Legal

IBIA: New regulatory BDN requirement from 1 January 2019

Offers practical advice to dispel some misunderstandings regarding the responsibility of suppliers.

Published

6 years ago

December 18, 2018

Admin

The following is a Friday (14 December) press release from the International Bunker Industry Association (IBIA):

IBIA would like to remind the industry that new regulatory requirements under MARPOL Annex VI, regarding the information to be included in the bunker delivery note (BDN), will enter into force on 1 January 2019. We would also like to offer some practical advice and dispel some of the misunderstandings regarding the responsibility of suppliers.

Below is the text of the new Appendix V, “Information to be included in the bunker delivery note (regulation 18.5)” that is set to take effect on 1 January, 2019:

QUOTE
Name and IMO Number of receiving ship
Port
Date of commencement of delivery
Name, address and telephone number of marine fuel oil supplier
Product name(s)
Quantity in metric tonnes
Density at 15°C (kg/m3 )
Sulphur content (% m/m)

A declaration signed and certified by the fuel oil supplier’s representative that the fuel oil supplied is in conformity with regulation 18.3 of this Annex and that the sulphur content of the fuel oil supplied does not exceed:

– the limit value given by regulation 14.1 of this Annex;
– the limit value given by regulation 14.4 of this Annex; or
– the purchaser’s specified limit value of _____(% m/m), as completed by the fuel oil supplier’s representative and on the basis of purchaser’s notification that the fuel oil is intended to be used:

.1 in combination with an equivalent means of compliance in accordance with regulation 4 of this Annex; or
.2 is subject to a relevant exemption for a ship to conduct trials for sulphur oxides emission reduction and control technology research in accordance with regulation 3.2 of this Annex.

This declaration shall be completed by the fuel oil supplier’s representative by marking the applicable box(es) with a cross (x).”
UNQUOTE

When this regulatory text was adopted by the IMO, it was made clear that the format of Appendix V, notably the checkboxes, gave the impression that this should be used as a template of the declaration, this is not the case. It only specifies what the regulatory requirements are, but the format and text can be rephrased to improve clarity.

During the IMO meeting where the new regulatory requirement was adopted, IBIA asked for clarification regarding the two specific sub-conditions below the third tick box, justifying supply of high sulphur fuel oil (HSFO). The clarification was given that, as there was no tick box against the two sub-clauses, the third tick box only requires that the sulphur value specified by the purchaser is entered. There is no requirement for validation by the supplier on the BDN as to which method of compliance is used by the ship.

IBIA provided detailed for our members regarding new regulatory BDN requirements shortly after the adoption of amendments to Appendix V of MARPOL Annex – which you can find here: https://ibia.net/ibia-advice-for-members-regarding-new-regulatory-bdn-requirements/

It has been suggested by various interested parties that the new supplier’s declaration puts an obligation on suppliers to ensure the ship has an approved exhaust gas cleaning system (EGCS) before supplying fuel with sulphur exceeding the sulphur limit in regulation 14.1, which is 3.50% at present, falling to 0.50% on 1 January 2020. This is not the case and the regulation is clear. It requires bunker suppliers, if asked to provide fuel exceeding the sulphur limit in Regulation 14.1 to a ship, to do so only on the basis of receiving a notification from the buyer that the fuel is intended to be used compliantly. There is no requirement on the supplier to check if this is the case – only to obtain a ‘notification’.

The bunker supply industry generally supports the 2020 sulphur cap and a level playing field. If a bunker supplier has concerns about a buyer’s ability to use HSFO compliantly, the supplier can of course choose not to provide HSFO, but there is no obligation on them to make checks. If the buyer orders a product exceeding the sulphur limit in regulation 14.1, the supplier is only obliged to obtain the required notification before supplying it.

In general, bunker suppliers have misgivings about accepting any kind of risk that they can be held liable for supplying a ship with non-compliant fuel if that is what the ship ordered. Suppliers are responsible for delivering to the specification ordered. We do not expect petrol stations to be held responsible for someone filling their diesel car with petrol or vice-versa. As long as the pumps are clearly marked it is up to the person fuelling their car to choose the product that is right for their engine.

Policing of ship compliance is up to port state control officers (PSCOs) and it is quite simple for them to do so in this case: if they check the BDN and it shows that the ship has purchased fuel with sulphur above 0.50% after 1 Jan 2020, they should immediately ask for the ship’s IAPP supplement detailing if it has an equivalent arrangement approved in accordance with regulation 4.1 (or an exemption under Regulation 3.2) which allows the ship to use (or carry for use post 1 March 2020) fuel with sulphur above 0.50%.

