Claims against shipowners by physical bunker suppliers. News from Malaysia.

A familiar claim, this time in Malaysia, by Vitol, the physical bunker supplier, in respect of bunkers supplied to a vessel by OW Bunkers. Vitol sent the shipowners a notice stipulating that it had exercised a lien over the bunkers, and that it should pay the supplier and not OWB. The vessel was later arrested in Malaysia and in Vitol’s  application to amend its pleadings the Kuala Lumpur High Court in Vitol Asia PTE LTD v The Owners of the Ship or Vessel Malik Al Ashtar considered the following issues.

  1. Was OWB contracting on behalf of the owners when it entered into the contract with the Vitol for the sale of the bunkers? The court found that there was no no document conferring actual authority on OWB to contract on behalf of the defendants, nor were there any representations by the shipowners that OWB had actual or apparent authority to enter into any agreements on its behalf.
  1. Were the shipowners liable in conversion? No. The court adopted the views of Males J in The Res Cogitans [2015] EWHC 2022  that despite a clause such as cl. 11.2, there would be no claim for conversion against the shipowner as the physical supplier had consented to the use of the bunkers by the vessel. Here, Vitol knew that OWB was a trader and not an end user and that it would sub-contract with shipowners to whom the bunkers would be delivered.
  1. Was there a claim in unjust enrichment? No, Vitol’s sales order confirmation and tax invoice evidenced its intention to contract directly with OWB only, and it should look solely to OWB for payment under its contract with it.
  1. Was there a direct contract whereby the shipowners would be jointly liable pursuant to Clause L4 of OWB’s general trading terms? No. There was no evidence that the shipowners had agreed to be bound by Vitol’s terms when they entered into a direct contract for supply of the bunkers with OWB. Nor had they agreed or authorised OWB to be bound by the Vitol’s terms when OWB contracted with Vitol for the supply of those bunkers. The Canadian decision in Canpotex Shipping Services Ltd v Marine Petrobulk [2015] FC 1108 on which Vitol relied did not reflect the English position and was not binding on the Malaysian courts.
  1. Was there a lien over the vessel or the bunkers? No. There was no contract between Vitol and the shipowners so no contractual lien could arise. If there were such a lien, it would give no right to payment as against the shipowner but would only give a right to retain possession of the bunkers until payment by OWB. There was no maritime lien in respect of the supply of bunkers under either English or Malaysian law.

Published by

Professor Simon Baughen

Professor Simon Baughen was appointed as Professor of Shipping Law in September 2013 (previously Reader at the University of Bristol Law School). Simon Baughen studied law at Oxford and practised in maritime law for several years before joining academia. His research interests lie mainly in the field of shipping law, but also include the law of trusts and the environmental law implications of the activities of multinational corporations in the developing world. Simon's book on Shipping Law, has run to seven editions (soon to be eight) and is already well-known to academics and students alike as by far the most learned and approachable work on the subject. Furthermore, he is now the author of the very well-established practitioner's work Summerskill on Laytime. He has an extensive list of publications to his name, including International Trade and the Protection of the Environment, and Human Rights and Corporate Wrongs - Closing the Governance Gap. He has also written and taught extensively on commercial law, trusts and environmental law. Simon is a member of the Institute of International Shipping and Trade Law, a University Research Centre within the School of Law, and he currently teaches at Swansea on the LLM in:Carriage of Goods by Sea, Land and Air; Charterparties Law and Practice; International Corporate Governance.

Leave a Reply