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Bunkering Clauses and IssuesPeter GloverSenior AssociateNorton Rose Fulbright LLP11 September 2014
Standard Bunker Supply Clauses• Common bunker clauses terms
– quality and quantity determination
– governing law
– warranties
• Problems and discussion
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Quality and Quantity Determination
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Quality and QuantityClause 6.1
Products shall meet specifications that are applicable at the time and place of delivery. The
Buyer shall be solely responsible for the selection and acceptance of Products tendered for
delivery to the Vessel.
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Quality and QuantityClause 6.3
Bulk deliveries ex-barges, wagons and vehicles must be checked by tank-dipping to measure
the contents and ensure full turn-out. Flow meters must be checked for seals correct settings
and calibration and general condition. All these checks must be carried out before and after
delivery of each consignment and each barge, wagon or vehicle tank load. The delivery must
be supervised at all times and care must be taken in ensuring that all documentation is
complete and accurate before signing and stamping. Any alleged discrepancies can only be
accepted in the form of a “Letter of Protest”. No comments will be allowed to be written on the
delivery receipt. The Seller will not accept any claims for short delivery or bad quality where
these receiving procedures are not followed.
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Quality and Quantity4.1 Buyer shall have the sole responsibility for the selection of the proper grades of Bunker
Fuels for use in the vessel being supplied and the Seller shall not be under any obligation to
check whether the grade of Bunker Fuels is suitable for the Vessel. The Bunker Fuels shall
be of the same quality generally offered for sale at the time and place of delivery, for the
grade of Bunker Fuels ordered by the Buyer.
5.1 The quantity of Bunker Fuel delivered shall be determined from gauges/ullages of the
barge or truck effecting delivery or by gauging/ullages of shore tank if delivery is by pipeline.
Buyer has the right to have its representatives present during measurements, but
determination of quantity shall be made solely by Seller, and will be conclusive.
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Quality and QuantityClause 10.1
The quantity of Bunker Fuel delivered shall be determined in accordance with Article 5.1. Any
claim regarding the quantity of the Bunker Fuel delivered shall be notified verbally as well as
in writing by the Buyer or the master of the Vessel to the Seller as soon as practicable at the
conclusion of the delivery of the Bunker Fuels while the delivery hoses are still connected. In
any event, such claim shall be deemed to be waived and barred. A notification inserted in the
Bunker Delivery Note or in a separate protest handed to the physical supplier of the Bunker
Fuel shall not qualify as notice under this section 10.1 and the Seller shall under no
circumstances be deemed to have accepted such notice or protest handed to the physical
supplier.
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Quality and QuantityClause 13.1
Any dispute as to the quantity delivered must be noted at the time of delivery in a letter of
protest. Any claim as to short delivery shall be presented by the Buyer immediately upon
completion of delivery, failing which any such claim shall be deemed to be waived and
absolutely barred.
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Quality and QuantityClause 13.2
Claims concerning quality shall have to be submitted to the Seller in writing within 15 days
from delivery, failing which the rights to complain or claim compensation of whatever nature
shall be deemed to have been waived and absolutely barred for all times. If it is alleged that
any equipment or machinery has been damaged by defective Products, full details must be
given to the Seller at the earliest opportunity and the item must be preserved and made
available for inspection on demand at any reasonable time or times to the Seller or its
representative otherwise no such claim shall be accepted by the Seller.
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Governing law
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Governing lawClause 16.1
The Bunker Contract shall be governed by the laws of Denmark. However, the choice of law
is for the sole benefit of the Seller and the Seller may apply and benefit from any law granting
a maritime lien and/or right to arrest the Vessel in any country as stipulated in Section 9
hereof.
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Governing lawClause 18
Expect as otherwise expressly agreed to in writing, the Agreement its performance and
enforcement is governed by the Greek Law. All disputes arising in connection with this
agreement or any agreement resulting hereof shall be referred to the Courts of Piraeus.
Clause 18.1
This Agreement shall be governed and construed by the laws of the Republic of Singapore.
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Warranties
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WarrantiesClause 4.2
DISCLAIMER. Any implied warranties, including the warranties of merchantability and fitness
for a particular purpose that the Seller may be deemed to have made, are expressly excluded
and disclaimed.
