In an exclusive interview with Singapore-based bunkering publication Manifold Times, Ms Corina Song, Vice-chairperson of Singapore Chamber of Maritime Arbitration, recently shared more about Singapore Bunker Claims Procedure (SBC Terms) that came into force in September 2022 including:

• the key changes made to its terms,
• its impact in resolving bunker disputes,
• how it has been designed by SCMA to specifically benefit the bunker industry and
• the importance of bunker players adopting SBC Terms

MT: Tell us about the Singapore Chamber of Maritime Arbitration’s Singapore Bunker Claims Procedure (SBC Terms).

The Singapore Bunker Claims Procedure SBC Terms is a set of arbitral rules for the resolution of disputes arising out of or in connection with the sale and supply of bunker by arbitration. This includes, amongst others, disagreements over quality and/or quantity of bunker; and/or non-payment or non-delivery of bunker.

The quantum of claims in bunker disputes can sometimes be modest when compared to other shipping and international trade disputes. Moreover, the issues of fact and law are relatively simple. The SBC Terms were designed by the Singapore Chamber of Maritime Arbitration (SCMA) with these features in mind. Besides the general SCMA Rules (4^th Edition, 1 January 2022) (the SCMA Rules) that is applied to all types of disputes, the bunkering industry is uniquely offered the additional option of applying the SBC Terms for an even faster and less costly process to resolve bunker disputes.

MT: When was SBC Terms 2022 launched? What’s the difference between the old SBC terms and the latest SBC Terms?

The SBC Terms 2022 is found in the Singapore Standards 600 of 2022, the Code of Practice for Bunkering for Bunker Tankers Using Tank Gauging (SS 600:2022). It came into force in September 2022 when SS 600:2022 was launched.

The previous iteration of the SBC Terms is the SBC Terms 2014, found in SS 600:2014.

The key changes made to the SBC Terms are set out below:

No requirement to send Notice of Protest or Complaint to Maritime and Port Authority of Singapore (MPA)

Where there is a dispute over the quantity of the bunker, the Notice of Protest only needs to be sent to the Singapore Shipping Association (SSA). Similarly, where there is a dispute over the quality of the bunker, the complaint only needs to be sent to SSA. There is no longer any need to send either the Notice of Protest or complaint to MPA.

Additional information required in the Notice of Arbitration

The Notice of Arbitration (NOA) now requires that the Claimant (i) specify whether the dispute concerns the quality or quantity of bunker, failure to deliver the bunker, non-payment for the bunker, or any other dispute arising from the supply of bunker; and (ii) include a formal request for arbitration as well as reference to the arbitration agreement or a reproduction of the arbitration agreement.

Expedited Arbitration and Summary Procedure

• An arbitration conducted under the SBC Terms may proceed in two (2) ways. There is a default process, and a faster process known as ‘Summary Procedure’. SS 600:2022 now refers to the default process as ‘Expedited Arbitration’ to avoid confusion with the ‘Expedited Procedure’ in the SCMA Rules.
• When the Summary Procedure applies, pursuant to SBC Terms 2022,

1. the hearing will be fixed within 21 days from the day the SCMA Registrar receives the request for Summary Procedure. This gives parties more time to prepare their cases. By comparison, the SBC Terms 2014 fixes a hearing within 14 days;
2. supporting documents and written submissions must be filed no later than 5 days before the date of the hearing. Previously, parties could file their supporting documents and written submissions 2 days before the hearing. This change gives the SCMA Registrar or Tribunal more time to review the facts and arguments.

Adducing oral evidence

Oral evidence could not be adduced in any circumstances under the SBC Terms 2014. However, under SBC Terms 2022, oral evidence can be presented at the request of the SCMA Registrar or Tribunal having conduct of the hearing. This strikes a better balance between having a fair hearing, with a better understanding of the evidence, and resolving a dispute expeditiously.

No mandatory physical hearings

Hearings under the SBC Terms 2022 can now be conducted virtually. This adopts the change in work practices during the COVID-19 pandemic. It is no longer mandatory that hearings be held at a physical venue.

