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Clyde & Co explains BIMCO’s Bunker Terms 2018 contract

Purpose of the Bunker Terms 2018 was to contain an OW Bunker type protective clause, and more.

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The following is an article written by James Kennedy of Clyde & Co to inform the shipping industry about the merits of BIMCO’s newly launched Bunker Terms 2018 contract:

The much anticipated new version of BIMCO's standard contract Bunker Terms 2018 was formally adopted yesterday, in New York. The BIMCO committee which drafted the Bunker Terms 2018, consisted of representatives from across the bunker industry including three major bunker suppliers/traders, shipowners Norden and J Lauritzen, the North of England P&I Club, the International Bunker Industry Association, and James Kennedy of Clyde & Co.

The background and purpose of the Bunker Terms 2018
Following the OW bankruptcy and the UK Supreme Court decision of "Res Cogitans", there were calls from across the industry for a contractual solution to protect against the consequences that flowed from the OW bankruptcy, e.g. double payment by buyers.

Additionally, in a volatile market with no widely and commercially acceptable existing standard contract terms, there was a plethora of contractual terms being used across the industry causing contractual uncertainty, extended contractual negotiations and the potential for disputes for both buyers and sellers.

The first purpose of the Bunker Terms 2018 was to contain an OW Bunker type protective clause. The second purpose of the Bunker Terms 2018 was to be a more balanced set of terms which were commercially acceptable to both buyers and sellers, which would then boost harmonisation of trading terms across the industry to bring clarity and certainty to bunker sale and purchase transactions, and reduce the potential for disagreement

The result – The Bunker Terms 2018
After wide consultation and a thorough examination of possible solutions, it was concluded that there is no legally and commercially workable OW Bunker type protective clause that would be widely accepted by the industry. Instead, the Bunker Terms 2018 will be accompanied by advice and guidance to better protect parties against double payment, by helping the industry to focus on better risk management, understanding of contractual terms, and know-your-counterparty due diligence before entering into a contract.

In relation to the second purpose, to strike a fair balance between the interests of buyers and sellers, a substantial amount of work and industry consultation went into redrafting and redesigning the previous terms to make them more commercially acceptable. There are, therefore, several changes to the terms including delivery, payment, and claims management clauses.

The most important changes however are a new liability cap and the use of a "Confirmation Note" and an "Election Sheet". The lack of a liability cap was seen as a stumbling block for the previous BIMCO terms gaining a stronger foothold in the market. The inclusion of the Confirmation Note was to reflect industry practice in the purchase and supply of bunkers. Similar to the Gencon or NYPE charterparty forms, the Election Sheet was viewed as a way of allowing parties to negotiate the terms more easily. The Bunker Terms 2018, therefore, don't have to be a "take it or leave it" style document and instead can be used as a template with parties free to adapt it to cater for particular commercial and legal factors.  

Comment
The Bunker Terms 2018 should go a long way toward providing certainty, simplifying negotiations, expediting transactions and reducing the potential for disputes between the parties.

Although it may take a little while for parties to become acquainted with the new terms, given the wide consultation across the supply chain during the drafting process (including strong representation from physical suppliers and traders), it is expected that the whole industry will respond positively to the introduction of the new standard contract. In the meantime, until there is wider uptake on the Bunker Terms 2018, scope for discrepancies in the contractual supply chain is likely to remain.  

Related: BIMCO introduces updated, approved bunker contract

Photo credit: BIMCO
Published: 11 May, 2018

 

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Legal

Shipowner and captain fined for using heavy fuel oil around Svalbard

Foreign shipping company has been fined NOK 1 million for having sailed one of its cargo ships with heavy fuel oil on board within the territorial waters around Svalbard; captain has been fined NOK 30,000.

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A foreign shipping company has been fined NOK 1 million (USD 94,632) for having sailed one of its ships with heavy fuel oil on board within the territorial waters around Svalbard, which is a breach of the Svalbard Environment Act, according to the Governor of Svalbard on Thursday (13 June). 

