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Holland & Knight discusses OW Bunker aftermath

New York-based legal firm discusses actions owners should take to protect against ‘secret liens’.
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8 years ago

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The following article is written by James Harold Power and Marie E Larsen of global legal firm Holland & Knight:

HIGHLIGHTS:

  • The high-profile collapse of the O.W. Bunker Group has caused havoc in the maritime industry and illustrated the need for owners to take every step possible to avoid allowing any lien for bunkers attached to its vessel.
  • Countless owners and their vessels have been targeted because of the all-too-common failure of a charterer to pay for bunkers.
  • Stakeholders, including owners and insurers, should take immediate steps to put in place a process and procedure to be followed at every fuel delivery.

The high-profile collapse of the O.W. Bunker Group has caused havoc in the maritime industry and illustrated the need for owners to take every step possible to avoid allowing any lien for bunkers attached to its vessel. Countless owners and their vessels have been targeted because of the all-too-common failure of a charterer to pay for bunkers. Moreover, failure by the bunker seller to pay a physical supplier for the fuel it purchased on credit often leads to multiple claims against a vessel by both the seller and the physical supplier. Liens for unpaid bunkers against a vessel are the largest threat to an owner's bottom line and yet can be entirely avoided with good practices.

It is no coincidence that most bunker sales contracts incorporate U.S. law with respect to the existence of a lien against the vessel for unpaid bunkers. Simply put, U.S. law is by far the most generous in terms of allowing a lien against the vessel in favor of the seller for unpaid bunkers.

Background
The U.S. Commercial Instruments and Maritime Lien Act (CIMLA) has been the subject of increased litigation and interpretation over the past three years as a result of the O.W. Bunker bankruptcy in Denmark and its subsidiaries around the world. (See Holland & Knight alert, "Second Circuit Confirms Physical Suppliers Don't Have Maritime Liens," June 21, 2018.) To quickly summarize, the current consensus among U.S. District Courts who have heard these cases is that a contract supplier possesses a maritime lien against the vessel, while the physical supplier, acting pursuant to instructions from O.W. Bunker, has not acted on the authority of any person authorized to bind the vessel. See 46 USC §31342. Based on the typical facts surrounding the O.W. Bunker cases, a charterer contracting with a bunker supplier has not authorized that supplier to subcontract with the physical supplier, sufficient to create the agency relationship required by CIMLA.

When faced with maritime lien claims from both O.W. Bunker as contract supplier (i.e., seller), as well as from the physical suppliers down the contractual chain, owners have faced significant damages as well as litigation costs as a result of the assertion of maritime liens, regardless of the ultimate merit of those claims. This is in part due to the ex parte nature of the Rule C arrest proceedings filed by sellers and physical suppliers and the minimal pleading standard in order to obtain the requested warrant of arrest. This alert refers to sellers and physical supplier collectively as "suppliers" for the sole purpose of addressing notice issues.

Proactive Steps
The recent bunker supply cases have highlighted the need for owners to take proactive steps to protect themselves, both from physical supplier claims as well as those from contract sellers. CIMLA was drafted to protect suppliers that faced the risk of going unpaid by a vessel whose creditworthiness could not be evaluated by the supplier. But this principal is outdated in an industry where suppliers are entering into sophisticated contracts with brokers, contract suppliers and charterers, including the extension of significant lines of credit and 30 days (or longer) credit terms.

CIMLA itself provides a rebuttable presumption that a charterer is authorized, on behalf of an owner, to bind the vessel to a maritime lien for the provision of necessaries to a vessel. 46 U.S.C. §31341, specifically states:

(a) The following persons are presumed to have authority to procure necessaries for a vessel:

(1) the owner;
(2) the master;
(3) a person entrusted with the management of the vessel at the port of supply; or
(4) an officer or agent appointed by—
(A) the owner;
(B) a charterer;
(C) an owner pro hac vice; or
(D) an agreed buyer in possession of the vessel.
 

Despite the recent increase in maritime lien cases in the United States, the presumption that an owner has authorized the charterer to bind the vessel to a lien is simply that – a rebuttable presumption for the owner to overcome. An owner must therefore in the eyes of U.S. law take proactive measures in order to avoid being held responsible for a charterers' debts. In the current industry where an owner could face claims from numerous parties down the contractual chain with whom it has never interacted, the O.W. Bunker cases have shown that this is especially important.

