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PMI Trading responds to Nustar Energy over alleged off-spec bunker fuel supply at Houston

24 Mar 2020

PMI Trading Limited, an Ireland incorporated entity jointly owned by Petróleos Mexicanos (48.5%) and P.M.I. Norteamérica, S.A. de C.V. (51.5%), on Friday (20 March) responded to Nustar Energy Services, Inc. over a 2017 contract regarding the supply of alleged off-spec bunkers.

On 19 April 2018, Nustar used IFO 380 supplied by PMI Trading in a bunker delivery to the Singapore-registered M/V Beatrice (IMO 9674763), a chemical tanker chartered by Toyota Tsusho Petroleum (TTP), at the Port of Houston in Texas.

The bunker samples were later discovered by both TTP and Nustar to be exceeding ISO 8217:2010(E) specifications for calcium, phosphorus and zinc content, resulting in TTP seeking a total $421,784.94 from Nustar through two claims in March 2019.

In its latest reply, PMI Trading lawyers said the company is seeking to enforce either an arbitration clause under its contract with Nustar, or to dismiss NuStar’s claims for negligence and products liability and TTP’s claims for breach of contract and products liability.

“Here, the 2017 Contract makes clear that the parties (PMI and NuStar) agreed to arbitrate disputes that arise out of or relate to the Contract,” explained the lawyers, according to court documents obtained by Manifold Times.

“Any disputes that arise out of or relate to the commercial transaction embodied in the Contract are subject to mandatory arbitration in New York, administered by the AAA and conducted pursuant to its International Rules,” they pointed out.

PMI Trading’s legal representatives further suggested the company not being liable to NuStar’s third party claims for negligence and products liability and TTP’s claim for products liability – recommending the dismissal of such claims.

“The Contract between PMI and NuStar is not a back to back contract where the same agreement carries through all the way to TTP,” they said.

“Each contract contains its own terms with respect to e.g. price, quality, warranties, amongst others. What may constitute a breach under the TTP/NuStar contract may not be a breach of the PMI/NuStar contract, and vice versa.”

The claims by Nustar and TPP are also barred by the economic loss doctrine, they suggested.

“Neither party has alleged damages beyond subpar bunker fuel and economic losses related to replacing the fuel. Therefore, claims in tort and products liability are barred by the economic loss doctrine.”

“TTP’s claim for breach of contract is barred because its pleadings to do not establish that TTP and PMI were parties to a contract,” they added.

“TTP’s claim for products liability fails as a matter of law because it has only made a claim for economic losses which do not entitle it to recover for products liability under maritime law.”

Related: Toyota Tsusho seeks off-spec bunker claim from Nustar Energy


Photo credit: Image by aymane jdidi from Pixabay
Published: 24 March, 2020

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