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Galadari Advocates & Legal Consultants: Securing a bunkering claim in United Arab Emirates

Partner Abdelhak Attalah discusses possibility for a bunker supplier, whether a physical supplier or a trader, to arrest and enforce the statutory lien generated by their debt over a ship in UAE jurisdiction.

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Law firm Galadari Advocates & Legal Consultants partner Abdelhak Attalah released an article to discuss the possibility for a bunker supplier, whether a physical supplier or a trader, to arrest and enforce the statutory lien generated by their debt over a ship in the United Arab Emirates (UAE) jurisdiction:

The right of ship arrest under UAE law for unpaid bunker

Relevant to our following discussion is that for ship arrest the UAE has adopted a “closed-list” approach for the definition of a “maritime claim”, where a list consists of limited numbers of maritime debts based on which only a ship could be arrested. These are reduced to fifteen (15) classes of maritime claims listed in Article 115(2) of the UAE Federal Law of No. 26 of 1981, as amended by Federal Law No. 11 of 1988, concerning the Commercial Maritime Law (“CML”). As for the bunkering claim, it is listed in paragraph (i) of the said Article which classifies it as: “Supplies of products or equipment necessary for the utilization or maintenance of the vessel, in whichever place the supply is made.” Thus, ship arrest in the UAE is a preservatory remedy to obtain security, in favor of an unpaid bunker claim in the merits whether commenced or to be commenced through court litigation or arbitration.

Bunker litigation in the UAE and the time-bar (a statute of limitations as known under common law jurisdictions)

Bunker claim is not only classified by the CML as “maritime debt” but a “priority debt” as stated forth in Article 84 (e) of the CML which classifies bunkering debt as:

“Debts arising out of contracts made by the master, and operations carried out by him outside the port of registration of the vessel within the scope of his lawful powers for an actual requirement dictated by the maintenance of the vessel or the continuance of its voyage, whether or not the master is also the owner of the vessel, or whether the debt is due to him, or to persons undertaking supply, or lenders, persons who have repaired the vessel, or other contractors.”

Thus, bunker claim takes precedence over some other maritime debts such as ship mortgage, demurrages, and insurance premium, and it ranks pari passu with other ship supplies. However, bunker claim would be time-barred within six (6) months as stated forth in Article 93 of the CML.

The validity of the incorporation of an English law clause contained in the General Terms and Conditions of the bunker supplier into their bunker delivery receipt under UAE law

The position of the UAE Courts has been clearly apparent regarding the incorporation by reference of a clause contained in another standard form contract or in the General Terms and Conditions of a trader stating for the application of the English law into an underlying contract as decided by the Dubai Court of Appeal in Cigna Insurance Middle East (S.A.L) v. Agribusiness United DMCC, Dubai Commercial Appeal No.2320 of 2021 and confirmed by Dubai Commercial Cassation No. 204 of 2022.

This ruling would have considerable benefit for bunker suppliers in raising their claims before UAE Courts, because, while unpaid bunker is not considered as a maritime claim under English law unlike the UAE law as confirmed in  the English case PST Energy 7 Shipping LLC v O.W. Bunker Malta Ltd [2015] EWCA Civ 1058 (‘Bunkers’) however, in the same case, the arbitrators, the first instance judge and the Court of Appeal decided that the price of the supplied bunker was due as a matter of debt. Therefore, the supplier’s claim is a straightforward claim in debt and as such is subject to section 5 of the Limitation Act 1980 which states:

“Time limit for actions founded on simple contract: “An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.””

Thus, whenever the terms and conditions of the bunker suppliers state for the application of English law to their supply contracts, they may rely on the extended statutory time limit of six years stated forth by section 5 of the Limitation Act 1980 instead of the six months stated forth in Article 93 of the CML.

The validity of the incorporation of an arbitration clause contained in the General Terms and Conditions of the bunker supplier into their bunker delivery receipt under UAE law

While Article 7(b) of the UAE Arbitration law of 2018 allows the incorporation of an arbitration clause contained in the General Terms and Conditions by reference those General terms and conditions however, the general rule of incorporation by reference is the “express terms” requirement where specific wording is used. Indeed, in Al Buhaira National Insurance Co. v. The Shipping Corporation of India Limited (Cassation No. 363 of 2011, Civil Appeal), the wording of incorporation of an arbitration clause stated that: “All terms, conditions and exceptions (including but not limited to Due Diligence, Negligence, Force Majeure, War, Liberties and Arbitration clauses) contained in which charter are herewith incorporated and form part hereof.” The court of cassation held that, the above incorporation wording in the bill of lading was sufficiently express to enable the charter party arbitration clause to be validly incorporated by reference. The requirement of express reference to the arbitration clause was confirmed by UAE Courts in recent rulings such as in the Dubai Courts Real Estate Cassations Nos. 603 and 693 of 2021.

