Lloyd's Maritime and Commercial Law Quarterly
BUNKER SUPPLIERS' INSOLVENCIES: TIME TO RECONSIDER MARITIME LIENS?
Victor Hugo Chacon*
The litigation resulting from bunker suppliers' insolvencies has revealed flaws in the law applicable to debt collection from physical suppliers. The maritime lien for necessaries would be an effective mechanism, but it was clearly excluded from English Law in the nineteenth century based on public policy at that time. In the United States, it is established by statute, but as circumstances have changed, a strict interpretation of the statute has lessened its effectiveness. An examination of the mechanism for enforcing these claims, the recent case law, and the current realities of the industry, suggest that the law for this maritime lien should be reconsidered.
I. INTRODUCTION
Ships generally cannot move without bunkers. Bunker suppliers are fundamental to the operation of the ship and, consequently, for international trade. The availability of a reliable supplier capable of providing the right quality and quantity of bunker fuel at a specific location, on time and at a reasonable price, is critical to the business of shipping. Investors face extensive and financially burdensome regulations associated with the complex infrastructure, tanks, pipes and barges required for this type of trade. Bunkers are also commonly sold on credit. The precarious position of physical suppliers in collecting debts became evident in the OW Bunker bankruptcy litigation. This led to the dismissal of claims by suppliers in courts in the United States, the United Kingdom and Singapore, among others,1 and is highlighted by the bankruptcy of another industry giant, Hin Leong Trading Pte Ltd. The entry into force of the IMO 2020 regulation2 and the ongoing Covid-19 pandemic has added to the challenges facing the industry. However, the greatest challenge is access to finance.3 The withdrawal of some banks from commodity financing
* Attorney at law in the Republic of Panama. Dr iur Hamburg University/International Max Planck Research School for Maritime Affairs. This article was written during the author's appointment as Senior Research Fellow at the Centre for Maritime Law, Faculty of Law, National University of Singapore. The author would like to thank Professor Stephen Girvin, Director of the Centre for Maritime Law, for his detailed revision and comments of early drafts of this paper. The usual disclaimer applies.
1. See M Davies, "A Comparative Analysis of National Responses to the OW Bunker Collapse" (2018) 42 Tul Mar LJ 359.
2. Regulation 14.1.3 of the MARPOL Annex VI on the sulphur content of the fuel oil used on board ships.
3. See, eg, M Wiese Bockman, "Bunker suppliers act as banks cut capital amid looming credit crunch" Lloyd's List (2 December 2020).
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