• Express attempt to avoid statutory warranties
• Success may depend:
– jurisdiction
– definitions
– value of service
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Discussion
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Starting position …• Fuel quantity:
– owners responsible for ensuring sufficient bunkers on board for voyage
– if charterers rely on information which is wrong they cannot be held liable
In my opinion, this is to endeavour to give far too extensive an operation to the provision
that the charterers are to ‘provide and pay for all coal’; I think it leaves untouched the duty
of the shipowners to render the ship seaworthy by seeing that there is on board sufficient
coal for the use of the ship when she starts on each stage of her voyage.
MacIver v Tate (1903) 8 Com. Cas. (C.A.).
The provision in cl. 2 does not relieve the shipowners from the obligation of seeing that
the vessel is in a seaworthy condition in respect of the supply of fuel: See McIver & Co.
Ltd. v. Tate Steamers Ltd., [1903] 1 K.B. 362. Thus it is the duty of the master to give the
charterers correct information, to enable them to provide the requisite quantity of fuel, …
Mammoth Bulk Carriers Ltd v Holland Bulk Transport B.V. (The “Captain Diamantis”) [1977] 1 Lloyd’s Rep. 362
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Discussion• Charterers - fuel quality:
– charterers have “absolute duty” to provide proper bunkers
Nippon Yusen Kaisha v Alltrans (20 February 1984, unreported)
– charterers to provide bunkers of a reasonable general quality
– suitable for engines fitted to the particular ship
– do not need to meet any unusual requirements of engine(s)
– unless specifically notified of same
• NYPE (1993 revision)
9. Bunkers
(b) The Charterers shall supply bunkers of a quality suitable for burning in the Vessel’s
engines and auxiliaries and which conform with the specification(s) set out in Appendix A.
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Problems• Where are the bunkers coming from?
– access to bunker barge / tankers for readings
– access to terminal
– sampling
• Accuracy of supplier tank calibration tables
• Calibration of flow meter
• Metering devices
– ullage
– temperature
– fraud
– mistake
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Problems• “Cappuccino” effect
• Samples:
– whose samples?
– provenance?
– labelling
– security and chain of custody
• Notification
– when
– who
– requirements
• Where are the bunkers being stored?
• Requirements for use
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Claims• Charter party claim against charterers:
– what are the terms of the contract?
– main engine details
– bunker specification
– sampling
– jurisdiction and time bar
• Contract claim against supplier:
– time bar
– law and jurisdiction
– payment and ownership
– sampling
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Claims• ITC Hulls 1/11/95
6 Perils
6.2 This insurance covers loss of or damage to the subject-matter insured caused by
6.2.3 negligence of repairers or charterers provided such repairers or charterers are not
an Assured hereunder
Provided that such loss or damage has not resulted from want of due diligence by the
Assured, Owners, Managers or Superintendents or any of their onshore management.
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Claims• Institute Additional Perils Clause – Hulls (1/11/95)
In consideration of an additional premium this insurance is extended to cover
1.2 loss of or damage to the Vessel caused by any accident or by negligence, incompetence
or error of judgement of any person whatsoever.
3 The cover provided Clause 1 is subject to all other terms, conditions and exclusions
contained in this insurance and subject to the proviso that the loss or damage has not
resulted from want of due diligence by the Assured, Owners or Managers. Masters
Officers Crew or Pilots not to be considered Owners within the meaning of this Clause
should they hold shares in the Vessel.
• Intertanko bunker clauses
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Peter GloverSenior AssociatePeter is a disputes lawyer based in London. Hefocuses on marine insurance, shipping, andadmiralty law.
Peter’s practice involves advising clients inrelation to all aspects of ‘wet’ and ‘dry’contentious and non-contentious matters andmarine insurance disputes. He has attendedcasualties worldwide and has particularexpertise in tanker related claims and oilpollution matters.
In addition to shipping litigation, Peter adviseson international trade issues and has appearedas an advocate for clients in board of inquiryand court environments.
Peter has a PhD in maritime law, is a dualqualified English and Australian lawyer, holds aMaster Class 1 Certificate of Competency andhas over 20 years’ experience in the maritimeindustry.
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