Many charters include a "no lien clause" which states that the charterer is not authorized to bind the vessel to a maritime lien. It could be argued these "no lien clauses" are standard in many form contracts and an owner, or a broker acting on its behalf, should take steps to negotiate that a "no lien clause" is contained within the charter. But typically, where the fuel supplier does not receive a copy of the contract and has no notice of such a provision, this clause cannot be relied upon by an owner when defending a maritime lien claim from the supplier. A supplier must have "actual knowledge" of the relevant clause. Additionally, even if the charterer is under a contractual obligation to communicate the "no lien clause" to the supplier, which the new Baltic and International Maritime Council (BIMCO) clause purports to require, it is difficult to police this in practice, and a charterer's failure to do so may result only in a breach of contract claim, which the owner must then pursue against a likely defunct charterer. Thus, the new BIMCO lien clause is insufficient to protect an owner against a lien for unpaid bunkers under U.S. law and caution should be exercised by any owner who is advised that a BIMCO lien clause is all that is needed.

Additionally, courts have consistently held that the addition of a "no lien stamp" to a bunker delivery note, which is affixed following the transfer of fuel, does not provide sufficient notice to the supplier. In our experience, the most common mistake made by owners is caused by a misunderstanding of the effect of a "no lien stamp." While a "no lien stamp" may put the supplier on notice that a "no lien clause" is contained within the charter and that the owner objects to any lien being lodged against the vessel is essentially has no effect in preventing a lien against the vessel. Any owner relying on a "no lien stamp" placed upon the bunker delivery note subsequent to the delivery of fuel to the vessel must immediately come to terms with the fact that a "no lien stamp" is meaningless under U.S. law unless certain additional steps are taken by the owner to convey its position that the fuel is being supplied solely on the credit of the charterer.

Holland & Knight has been a leading U.S. firm representing owner's interests on lien issues in defense of bunker liens and recently represented the owner in a case before the U.S. District Court for the Northern District of New York, Bomin Greece S.A. v. M/V Genco Success, 2017 A.M.C. 1716 (May 30, 2017). This case is the most important decision in favor of an owner in recent years and provides useful guidance for owners attempting to avoid a maritime lien. In that case, the Court agreed with relevant precedent that the burden of showing that the supplier has actual knowledge of the charterer's lack of authority rest squarely on the owner of the vessel to overcome the supplier's statutory presumption under CIMLA. Where the chief engineer of the vessel, on behalf of the owner, made affirmative representations to the captain of the bunker supply barge in a pre-bunkering meeting, such communications were sufficient to overcome the presumption. In that case, the pre-bunkering notice of the no-lien provision of the charter party and lack of authority of the charterer to bind the vessel was also documented contemporaneously with a letter of protest that the barge crew was asked to sign, though they refused.

The Bomin case involved a finding that the corporate entity responsible for crewing the bunker supply barge was related to the physical supplier. However, the Court noted that the owner was responsible for providing notice to the only party it was aware of – and that the physical supplier in turn was in a position to "effect" renegotiations of the contract, if necessary.

Conclusion and Takeaways
While ultimately the Bomin court found that the notice provided in the pre-bunkering meeting was sufficient to provide actual notice to the supplier in that particular situation, there are further preventative steps that should be taken by an owner to avoid costly litigation in the first place, not to mention an arrest of the vessel. A checklist of actions should be instituted by vessel owners that masters and chief engineers must follow, and protection and indemnity (P&I) insurers should require or encourage these policies in order to reduce litigation costs for bunker claims. It makes little sense in today's uncertain market that an owner would continue to put itself at risk for payment of fuel which a charterer ordered for its own behalf. Owners can 100 percent prevent what amounts to strict liability for payment of fuel delivered to the vessel. Stakeholders, including owners and freight, demurrage and defense (FD&D) insurers, should take immediate steps to put in place a process and procedure to be followed at every fuel delivery. Taking such steps, including those recommended by Holland & Knight in its "Bunkering Checklist," will ensure victory in the fight against the ever-increasing efforts of fuel suppliers to hold the owner strictly liable for fuel delivered to the vessel.

Published: 27 June, 2018
 

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Vessel Arrest

Malaysia: MMEA detains two vessels over suspected illegal ship-to-ship transfer off Johor

Other than the vessels, MMEA also seized a cargo of oil, bringing the total value of the seizure to MYR 260 million (USD 61.9 million).
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2 days ago

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September 3, 2026

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Malaysia: MMEA detains two vessels over suspected illegal ship-to-ship transfer off Johor

The Malaysian Maritime Enforcement Agency (MMEA) detained tugboat and dredger suspected of conducting an unauthorised ship-to-ship (STS) transfer in Malaysian waters.

The two Malaysian-registered vessels were detained at around 3.20am on Wednesday by an MMEA patrol boat after the agency received public information about two suspicious vessels seen operating alongside each other about 1.4 nautical miles northwest of Tanjung Buai.