So in summary:
1. Suppliers should not be expected to police ships beyond the regulatory requirement to obtain the notification about the ship’s intention to use the fuel compliantly, and should not face any liability if that notification is a false statement.
2. Suppliers may, on a voluntary basis, go above and beyond the regulatory requirement to make sure that a ship ordering fuel exceeding 0.50%S after 1 Jan 2020 does in fact have an approved equivalence method (e.g. a scrubber) or an exemption under regulation 3.2 to trial such technology.

IBIA advice for improving clarity of BDN

IBIA believes the clarity of the BDN can be enhanced so it is less open for confusion by stating the actual sulphur limits associated with each tick box, and also a format that allows suppliers, as we approach the end of 2019, to provide assurance that they are meeting the 0.50% limit in Regulation 14.1 by deleting the 3.50% option. Otherwise, if the BDN only states that the supplier is providing fuel meeting the limit value of Regulation 14.1 they are only guaranteeing max 3.50% up to and including 31 December 2019. We believe the format in the example we have suggested addresses this elegantly.

Photo credit: International Bunker Industry Association
Published: 18 December, 2018

Legal

Helmsman on Inter-Pacific Petroleum legal battle: When ignorance meets fraud

Lester Ho, Associate Director of law firm Helmsman shared his timely key takeaways on the recent case of Goh Jin Hian against defunct Singapore bunker supplier Inter-Pacific Petroleum.

Published

1 day ago

June 13, 2025

Admin

Lester Ho, Associate Director of multi-disciplinary law firm Helmsman LLC shared his timely key takeaways on the recent case of Goh Jin Hian v Inter-Pacific Petroleum when the Appellate Division of the High Court in Singapore overturned the High Court’s finding that Mr Goh’s breach had caused IPP to incur the losses:

The collapse of a company often prompts a search for blame, especially where the downfall stems from deliberate misconduct such as fraud that appears avoidable in hindsight. Unsurprisingly, a company’s directors are frequently perceived as the root of the problem and become prime suspects in the inevitable witch hunt for accountability. The recent case of Goh Jin Hian v Inter-Pacific Petroleum Pte Ltd (in liquidation) [2025] SGHC(A) 7 is a timely reminder of a director’s duties as well as the legal risks in the event of breach.

The downfall of Inter-Pacific Petroleum Pte Ltd (“IPP”) is well-documented. The Maritime Port Authority of Singapore suspended IPP’s bunker craft operator licence after discovering that the mass flow meter of a bunker tanker chartered by IPP had been tampered with. Concerns raised by IPP’s banks in relation to its business led its non-executive director, Mr Goh Jin Hian, to discover that it was heavily indebted to the banks. It was also discovered that the facilities had been used on sham sale and purchase transactions.

IPP was subsequently placed in compulsory liquidation, and Mr Goh was sued for breach of his director’s duties. It was alleged that the sham transactions could have been prevented had Mr Goh discharged his duties and that he was therefore responsible for IPP’s losses. At first instance, the High Court found that Mr Goh had breached his duty of care and ordered him to compensate IPP for approximately US$146 million in losses (Inter-Pacific Petroleum Pte Ltd (in liquidation) v Goh Jin Hian [2024] SGHC 178). Among other things, the High Court found that Mr Goh was in breach because he was entirely ignorant of IPP’s cargo trading business.

The Appellate Division of the High Court upheld the finding that Mr Goh had breached his duty for having been unaware of IPP’s cargo trading business. However, it overturned the High Court’s finding that Mr Goh’s breach had caused IPP to incur the losses. The Appellate Division found that IPP failed to prove that Mr Goh would have uncovered the sham transactions even if he had discharged his duty. Accordingly, Mr Goh was absolved of his liability to compensate IPP.

There are two broad takeaways from the decision.

The first takeaway is that every director, both executive and non-executive, is held to a minimum standard of care. This standard requires directors to take reasonable steps to put themselves in a position where they can guide and monitor the management of the company. Put simply, ignorance of a company’s business is no defence, even for non-executive directors that are not involved in everyday operations. Accordingly, although Mr Goh was a non-executive director, the fact that he was unaware that IPP was carrying on the business of cargo trading meant that he was in breach of his duties.

It may be surprising that a director could be entirely unaware of an important part of a company’s business. But the reality is that modern day companies have become commercial behemoths with complex and layered operations that makes it all too easy for directors (especially non-executive directors) to delegate oversight over critical business decisions and lose visibility of what their companies do. It is therefore important for directors, regardless of their formal titles, to ensure that there is a robust chain of reporting and command such that they have sufficient knowledge of the company’s operations to discharge their duties.