In addition, the captain has been fined NOK 30,000.

On 6 June 2024, the cargo ship passed into Svalbard's territorial waters, despite the vessel having heavy fuel oil on board, which was established by an inspection carried out by inspectors from the Norwegian Maritime Directorate on the same day.

“This is a breach of Section 82a of the Svalbard Environment Act, which stipulates that ships calling at Svalbard cannot use or have heavy fuel oil as a means of transport. The provision applies to the whole of Svalbard and was introduced on 1 January 2022,” Lars Fause said. 

For the violation of Section 82a of the Svalbard Environment Act, the Governor of Svalbard has issued a forfeiture order against the foreign shipping company of NOK 1,000,000. In addition, the captain of the ship has been fined NOK 30,000.

“It is the first time that the Governor has fined a company in connection with a breach of the heavy oil provision on Svalbard,” he added. 

The fines have not been accepted. The shipping company provided a guarantee for the sum of the fine and was thus allowed to sail down from Svalbard on Wednesday evening, 12 June.

The main hearing in the case is scheduled for the Nord-Troms district court in early October.

 

Photo credit: Venti Views on Unsplash
Published: 20 June, 2024

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Business

Singapore: Xihe Capital liquidator issues notice of intended dividend

Xihe Capital Pte Ltd and its subsidiaries are owned by the Lim family, who are also the owners of the embattled Hin Leong Trading.

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RESIZED Drew Beamer

A notice to declare intended dividend of Nan Shan Maritime Pte Ltd to its creditors has been posted on the Government Gazette on Monday (10 June).

Xihe Capital Pte Ltd and its subsidiaries are owned by the Lim family, who are also the owners of the embattled Hin Leong Trading.

The following are the details of the notice of intended dividend:

Name of Company : XIHE CAPITAL (PTE.) LTD. (IN CREDITORS’ VOLUNTARY LIQUIDATION)
Unique Entity No. / Registration No. : 201727410K
Address of Registered Office : 10 ANSON ROAD, #10-10,INTERNATIONAL PLAZA, SINGAPORE 079903
Last Day for Receiving Proofs : 2 JULY 2024
Name of Liquidator : TAM CHEE CHONG
Address : c/o 10 ANSON ROAD, #10-10, INTERNATIONAL PLAZA, SINGAPORE 079903

Related: Singapore: Liquidator arranges creditors meeting for Xihe Capital
Related: Petition to place Xihe Capital subsidiaries under judicial management approved
Related: Creditors’ meeting for Xihe Capital and related shipping firms to take place in November

 

Photo credit: Drew Beamer
Published: 19 June 2024

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Winding up

Singapore: Final meetings scheduled for An Ping Shipping and related companies

Other companies involved are Da Wei Shipping, Da Kang Shipping, Da Jiang Shipping, Da Hua Shipping, Xin Jiang Shipping and Xin Rong Shipping.

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The final meetings of An Ping Shipping Pte Ltd and related companies have been scheduled to take place on 15 July, according to the company’s liquidator on a notice posted on Friday (14 June) on the Government Gazette.

The meetings will be held at 10 Anson Road, #10-10 International Plaza, Singapore 079903 on 15 July 2024.

The following are the list of the companies involved and timings of the meetings: 

Singapore: Final meetings scheduled for An Ping Shipping and related companies

The meetings are 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 respective company disposed of and of hearing any explanation that may be given by the Liquidators.

The following are details of the joint liquidators:

Tam Chee Chong
Liquidator
c/o 10 Anson Road
#10-10 International Plaza
Singapore 079903#05-01 Parkview Square
Singapore 188778

Note: A Member or Creditor of the Companies may vote either in person or by proxy. To be valid, proxies to be used at the Final Meeting must be lodged with the Liquidator’s office at least 48 hours before the meeting via email to [email protected].

 

Photo credit: Jo_Johnston from Pixabay
Published: 19 June, 2024

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