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Singapore: Lawyer ‘strongly recommends’ bunker suppliers revisit T&Cs for contactless bunkering ops

28 Jul 2021

The following article on legal responsibility during contactless bunkering operations at Singapore port amidst the Covid-19 pandemic has been written by Nathanael Lin, Partner (Shipping & International Trade) at legal firm Rajah & Tann Singapore LLP; the write-up was made possible through an arrangement led by the Singapore Chamber of Maritime Arbitration (SCMA):

The implementation of contactless bunkering by way of MPA’s Port Marine Circular (“PMC”) No. 21 of 2021 dated 28 May 2021 (since superseded by PMC No. 31 of 2021 dated 14 July 2021), coupled with other safe management measures enacted by the MPA (e.g., Rostered Routine Testing, strict crew change protocols, etc) have significantly reduced the risk of a COVID-19 transmission during a bunkering operation.  This is evident from the fact that we have not seen significant COVID-19 clusters forming on board bunker barges since the NEWOCEAN 6 cluster in January 2021.  Nevertheless, we would strongly recommend that bunker suppliers revisit their General Terms & Conditions, to contractually provide for the allocation of risk in the event that a bunker barge’s crew (or vice-versa) is infected with COVID-19: as we have seen in the case of the NEWOCEAN 6 cluster, any such infection could result in the quarantine of the affected bunker barge (and potentially other barges in the same management / fleet) for weeks, causing significant operational disruption and monetary losses.  Before doing so, bunker suppliers would have to carry out their own due diligence to ascertain if it would be feasible to prove, i.e., trace, the source of any such infection.

In addition to the foregoing, we have seen a significant uptick in the number of quality claims being alleged by ship owners since the implementation of contactless bunkering operations.  Bunker suppliers, bunker clerks, and the crew of the bunker barge are now unable to witness the sampling and sealing of the bunker sample at the receiving vessel’s manifold.  Some of the more creative bunker suppliers have attempted to video the sampling and sealing process through the use of unmanned aircraft, or drones, but MPA’s PMC No. 22 of 2021 dated 4 June 2021 requires the Master of any vessel within Singapore port to notify the Port Master of any unmanned aircraft (including drones).  Our anecdotal experience is that such attempts to use drones to record the sampling and sealing process have not been met with regulatory approval.

The good news for suppliers is that virtually all such quality claims have been settled commercially. Suppliers have been able to fend off such claims by making reference to tests done on the barge-retained sample, as well as the fact that other vessels who have taken delivery of bunkers from the same barge lot have not brought allegations of quality claims based on the same quality parameters which are allegedly off-specification.

The bad news is that dealing with such claims incurs significant opportunity cost, and even small discounts cut into suppliers’ already-thin profit margins – which have seen significant erosion this year following the significant increase in Zhoushan as a price-competitive alternative bunkering port to Singapore.  Any review of suppliers’ General Terms & Conditions should take into account the increased operational risk to bunker suppliers arising from contactless bunkering operations as well.

Nathanael Lin
Partner, Rajah & Tann
Shipping & International Trade
D +65 62320293
F +65 64282092
Email: nathanael.lin@rajahtann.com

Editor’s note: The above article is the final piece in a series of SCMA organised write-ups focusing on legal responsibility during contactless bunkering operations. Earlier two articles were:

Related: Singapore: Contactless bunkering protocol breach may lead to regulatory action and tort of negligence claims
Related: Contactless bunkering operations at Singapore port ‘raises questions’ on remedies in event of breach

 

Photo credit: Manifold Times
Published: 28 July, 2021

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