Thus, the important aspect of the Court of Cassation’s ruling is that an arbitration clause contained in the General Terms and Conditions of the bunker supplier can be incorporated into their bunker delivery receipt by reference, as long as: (a) not only those General Terms and Conditions are incorporated by reference; but (b) the referral of disputes to arbitration as specified in the relevant General Terms and Conditions clause is also specifically incorporated into their bunker delivery receipt.

 

Photo credit: David Rodrigo on Unsplash
Published: 13 March, 2023

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Fuel Testing

Singapore: CTI-Maritec shares testing protocols ahead of mandatory enhanced bunker fuel checks

In light of mandatory enhanced checks for marine fuel delivered at Singapore port coming into effect on 1 June, CTI-Maritec shares recommendations for fuel testing protocols, primarily focused at COCs and SAN detection for bunker supply in Singapore.

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Louis Reed from Unsplash

With mandatory enhanced checks for marine fuel delivered at Singapore port coming into effect on 1 June, bunker fuel testing and marine surveying business Maritec Pte Ltd (CTI-Maritec) has published a newsletter providing recommendations on vital pre-emptive fuel testing measures vessels should be taking as part of their routine fuel testing and also recommendations on optimal testing options available when deep-dive analysis is required to determine a root cause: 

Introduction

On 8 February 2024 the Maritime and Port Authority of Singapore (MPA) issued a Port Marine Circular No 3 of 2024 regarding the implementation of enhanced testing parameters for marine fuel batches intended to be delivered as bunkers in the Port of Singapore in addition to the existing quality assurance measures.

In accordance with the MPA’s Port Marine Circular No 3 of 2024, from 1 June 2024 onwards, bunker suppliers in the Port of Singapore must ensure that:

  • Residual & Bio-residual bunker fuel do not contain Chlorinated Organic Compounds (COC) above 50mg/kg and are free from inorganic acids.
  • COC must be tested using the EN 14077 accredited test method and shall be reported in the “Certificate of Quality” (COQ) provided to receiving vessels.
  • Inorganic acids must use the ASTM D664 accredited test method as prescribed in ISO 8217 and the Strong Acid Number (SAN) (in addition to the Total Acid Number (TAN) shall be reported in the COQ (i.e. SAN = 0) provided to receiving vessels. For distillate / bio-distillate bunker marine fuel batches, SAN must be tested as per ASTM D664 test method and reported in the COQ.
  • Residual marine fuels are free from polystyrene, polypropylene & polymethacrylate. These can be tested by filtration, microscopic examination, & Fourier-Transform Infrared spectroscopy analysis.

Testing Recommendations in line with MPA Enhanced Parameters to Protect Your Vessels:

In view of the above, CTI-Maritec recommends fuel testing protocols as depicted in the chart below (as routine pre-emptive measures and/or for deep dive requirements to detect the root cause) to help safeguard vessel health.

Our recommendations are primarily focused at COCs and SAN detection for bunker supply in Singapore, while recommendations for testing Polymers are advised for requirements of reported problem cases or when highly abnormal GCMS findings of chemical compounds like Styrene, DCPD and Indene are detected.

COC & SAN GCMS testing Packages A to E

Related: Singapore: CTI-Maritec publishes whitepaper on upcoming mandatory enhanced bunker fuel tests
Related: Singapore: Marine fuel quality testing agencies applaud move for mandatory enhanced bunker fuel tests
Related: Singapore: MPA tightens testing parameters to reduce contaminated bunker fuels
Related: MPA: Glencore and PetroChina supplied contaminated bunkers to about 200 ships in the Port of Singapore

 

Photo credit: Louis Reed from Unsplash
Published: 29 May 2024

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Methanol

VPS conducts assessment on first SIMOPS methanol bunkering op in Singapore

Firm was appointed by OCI Methanol Europe to conduct a quantity and quality assessment of a methanol bunker fuel delivery to “Eco Maestro” in Singapore.

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VPS conducts assessment on first SIMOPS methanol bunkering op in Singapore

Marine fuels testing company VPS on Tuesday (28 May) said it was appointed by OCI Methanol Europe, part of the OCI Global Group, to conduct a quantity and quality assessment of a methanol fuel delivery to Eco Maestro in Singapore.

