-ship activities without authorisation from the Malaysian Director of Marine.

The vessels are also being investigated under Section 491B(1)(L) of the MSO 1952 for allegedly anchoring without permission, as well as under the Customs Act 1967 in connection with the oil cargo suspected of lacking the required documentation.

 

Photo credit: Malaysian Maritime Enforcement Agency
Published: 3 September, 2026

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Bunker Claim

Rajah & Tann: Bunker disputes are won in the first 48 hours

Partner V Bala says bunker disputes depend heavily on evidence gathered in the first 48 hours, making disciplined preservation, accurate reporting and early expert involvement critical to protecting a claim or defence.
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Published

4 days ago

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September 2, 2026

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Rajah & Tann: Bunker disputes are won in the first 48 hours

V Bala, a partner in Rajah & Tann Singapore’s Shipping & International Trade practice group, has highlighted the critical importance of preserving evidence in the first 48 hours of a bunker incident, outlining best practices for ship managers to protect potential claims and defences:

A vessel somewhere in the Indian Ocean reports abnormal fuel behaviour. Sludge is forming. Filters are clogging. Consumption looks wrong. Within hours, owners, charterers, managers, suppliers and insurers are exchanging messages. Everyone asks the same question: is there a claim? It is reasonable. It is also often premature. The better question is: what evidence will still exist in 48 hours to explain what happened?

For all the technical sophistication around modern bunker disputes, many are decided less by expert reports than by the first two days after trouble appears. The tribunal may sit years later. The factual foundation is usually laid before the vessel reaches its next port.

Bunker claims are commonly treated as technical contests about fuel specifications, ISO standards and competing laboratory results. They are that. But experienced litigators quickly notice a simpler pattern: the strongest cases are rarely built by the cleverest lawyers. They are built by the best recordkeepers.

The Vanishing Evidence Problem 

Unlike a collision, fire or grounding, bad bunkers leave few obvious visual traces. The evidence is scattered across tanks, samples, engine records, maintenance logs, performance data and electronic communications. Much of it can deteriorate, disappear or become contaminated with surprising speed.

A discarded sample cannot be recreated. A cleaned filter may tell a different story from one preserved immediately after failure. Electronic records overwritten in routine operations may never be recovered usefully. Crew change. Memories fade. The difficulty is that bunker incidents rarely feel like casualties when they first arise. They look like operational nuisances.

The Pressure to Move On 

A ship manager’s first duty is to keep the vessel trading. Engineers solve the immediate problem. Technical managers assess options. Owners watch delay. Charterers want assurance. The commercial pressure to restore normality is intense. It is also the moment when evidential mistakes are most easily made.

Fuel is blended before investigations are complete. Samples are mishandled. Machinery is repaired before it is properly photographed. Internal messages fill with theories. By the time experts arrive, the most useful evidence may already have changed.

The Danger of Instant Certainty 

Modern communication has made this harder. A concern raised in the engine room can reach executives across continents within minutes. The advantages are obvious. So are the risks.

The earliest explanations are often the least reliable. When machinery problems arise shortly after bunkering, the fuel is naturally blamed because it is the most visible recent change. Sometimes that is right. Sometimes it is not.

Yet once a theory enters circulation, it acquires momentum. Months later, early WhatsApp messages or emails written under pressure may be attached to witness statements, analysed by experts and scrutinised by lawyers. A passing operational remark can begin to look like a settled conclusion.

The Documentary Ship 

Shipping remains a documentary business. Despite digitalisation, disputes still turn on engine logs, maintenance reports, fuel transfer records, sounding measurements and superintendent correspondence.

What matters is not merely whether those records exist, but what story they tell together. Tribunals value contemporaneous documents because they were created before positions hardened. They are the closest thing to a real-time account.

Ship Managers at the Centre 

Ship managers sit at the centre of the network: owners, financiers, charterers, bunker suppliers, insurers and regulators. In bunker matters, their role now goes beyond technical operation. It includes preserving enough information to understand what happened if the matter becomes a claim.