MMEA Tanjung Sedili Zone Acting Director Maritime Commander Mohd Najib Sam said further inspection found that the tugboat was operated by five crew members, including its skipper, comprising Malaysian and Indonesian nationals aged between 26 and 58.

The dredger was operated by 13 crew members, including its skipper, all Malaysian nationals aged between 22 and 51.

“Further inspection also found a quantity of oil cargo believed to be without any documents relating to ownership and delivery,” Najib said.

Both vessels and the oil cargo have been seized for further investigation. The total value of the seizure, including the two vessels and the oil cargo, is estimated at MYR 260 million (USD 64 million).

The case is being investigated under Section 491B(1)(K) of the Merchant Shipping Ordinance (MSO) 1952 for allegedly conducting ship-to-ship activities without authorisation from the Malaysian Director of Marine.

The vessels are also being investigated under Section 491B(1)(L) of the MSO 1952 for allegedly anchoring without permission, as well as under the Customs Act 1967 in connection with the oil cargo suspected of lacking the required documentation.

 

Photo credit: Malaysian Maritime Enforcement Agency
Published: 3 September, 2026

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Bunker Claim

Rajah & Tann: Bunker disputes are won in the first 48 hours

Partner V Bala says bunker disputes depend heavily on evidence gathered in the first 48 hours, making disciplined preservation, accurate reporting and early expert involvement critical to protecting a claim or defence.
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Published

3 days ago

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September 2, 2026

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Rajah & Tann: Bunker disputes are won in the first 48 hours

V Bala, a partner in Rajah & Tann Singapore’s Shipping & International Trade practice group, has highlighted the critical importance of preserving evidence in the first 48 hours of a bunker incident, outlining best practices for ship managers to protect potential claims and defences:

A vessel somewhere in the Indian Ocean reports abnormal fuel behaviour. Sludge is forming. Filters are clogging. Consumption looks wrong. Within hours, owners, charterers, managers, suppliers and insurers are exchanging messages. Everyone asks the same question: is there a claim? It is reasonable. It is also often premature. The better question is: what evidence will still exist in 48 hours to explain what happened?

For all the technical sophistication around modern bunker disputes, many are decided less by expert reports than by the first two days after trouble appears. The tribunal may sit years later. The factual foundation is usually laid before the vessel reaches its next port.

Bunker claims are commonly treated as technical contests about fuel specifications, ISO standards and competing laboratory results. They are that. But experienced litigators quickly notice a simpler pattern: the strongest cases are rarely built by the cleverest lawyers. They are built by the best recordkeepers.

The Vanishing Evidence Problem 

Unlike a collision, fire or grounding, bad bunkers leave few obvious visual traces. The evidence is scattered across tanks, samples, engine records, maintenance logs, performance data and electronic communications. Much of it can deteriorate, disappear or become contaminated with surprising speed.

A discarded sample cannot be recreated. A cleaned filter may tell a different story from one preserved immediately after failure. Electronic records overwritten in routine operations may never be recovered usefully. Crew change. Memories fade. The difficulty is that bunker incidents rarely feel like casualties when they first arise. They look like operational nuisances.

The Pressure to Move On 

A ship manager’s first duty is to keep the vessel trading. Engineers solve the immediate problem. Technical managers assess options. Owners watch delay. Charterers want assurance. The commercial pressure to restore normality is intense. It is also the moment when evidential mistakes are most easily made.

Fuel is blended before investigations are complete. Samples are mishandled. Machinery is repaired before it is properly photographed. Internal messages fill with theories. By the time experts arrive, the most useful evidence may already have changed.

The Danger of Instant Certainty 

Modern communication has made this harder. A concern raised in the engine room can reach executives across continents within minutes. The advantages are obvious. So are the risks.

The earliest explanations are often the least reliable. When machinery problems arise shortly after bunkering, the fuel is naturally blamed because it is the most visible recent change. Sometimes that is right. Sometimes it is not.

Yet once a theory enters circulation, it acquires momentum. Months later, early WhatsApp messages or emails written under pressure may be attached to witness statements, analysed by experts and scrutinised by lawyers. A passing operational remark can begin to look like a settled conclusion.

The Documentary Ship 

Shipping remains a documentary business. Despite digitalisation, disputes still turn on engine logs, maintenance reports, fuel transfer records, sounding measurements and superintendent correspondence.

What matters is not merely whether those records exist, but what story they tell together. Tribunals value contemporaneous documents because they were created before positions hardened. They are the closest thing to a real-time account.

Ship Managers at the Centre 

Ship managers sit at the centre of the network: owners, financiers, charterers, bunker suppliers, insurers and regulators. In bunker matters, their role now goes beyond technical operation. It includes preserving enough information to understand what happened if the matter becomes a claim.

