The American Club & Eagle Ocean Marine recently hosted in Piraeus a Loss Prevention & Claims seminar which looked at both the technical and legal aspects of bunker contamination claims, explains Andrew Dyer, Regional Claims Director EMEA – SVP, The American P&I Club & Global Claims Eagle Ocean Marine.
Although there appears to have a been a reduction in the incidence of such claims, especially when compared to a spike during 2022 (including issues with bunker supplies involving organic chloride), it is clear that bunker contamination continues to remain an ever-present concern.
A time charterer will typically be responsible to take up and pay for bunkers on board the vessel on her delivery into the service of a Charterer and thereafter to “provide and pay for all the bunkers”. Either by way of standard or rider clauses, the charterparty will often provide detailed provision as to the quality of those bunkers to be supplied. Bimco have produced several different standalone clauses dealing with matters such as contractual standards, liability and the taking of samples. It is common for there to be a reference to specific standards such as IS0 8217 and clear provisions that liability will rest with Charterers for loss or damage.
Whilst therefore the time charter regime may well set out quite clearly both the standard as to quality of bunkers and the legal effect of failing to provide such bunkers of the agreed contractual standard, going back to the basics, the burden will be on the owners to establish causation. Where there is apparent damage to the vessel / her engines the evidential chain will be critical. Issues such as: (1) How bunkers were received; (2) what samples were taken and who and how they were witnessed; (3) the whereabouts of samples and sample seal numbers; (4) fuel tank history and oil record books all remain vitally important links in such a chain.
In bunker fuel quality disputes, “fuel management” issues may also come to the fore which focus on the fuel testing program the ship has in place before the use of any bunkers, whether bunkers have been mixed with other bunkers in fuel tanks and compatibility/stability issues.
Where an owner has chartered out the vessel on a voyage basis or where the head time charterer has sub-chartered out the vessel on a voyage basis, then there will of course be a contract for the supply of the bunkers between such owner or time charterer and a bunker broker/ trader. The bunker broker/trader will often source those bunkers (by way usually of a separate contract) from a physical supplier who should then supply the agreed quantity of bunkers at the specified place and at the agreed contractual specifications.
As referred to above, bunker contracts will most of the time have terms which are very firmly in favour of the bunker supplier and may create a wide legal disparity on similar issues between the bunker contract and the one hand and what has been agreed with the owner in the charterparty on the other.
The bunker supply contract will often have extremely short limits, of 7-14 days, within which to provide notice of quality disputes. Such notice provisions can be quite onerous in terms of the requirements as to the contents of that notice and require, for example “[Owners to] give notice [of] the receiving vessel’s position, destination and ETA, the quantities, and locations of all bunkers onboard…the location immediately prior to the consumption of bunkers, the three preceding deliveries to the receiving vessel…”
The bunkering contract may also contain very different considerations as to what is a “binding sample”.
For example, looking at BIMCO’s “Bunkering operations & sampling clause 2011” this provides: “…(b) During bunkering a primary sample of each grade of fuels shall be drawn in accordance with IMO Resolution MEPC 182 (59)”. The IMO resolution in question provides, in terms of the “sampling location”, that a “sample of fuel delivered to the ship should be obtained at the receiving ship’s inlet bunker manifold and should be drain continuously throughout the bunker delivery period”.
By contrast, the standard terms & conditions of a bunker supply contract may contain contractual provisions that representative sealed samples are to be considered those which are from and at the manifold of the bunkering vessel and that such samples “shall be conclusively deemed to be representative” of the quality of the bunkers supplied to an owner’s vessel. The standard terms & conditions may go further and expressly state that any supplies drawn from the bunker manifold of the Owner’s vessel are not to be treated as a valid indicator of the quality supplied.
Also, usually there will be an exclusion of claims for loss of profit/consequential loss etc and there may also be a limit on what can be claimed, such as the cost of bunkers themselves together with the cost of de-bunkering.
Should a bunker claim arise, it is important that P&I insurers are involved from early on to assist, drawing not only on their own internal expertise but also the expertise of their network of lawyers, correspondents and experts.
The views presented hereabove are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
