Legal

“Bow Jubail” bunker spill: Owner could have controlled liability

It is the onus on a party seeking to limit liability to provide all information at early stage, says lawyer.

Published

6 years ago

December 12, 2018

Admin

The following article is written by Vivian van der Kuil, Partner at Rotterdam-based legal firm AKD NV, and shared with Singapore bunker publication Manifold Times; it was first published in the newsletter of the International Law Office.

Onus on party seeking to limit liability to provide all information at early stage

A case recently brought before the Rotterdam Court emphasises the importance of assessing at an early stage which liability regime applies when a party seeks to limit its exposure to claims in the event of an oil spill at sea.

Liability regimes

The limits of liability, as well as the claims to which limitation may apply, can vary greatly. The Convention on Limitation of Liability for Maritime Claims 1976 (LLMC) and the 1996 Protocol provide the general legal framework for limitation of liability. They allow a shipowner and certain other parties closely connected to the operation of the vessel to limit liability for a wide variety of claims, most importantly for claims in respect of loss of life, personal injury or loss of or damage to property occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom.

In order to be able to rely on limitation of liability, a shipowner must file a request and then constitute a so-called 'limitation fund' – by putting up a guarantee or cash payment (depending on the jurisdiction where the fund is established) for the amount of the limited liability – which is calculated on the basis of the gross tonnage of the vessel.

The LLMC stipulates that the rules of the convention do not apply to claims for oil pollution damage within the meaning of the International Convention on Civil Liability for Oil Pollution Damage 1969 (CLC) or of any amendment or protocol thereto. The CLC and subsequent 1976 and 1992 Protocols introduced the system of strict liability for owners of seagoing vessels constructed or adapted for the carriage of oil in bulk as cargo, but only when the vessel is actually carrying oil in bulk as cargo or following such carriage unless it has proved that it has no residues of such carriage of oil in bulk on board.

The International Convention on Civil Liability for Bunker Oil Pollution Damage (Bunker Convention) 2001, meanwhile, is modelled on the CLC and deals with damage caused by spills of oil when carried as ships' bunkers. Both conventions determine that the registered owner of a vessel is to maintain compulsory insurance cover and have the possibility of direct action which allows a claim for compensation for pollution damage to be brought directly against an insurer.

Rotterdam Court decision

A recent decision by the Rotterdam Court regarding a major oil spill in the port of Rotterdam caused by the vessel Bow Jubail in June 2018 underlines the need to assess the nature of the limitation regime which applies. (1)

The owner of the Bow Jubail, a seagoing vessel designed to carry oil and other cargoes in bulk, filed a request to limit liability based on the LLMC and the Bunker Convention. The Rotterdam Court asked the owner to clarify why the CLC was not applicable, even though the vessel qualified as a ship as described under the CLC (ie, designed to carry oil in bulk as cargo).

According to the owner, the Bow Jubail was at the time of the incident not carrying oil and had no residues of oil in bulk on board. However, the Rotterdam Court decided that, based on the information available, it could not be established that the Bow Jubail had no residues of oil in bulk on board, especially since the vessel's previous cargo had consisted of various persistent oils. In addition, the court emphasised that, in procedures concerning limitation of liability, it is the responsibility of the party seeking to rely on limitation to provide all of the information available at an early stage.

Comment

The request filed by the owner of the Bow Jubail was denied, resulting in unlimited liability at least until a new request based on the CLC was filed and decided upon. This could all have been avoided if an assessment had been made of the various limitation regimes and the differences between them.

For further information on this topic please contact Vivian van der Kuil at AKD NV by telephone (+31 88 253 5000) or email ([email protected]). The AKD website can be accessed at www.akd.nl.

Endnotes
(1) 9 November 2018, ECLI: RBROT:2018:9174.

Photo credit: Port of Rotterdam Authority
Published: 12 December, 2018

Sanctions

CCIC Singapore amongst nearly 24 firms named in latest US OFAC sanctions

Marine fuel testing and surveying firm CCIC Singapore was accused of concealing the identity of a sanctioned vessel and certifying its Iranian oil cargo as Malaysian heavy crude oil in mid-2024.

Published

2 days ago

May 14, 2025

Admin

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) on Tuesday (13 May) sanctioned nearly two dozen firms operating in multiple jurisdictions, including marine fuel testing and surveying firm CCIC Singapore Pte Ltd (CCIC Singapore).

OFAC said the Iranian government allocates billions of dollars’ worth of oil annually to its armed forces to supplement their budget allocations, underwriting the development of ballistic missiles and unmanned aerial vehicles, as well as financing regional terrorist groups.

“Iran’s Armed Forces General Staff (AFGS) and its main commercial affiliate, Sepehr Energy Jahan Nama Pars Company (Sepehr Energy), continue to establish front companies and rely on buyers and facilitators to enable their sanctioned oil trade,” it said on its website.

OFAC alleged that Sepehr Energy has “consistently relied” on CCIC Singapore to accomplish not only the necessary pre-delivery cargo inspections required before oil is transferred to China, but also to conceal the oil’s Iranian origins.

