Editor’s note: A Sing Fuels representative has confirmed the company is aware of the court order and is currently evaluating its options, including a potential appeal, with legal representatives.

Singapore-based energy trading company Sing Fuels Pte Ltd (Plaintiff) has lost a bunker claim of USD 532,000 (exact: USD 532,312.48) against Autumn Harvest, the owner of 2011 built 43,692 GT bulk carrier Lila Shanghai (Defendant), at a U.S. Court on 19 April 2021 due to no maritime lien established.

“The Court finds that there is no privity of contract between the Defendant owner of the Vessel and the Plaintiff. Specifically, the subcharterer, MedMar Inc., did not have actual, apparent, or presumed authority to hold the Defendant liable for the bunker fuel,” it stated in a judgement seen by Manifold Times.

Sing Fuels was claiming over a total 1,049.29 metric tonnes (mt) of 380 centistokes (cSt) bunker fuel delivered to the vessel at Port Elizabeth, South Africa; it was delivered in two bunker stems of 595.888 mt on 10 July 2019, and 459.038 mt on 12 July 2019.

The bunker stem to the vessel was placed with Costas Mylonakis, a fuel broker at Windrose Marine.

Documents showed Autumn Harvest chartering out the Lila Shanghai to Bostomar Bulk Shipping Pte Ltd, which in turn subchartered the vessel out to MedMar Inc., between the period of 25 April 2019 to 31 December 2019.

A default of MedMar in October 2019 prompted Sing Fuels to track the vessel from October 2019 when it was still at South Africa, to India, and then to the United Kingdom and various others ports before its arrival to the United States in April 2020 where it was eventually arrested.

In summary, the Judgement of the U.S. Court was based on the following findings:

Charter Party Contract

The U.S. Court, which analysed the charter party contract, found MedMar not having actual authority to order necessary supplies that would create a maritime lien on the Lila Shanghai.

Notably, Clause 9 of the charter party contract states “[i]n no event shall Charterers procure, or permit to be procured, for the Vessel, any supplies/services on the credit of the Vessel of her Owners.”

“Therefore, the Court find that the charter party agreement between Defendant and Bostomar, Inc. explicitly states that, while Bostomar could subcharter the Vessel to MedMar Inc., the subcharterer (MedMar Inc.) could not procure any supplies, including fuel, on the credit of the Vessel or the Defendant,” explains the Judge.

No Authority to Create Maritime Lien

Upon establishing Autumn Harvest not authorising MedMar any rights to create a maritime lien on the vessel, the Judge moved on to find out if Mylonakis was indeed an agent of MedMar.

“Mylonakis later revealed that he never had any direct communications with MedMar Inc. regarding these fuel bunkers […] Mylonakis revealed he was only dealing with M.A.C. Shipping and he believed they were the same entity as MedMar Inc,” found the Judge.

Records further showed a “tenous relationship” between Mylonakis and MedMar; not enough to establish a direction relationship to the vessel enough to establish a lien.

“Accordingly, in this case, the Court concludes that Mr. Mylonakis did not have presumed authority to bind the Vessel to the provisions of the Bunker Confirmation. Thus, there is no presumed authority to establish a maritime lien.”

Plaintiff Barred by Laches

Overall, the U.S. Judge believed Sing Fuels had multiple opportunities to take earlier legal action but waited more than nine months after the maritime lien arose (between July 2019 to April 2020) to do so; which was unfair to Autumn Harvest.

“The evidence shows that Sing Fuels does not have a satisfactory excuse for the delay in bringing the cause of action,” he stated.

“First, Sing Fuels was not diligent in investigating MedMar Inc. before finalizing the contract with Mr. Mylonakis for the bunker fuel,” he further wrote, explaining of Sing Fuels not confirming if M.A.C. Shipping was indeed the same company as MedMar.

“Second, during the inquiry period, Sing Fuels investigated MedMar and determined that they had low assets but still decided to extend a $1.6 million credit line. Sing Fuels also provided MedMar with 60 pays to pay the amount owed after the fuel was delivered to the vessel.

“Third, Sing Fuels in its own Terms and Conditions recognizes a six-month limitation to bring claims is fair.”

“Overall, based on principles of equity, the Court finds that the six-month statute of limitations appropriately applies in this case. Thus, Defendant is entitled to a presumption that they have been prejudiced by the delay.”

Photo credit: Bill Oxford on Unsplash
Published: 10 May, 2021