Fuel intermediaries supply a valuable service in today’s shipping industry, playing a supporting role in the operation of cargo carriers, by box or in bulk. Working for the vessel, fuel intermediaries order “bunkers” from local physical suppliers and arrange for the suppliers to “stem” the vessel when she reaches the specified port. Such a service is crucial where vessels run international routes on tight schedules and risk delay due to language barriers, changes in currencies or changes in port requirements. Regarded within the industry as “local experts,” intermediaries leverage their knowledge, technology, resources and people to connect the vessel with the most reliable, efficient, safest and low-cost local bunker suppliers at each port, allowing the vessel to voyage on. The largest international liner companies rely on bunker intermediaries out of convenience and the vessels running tramp services rely on them out of necessity.
Given the crucial service bunker intermediaries provide, and the extent to which vessels rely on them to continue moving, one would assume that they would be entitled to a lien for necessaries, specifically a lien for the supply of bunkers, under the Commercial Instruments and Maritime Liens Act (CIMLA). However, Judge Katherine B. Forrest, of the United States District Court for the Southern District of New York, did not agree with such an assumption when she applied CIMLA stricti juris and ruled that O.W. Bunker & Trading A/S, one of the world’s largest bunker intermediaries, was not entitled to a maritime lien for the supply of bunkers. In her opinion, Judge Forrest is unsympathetic to the proposition that brokers like O.W. Bunker contribute to the overall purpose that CIMLA and the maritime lien for necessaries serve – to encourage private investment in the vessel in the form of commercial credit by securing the creditor. Nevertheless, an in depth review of the case law and legislative history behind the maritime lien for necessaries and O.W. Bunker’s success in the market place suggest that Judge Forrest’s view of bunker intermediaries is unsupported and unfounded. Judge Forrest misapplied stricti juris when interpreting the maritime lien for necessaries and O.W. Bunker’s market success should persuade that its services constituted necessaries for which a lien is authorized under CIMLA.
This paper focuses on how bunker intermediaries like O.W. Bunker contribute to the goal served by the lien for necessaries and why ship owners are better off with them than without them. Part I outlines the current state of the law governing the lien for necessaries and provides an overview of the legislative history behind the lien for necessaries. Part II relates the rise and fall of O.W. Bunker, as well as how the company’s structure resulted in the litigation of a novel issue. Part II details the specific transaction and issue at the center of Judge Forrest’s ruling in ING Bank N.V. v. M/V Temara et. al. Finally, Part III analyzes why Judge Forrest’s decision and reasoning are misguided and how fuel intermediaries like O.W. Bunker contribute to the overall purpose thereof and are therefore entitled to a CIMLA lien for necessaries.
Chresanthe E. Staurulakis, Bunker Intermediaries and their Rights to a Maritime Lien Under CIMLA, American Bar Association Admiralty and Maritime Law Committee Newsletter, Fall 2017, at 13.