The second is that, while the law imposes high standards on directors, it does not demand unrealistic standards. As noted, the Appellate Division accepted that Mr Goh had breached his duties for having been unaware of IPP’s cargo trading business. However, it was not persuaded that, even if Mr Goh had discharged his duties and had been properly informed of IPP’s activities, the sham transactions could have been prevented. IPP was affected by what the Appellate Division considered a “deep-seated fraud” that had gone undetected even by IPP’s auditors. In the circumstances, it was far from clear that Mr Goh could have prevented the loss even if he had discharged his duty.

However, just because the law does not expect directors to be superhuman does mean that directors can afford to be complacent. Directors would still do well to take reasonable and diligent steps to ensure that they have a good grasp of the company’s operations and engage competent professionals (e.g., auditors) to help surface risks that they may otherwise miss. In a sense, Mr Goh avoided liability not because his breach was minor, but because the extent of the fraud perpetrated meant that the gravity of his breach cannot be said to have caused the loss. In other words, a less sophisticated or extensive fraud might have yielded a drastically different outcome – directors should take heed.

A timeline organised list of events preceding the current development of Inter-Pacific Petroleum has been recorded by Manifold Times below:

Photo credit: Helmsman
Published: 13 June, 2025

Biofuel

BIMCO subcommittee launched to develop bio bunker fuel clause for time charters

Newly formed subcommittee marks a proactive step toward addressing legal and operational challenges posed by the growing use of biofuels in shipping.

Published

5 days ago

June 9, 2025

Admin

International shipping association BIMCO on Wednesday (4 June) launched a new subcommittee to develop a Biofuel Clause for Time Charter Parties, marking a proactive step toward addressing the legal and operational challenges posed by the growing use of biofuels in shipping.

With regulatory frameworks like the EU ETS, FuelEU Maritime, and the upcoming IMO Net-zero Framework measures reshaping fuel strategies, biofuels are becoming an increasingly attractive option for reducing emissions. Yet, their integration into charter agreements remains complex, often raising questions around fuel quality, engine compatibility, and liability.

The newly formed subcommittee, comprising shipowners, charterers, P&I representatives and technical experts, met for the first time on 7 April 2025. Its work will focus on defining the scope and standards for biofuels, clarifying how they may be supplied and handled, and ensuring that their use aligns with performance expectations and regulatory obligations.

The clause will also consider the practical realities of biofuel use, such as blending with conventional fuels, onboard storage, and the implications for speed and consumption warranties. By addressing these issues, BIMCO aims to provide a flexible yet robust contractual solution that supports compliance without compromising vessel reliability.

A draft clause is expected to be presented at BIMCO’s Documentary Committee meeting in October 2025. Once adopted, it will offer much-needed clarity for charterers and owners navigating the transition to low-carbon operations.

Photo credit: BIMCO
Published: 9 June, 2025

Legal

Singapore: Ex-Director of Inter-Pacific Petroleum wins appeal against former company

Appellate Division of the High Court has found Dr Goh Jin Hian not liable to pay up to USD 146 million of the company’s total USD 156 million loss.

Published

1 week ago

June 6, 2025

Admin

The Appellate Division of the High Court on Thursday (5 June) has found a former Director of defunct Singapore bunker supplier Inter-Pacific Petroleum (IPP) not liable to pay up to USD 146 million of the company’s total USD 156 million loss.

The decision sets aside an earlier decision by the High Court that found Dr Goh Jin Hian responsible for the company’s financial loss.

The Appellate Division of the High Court found that even though it agreed that Dr Goh had breached his duty of care as a director, IPP has failed to show that his breach caused loss to the company.

In a judgment issued by the Appellate Division of the High Court, sighted by Manifold Times, it wrote: “While we agree with the Judge that Dr Goh had breached the Care Duty by reason of his ignorance of the cargo trading business, IPP has failed to show causation, ie, that the breach caused the loss in question.

“Also, we disagree with the Judge that the Care Duty was breached as regards the purported red flags. Finally, we find that Dr Goh did not breach the Creditor Duty in relation to the Cargo Drawdowns.”

The justices presiding the appeal were Tay Yong Kwang, Woo Bih Li and Kannan Ramesh.

IPP Judicial Managers (JMs) Deloitte Singapore, the plaintiffs, on April 2023 initiated a legal suit against Dr Goh, the defendant, suing him for over USD 156 million over losses due to alleged breach of his Director’s duties.

A timeline organised list of events preceding the current development of Inter-Pacific Petroleum has been recorded by Manifold Times below:

Photo credit: Manifold Times
Published: 6 June, 2025

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IBIA: New regulatory BDN requirement from 1 January 2019

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