Written awards for all disputes

Under SBC Terms 2014, a written award only needs to be rendered where the claim or counterclaim exceeds SGD50,000. The SBC Terms 2022 has changed the practice, requiring the SCMA Registrar or Tribunal having conduct of the arbitration to issue a written award for all disputes.

No need for security of the claim to be lodged with SSA

The SBC Terms 2022 no longer provides that security for the claim may be lodged with SSA. This simplifies proceedings and reduces costs. In addition, respondents would not be out-of-pocket before the merits of the claim are even decided. Should such security be required, the claimant could make an application to the SCMA Registrar or Tribunal, seeking such security.

The SCMA is grateful for the help of the organisations involved in the revision of the SBC Terms.  We would like to thank MPA, SSA, Singapore Standards, and the Singapore Chemical Industry Council.

MT: What are the differences between SBC Terms 2022 and the rest of arbitration terms out there?

A distinguishing feature of the SBC Terms 2022 (as is also the case under the SCMA Rules) is the non-administered model of arbitration upon which it was crafted. Unlike institutions that adopt an administered arbitration model, parties are given full control of managing their own arbitration process. The SBC Terms 2022 and the SCMA Rules provide parties with the tools and procedural flexibility to maximise efficiency and decrease costs. There are no fees payable for administration of the arbitration since this is not performed by the SCMA. There is also no need to pay a filing fee before commencing the arbitration or placing a deposit. The upfront costs are significantly reduced. However, should parties require specific services, such as the appointment of the sole arbitrator when parties cannot agree, this can be provided by the SCMA Secretariat at a modest fixed fee.

It is due to these cost-saving measures that the shipping and international trade industries have long favoured non-administered arbitration. For this reason, the SCMA was re-constituted in 2009 as an independent body to provide a framework for maritime arbitration specifically tailored to the needs of the maritime community.

When the SBC Terms 2022 are compared to SCMA Rules, some examples would illustrate how the former has been designed by SCMA to specifically benefit the bunker industry.

• Where a bunker claim is valued at SGD100,000, the earliest it can be resolved under the SCMA Rules’ Expedited Procedure is an estimated period of three (3) months. By contrast, the same claim could, when applying the Summary Procedure of the SBC Terms 2022, be determined in or around less than two (2) months.
• The arbitrator’s fees and legal costs for proceedings under SBC Terms 2022 are capped at a lower ceiling than that for the SCMA Rules’ Expedited Procedure.

MT: Why should bunker players adopt SBC Terms 2022 in their contracts?

For the reasons earlier shared, it is clearly in the financial interests of bunker players to adopt the SBC Terms 2022. The cost savings do not, in any way compromise due process to achieve a fair and just outcome.

Should a bunker player wish to use the SBC Terms 2022 in its sale and/or supply contracts, the model arbitration clause is available for incorporation on the SCMA website.

MT: How can SBC Terms 2022 help the maritime sector as it moves towards the adoption of clean fuels in preparation for IMO 2030/2050?

The IMO has implemented the Carbon Intensity Indicate Rating Scheme that measures, amongst other indicia, carbon emissions of ships. One key way to reduce carbon emissions is to use low-carbon or cleaner fuels.

The utility and benefits of the SBC Terms 2022 remain unchanged, regardless of the composition of the fuel. Quality and quantity assurance will persist as perennial concerns. Similarly, the possibility of parties refusing to make full and timely payment continues to exist, as does non-delivery of low-carbon fuels. These are all causes of disputes arising out of or in connection with the sale and/or supply of low-carbon bunker.

Ms Corina Song is also a Partner in the international arbitration, litigation, and maritime and aviation practice groups at Allen & Gledhill LLP. Ms Song is a Senior Accredited Specialist in Maritime and Shipping Law by the Singapore Academy of Law, a statutory board.

 

Photo credit: Singapore Chamber of Maritime Arbitration
Published: 8 May, 2023