What the Best Operators Do Differently 

If bunker disputes are won in the first 48 hours, what do the best operators do differently? They treat fuel incidents as evidential events as well as operational ones. While engineers restore function, someone asks: if this becomes a dispute, what will we wish we had preserved today?

They resist instant certainty. Communications distinguish facts from theories. There is a difference between recording that power loss followed consumption from a particular tank and declaring that the supplier delivered bad fuel.

They know samples are useful only if identity, seals, labels and custody can be proved. They keep samples alongside the full operational record: delivery documents, tank soundings, transfer history, engine logs, alarms, purifier settings, maintenance data and ship-to-shore messages.

They preserve physical evidence before routine work alters it. Filters, residues and affected components may contain information that disappears once cleaned or discarded. Photographs should capture the condition found, not just the condition after repair.

Finally, they bring the right expertise to the problem early. They also involve the right people early: surveyors, laboratories, technical experts, insurers and lawyers. A surveyor or technical expert can help identify what should be sampled, photographed, retained and recorded before the evidence changes. Lawyers and insurers can help ensure that notifications are made, communications remain measured and contractual deadlines are not overlooked. The point is not to turn every operational problem into litigation. It is to avoid discovering, months later, that the ingredients of a sound claim or defence were lost during the first voyage after the incident.

The first 48-hour discipline 

PRESERVE Segregate the suspect fuel where practicable. Secure representative samples, seals, labels and a documented chain of custody. Retain affected filters, residues and components before cleaning or disposal.
RECORD Capture tank soundings, transfer history, consumption sequence, engine parameters, alarms, purifier settings, maintenance data and photographs. Preserve original electronic records and contemporaneous logs.
COMMUNICATE Report observed facts, not untested conclusions. Keep a disciplined chronology of what happened, when it happened, who was informed and what action was taken.
NOTIFY Check contractual notice provisions and inform the relevant owner, charterer, supplier, manager, insurer or P&I club promptly. Delay can damage both evidence and rights.
DEPLOY Involve the appropriate surveyor, laboratory, technical expert and legal team before the condition of the evidence changes, not after positions have hardened.

The lesson is simple. In bunker disputes, the law often comes late. The evidence comes early. The party that preserves it calmly, completely and without premature blame gives itself the best chance of winning the argument when the dispute finally arrives.

 

Photo credit: Rajah & Tann Singapore
Published: 2 September, 2026

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Winding up

Singapore: Notices of intended dividend issued for Hua An Shipping and related firms

Creditors will need to produce proofs of debt to liquidators of Hua An Shipping, Hua Guang Shipping, Nan Hai Maritime, Nan Sia Maritime and Nan Zhou Maritime by 11 September.
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Published

5 days ago

on

August 31, 2026

By

RESIZED Drew Beamer

Notices of intended dividend for Hua An Shipping Pte Ltd, Hua Guang Shipping Pte Ltd, Nan Hai Maritime Pte Ltd, Nan Sia Maritime Pte Ltd and Nan Zhou Maritime Pte Ltd were published on the Government Gazette on Friday (28 August). 

The following are the details of the notice of Hua An Shipping Pte. Ltd:

Name of Company : Hua An Shipping Pte. Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / Registration No. : 200610919Z
Address of Registered Office : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960

Details of the notice of intended dividend for Hua Guang Shipping Pte. Ltd are as follows:

Name of Company : Hua Guang Shipping Pte. Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / : 200610922R Registration No.
Address of Registered Office : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960

Details of the notice of intended dividend for Nan Hai Maritime Pte Ltd are as follows:

Name of Company : Nan Hai Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. /Registration No. : 200814299M
Address of Registered Office : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private, Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960

Details of the notice of intended dividend for Nan Sia Maritime Pte Ltd are as follows:

Name of Company : Nan Sia Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No.  / Registration No.  : 200814320Z
Address of Registered Office : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited 8 Marina View #40-04/05 Asia Square Tower 1 Singapore 018960

Details of the notice of intended dividend for Nan Zhou Maritime Pte Ltd are as follows:

Name of Company : Nan Zhou Maritime (Pte.) Ltd. (In Creditors’ Voluntary Liquidation)
Unique Entity No. / Registration No.: 200814295H
Address of Registered Office : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960
Last Day for Receiving Proofs : 11 September 2026 at 5:00 pm by email to [email protected]
Name of Liquidators : Paresh Tribhovan Jotangia and Ho May Kee
Address : c/o Grant Thornton Singapore Private Limited, 8 Marina View, #40-04/05 Asia Square Tower 1, Singapore 018960

 

Photo credit: Drew Beamer

Published: 31 August, 2026

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