What the Best Operators Do Differently 

If bunker disputes are won in the first 48 hours, what do the best operators do differently? They treat fuel incidents as evidential events as well as operational ones. While engineers restore function, someone asks: if this becomes a dispute, what will we wish we had preserved today?

They resist instant certainty. Communications distinguish facts from theories. There is a difference between recording that power loss followed consumption from a particular tank and declaring that the supplier delivered bad fuel.

They know samples are useful only if identity, seals, labels and custody can be proved. They keep samples alongside the full operational record: delivery documents, tank soundings, transfer history, engine logs, alarms, purifier settings, maintenance data and ship-to-shore messages.

They preserve physical evidence before routine work alters it. Filters, residues and affected components may contain information that disappears once cleaned or discarded. Photographs should capture the condition found, not just the condition after repair.

Finally, they bring the right expertise to the problem early. They also involve the right people early: surveyors, laboratories, technical experts, insurers and lawyers. A surveyor or technical expert can help identify what should be sampled, photographed, retained and recorded before the evidence changes. Lawyers and insurers can help ensure that notifications are made, communications remain measured and contractual deadlines are not overlooked. The point is not to turn every operational problem into litigation. It is to avoid discovering, months later, that the ingredients of a sound claim or defence were lost during the first voyage after the incident.

The first 48-hour discipline 

PRESERVE Segregate the suspect fuel where practicable. Secure representative samples, seals, labels and a documented chain of custody. Retain affected filters, residues and components before cleaning or disposal.
RECORD Capture tank soundings, transfer history, consumption sequence, engine parameters, alarms, purifier settings, maintenance data and photographs. Preserve original electronic records and contemporaneous logs.
COMMUNICATE Report observed facts, not untested conclusions. Keep a disciplined chronology of what happened, when it happened, who was informed and what action was taken.
NOTIFY Check contractual notice provisions and inform the relevant owner, charterer, supplier, manager, insurer or P&I club promptly. Delay can damage both evidence and rights.
DEPLOY Involve the appropriate surveyor, laboratory, technical expert and legal team before the condition of the evidence changes, not after positions have hardened.

The lesson is simple. In bunker disputes, the law often comes late. The evidence comes early. The party that preserves it calmly, completely and without premature blame gives itself the best chance of winning the argument when the dispute finally arrives.

 

Photo credit: Rajah & Tann Singapore
Published: 2 September, 2026

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Winding up

Singapore: Notices of intended dividend issued for Hua An Shipping and related firms

Creditors will need to produce proofs of debt to liquidators of Hua An Shipping, Hua Guang Shipping, Nan Hai Maritime, Nan Sia Maritime and Nan Zhou Maritime by 11 September.
Admin

Published

6 days ago

on

August 31, 2026

By

RESIZED Drew Beamer

Notices of intended dividend for Hua An Shipping Pte Ltd, Hua Guang Shipping Pte Ltd, Nan Hai Maritime Pte Ltd, Nan Sia Maritime Pte Ltd and Nan Zhou Maritime Pte Ltd were published on the Government Gazette on Friday (28 August). 

The following are the details of the notice of Hua An Shipping Pte. Ltd:

Name of Company : Hua An Shipping Pte. Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / Registration No. : 200610919Z
Address of Registered Office : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960

Details of the notice of intended dividend for Hua Guang Shipping Pte. Ltd are as follows:

Name of Company : Hua Guang Shipping Pte. Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / : 200610922R Registration No.
Address of Registered Office : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960

Details of the notice of intended dividend for Nan Hai Maritime Pte Ltd are as follows:

Name of Company : Nan Hai Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. /Registration No. : 200814299M
Address of Registered Office : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private, Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960

Details of the notice of intended dividend for Nan Sia Maritime Pte Ltd are as follows:

Name of Company : Nan Sia Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No.  / Registration No.  : 200814320Z
Address of Registered Office : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960

Details of the notice of intended dividend for Nan Zhou Maritime Pte Ltd are as follows:

Name of Company : Nan Zhou Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / Registration No.: 200814295H
Address of Registered Office : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960

 

Photo credit: Drew Beamer

Published: 31 August, 2026

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