In late 2024, CCIC Singapore provided inspection services during a ship-to-ship transfer of approximately two million barrels of Iranian oil from the sanctioned vessel and Sepehr Energy-affiliated SIRI (IMO 9281683), formerly known as the ANTHEA.

In mid-2024, CCIC Singapore also allegedly provided inspection services for the sanctioned vessel HECATE (IMO 9233753) and likely provided falsified documents concealing the vessel’s identity and certifying its Iranian oil cargo as Malaysian heavy crude oil. From late-2023 until at least late-2024, China-based CCIC sister company Huangdao Inspection and Certification Co., Ltd similarly provided oil cargo inspection services to numerous vessels already sanctioned for transporting Iranian oil.

“CCIC Singapore PTE. Ltd. and Huangdao Inspection and Certification Co., Ltd are being designated pursuant to E.O. 13224, as amended, for having materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, Sepehr Energy,” OFAC said.

Once the oil reaches ports in China, Sepehr Energy and its fronts are reliant on complicit local agencies to handle vessel berthing and discharge operations, as well as transportation and storage services for the vessels’ oil cargoes.

Entities in Shandong province, which is home to many of China’s small, independent teapot refineries—the primary purchasers of Iranian crude oil—have been especially willing to aid sanctioned Iranian vessels and oil cargoes.

OFAC added other companies—typically small agencies with generic or non-descript stated business purposes—have served as the middlemen between Sepehr Energy and Shandong’s teapot refineries by acting as the purchasers of the oil.

In early 2024, Hong Kong-based companies Metaone Trading Limited, South Sea Energy Limited, Continental Sinoil Group Limited, Winso Trading Limited, and Singapore-based Oriental Apple Company Pte Ltd collectively took delivery of millions of barrels of Iranian oil from Sepehr Energy front Xin Rui Ji, likely as representatives of the small, independent teapot refineries based near Qingdao Port area in Shandong province.

Note: The full list of sanctioned companies can be found here.

Photo credit: Manifold Times
Published: 14 May, 2025

Business

Vitol and Grindrod announces winding down of bunkering firm Cockett

‘The shareholders would also like to thank all of Cockett’s suppliers and customers for their support over the last 45 years of trading,’ said a joint statement.

Published

3 days ago

May 13, 2025

Admin

Vitol and Grindrod, joint shareholders of bunkering firm Cockett, on Tuesday (13 May) made the strategic decision to conduct an orderly wind-down of Cockett.

“This difficult decision was reached after long consideration and in light of the non-core nature of Cockett’s business to both shareholders,” said a joint statement.

“Cockett is in a sound financial position. It will continue to perform all of its existing contractual obligations, in a timely manner, to both suppliers and customers. As of today however, it will not enter into any new business.

“The shareholders are keen to ensure that the wind-down proceeds on a solvent basis. Cockett anticipates that all relevant suppliers will be paid in full within the next 60 days, in each case in accordance with the terms of their supply contracts. It also anticipates payment of relevant receivables due from customers within a similar timeframe.”

According to the statement, the wind-down process will be led by Cockett’s current management team, Cem Saral and Arnaud Payot, Cockett’s long standing CEO and CFO. They will be supported by Vitol on behalf of the shareholders who, as a leading global energy supplier, holds existing relationships with many of Cockett’s suppliers and customers. A core team will remain in place to ensure the orderly settlement of payables and receivables.

“The shareholders would like to thank the Cockett employees for their professionalism, hard work and dedication to the company over many years. All employees will receive considered and responsible compensation,” it noted.

“The shareholders would also like to thank all of Cockett’s suppliers and customers for their support over the last 45 years of trading.”

Photo credit: Cockett
Published: 13 May 2025

Winding up

Singapore: Liquidator schedules final meeting for President Marine

Meeting will be held at 600 North Bridge Road, #05-01 Parkview Square, Singapore 188778 at 9am on 9 June to hear any explanation that may be given by the liquidator, says Government Gazette notice.

Published

3 days ago

May 13, 2025

Admin

The final meeting of members for President Marine Pte Ltd, has been scheduled to take place on 9 June, according to the company’s liquidator on a notice posted on Friday (9 May) on the Government Gazette.

The meeting will be held at 600 North Bridge Road, #05-01 Parkview Square, Singapore 188778 at 9am.

The meeting is being held for the purpose of having an account laid before the members showing the manner in which the winding up has been conducted and the property of the company disposed of and of hearing any explanation that may be given by the liquidators

The details of the liquidator are as follows:

Victor Goh
Khor Boon Hong
Marie Lee
Joint Liquidators
C/o Baker Tilly
600 North Bridge Road
#05-01 Parkview Square
Singapore 188778

According to Singapore-based The Grid, a B2B Sales Intelligence platform, the company’s business was in building and repairing tankers and other ocean-going vessels.

Photo credit: Jo_Johnston from Pixabay
Published: 13 May, 2025