Captain Rahul Choudhuri, President Strategic Partnerships, VPS, said VPS survey experts Rafael Theseira and Muhd Nazmi Abdul Rahim were at hand during the methanol bunkering to ensure the 300 metric tonnes of methanol transfer was carried out smoothly, having been involved in the first methanol bunkering a year ago. 

Manifold Times recently reported X-Press Feeders, Global Energy Trading Pte Ltd (GET), and PSA Singapore (PSA) successfully completing the first simultaneous methanol bunkering and cargo operation (SIMOPS) in Singapore.

A X-Press Feeder container vessel, Eco Maestro, on its maiden voyage from Asia to Europe was successfully refuelled with close to 300 mt of bio-methanol by GET, a MPA licensed bunker supplier, using MT KARA

The ISCC-certified bio-methanol used for the SIMOPS was produced by green methanol producer OCI Global and supplied via GET, a ISCC-certified supplier.

Captain Choudhuri said the role of the marine, petroleum or bunker surveyor has evolved over the years in shipping and maritime affairs, but the principles have not - and that is to provide independent assessment of the quality and quantity of the product transfer. 

“This may seem obvious but this quality and quantity control is crucial to avoid commercial discrepancies, shortages or fraud,” he said.

“Safety training is critical and we have been on top of this having completed the required MPA fire-fighting course and the IBIA Methanol training course. We will work more with the Singapore Maritime Academy for trainings in future,” he added.

In August last year, Singapore-headquartered independent common carrier X-Press Feeders launched its first ever dual-fuel vessel Eco Maestro in China.

Manifold Times previously reported VPS stating it was the first company to complete a methanol bunker quantity survey (BQS) operation in Singapore on 27 July last year.

VPS was appointed by Maersk and Hong Lam Marine Pte Ltd, to undertake the very first bunker quantity survey (BQS) of a methanol fuel delivery, supplied by Hong Lam to the Maersk vessel on its maiden voyage to Europe. 

Related: First SIMOPS methanol bunkering operation completed in Singapore
Related: VPS completes quantity survey on Singapore’s first methanol bunkering op
Related: Singapore bunkering sector enters milestone with first methanol marine refuelling op
Related: X-Press Feeders launches its first methanol dual-fuel vessel “Eco Maestro” in China

 

Photo credit: VPS
Published: 29 May 2024

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LNG Bunkering

Gasum and Equinor ink continuation of long-term LNG bunkering agreement

Agreement builds on the success of the previous contract Gasum has had with Equinor; Gasum’s bunker vessels “Coralius”, “Kairos” and “Coral Energy” will be used for the bunkering operations.

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Gasum and Equinor ink continuation of long-term LNG bunkering agreement

Nordic liquefied natural gas (LNG) bunker supplier Gasum on Tuesday (28 May) said it signed a long-term contract with Norway-based global energy company Equinor whereby Gasum continues to supply LNG to Equinor’s dual-fuel chartered fleet of vessels. 

The agreement builds on the success of the previous contract Gasum has had with Equinor. Gasum’s bunker vessels Coralius, Kairos and Coral Energy will be used for the bunkering operations.

The agreement also includes additional support services such as cooling down and gassing up, which has also been a part of Gasum’s previous collaboration with Equinor. 

Gasum has organised three separate LNG cool down operations for Equinor in Skagen so far this year.

Both Gasum and Equinor have committed to sustainability goals to enable a cleaner energy future. Equinor’s ambition is to become a net-zero emissions energy company by 2050.

Using LNG in maritime transport means complete removal of sulfur oxides (SOx) and particles, and reduction of nitrogen oxides (NOx) emissions of up to 85 percent as well as a reduction in CO2 emissions by at least 20%. LNG is interchangeable with liquefied biogas (LBG/bio-LNG), which reduces carbon dioxide emissions by 90% compared to conventional fuel such as marine gasoil (MGO).

With LNG and bio-LNG the maritime industry can reduce emissions already today, instead of waiting for future solutions. Gasum’s strategic goal is to bring yearly seven terawatt hours (7 TWh) of renewable gas to market by 2027. Achieving this goal would mean combined carbon dioxide reduction of 1.8 million tons per year for Gasum’s customers.

Related: Equinor Energy AS extends LNG bunkering agreement with Gasum
Related: Gasum expands LNG bunkering business to ARA region through partnership with Equinor

 

Photo credit: Gasum
Published: 29 May 2024

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