Zederkof of Dan-Bunkering to represent IBIA in BIMCO Bunker Contract negotiations
BIMCO has decided to review “BIMCO Terms 2015” – the latest version of the BIMCO Standard Bunker Contract – primarily with the aim of improving the terms and conditions post-OW Bunker. IBIA will be represented in the BIMCO subcommittee that will develop the contract by Henrik Zederkof, CEO of global bunker supplier and trader Dan-Bunkering.
Zederkof joined IBIA’s board at the start of April his year. With his first-hand experience of the consequences of the OW Bunker collapse, he is an ideal representative of the bunker supply industry in these negotiations. For the BIMCO Bunker Contract to become widely used, it needs to be acceptable to both buyers and suppliers, hence it is crucial to have all sides that are affected by the bunker contract represented in the subcommittee, along with qualified legal advisors. Maritime arbitrator Trevor Harrison, a former IBIA board member and CEO who has worked with BIMCO on the bunker contract before, will be on stand-by as consultant for the subcommittee if and when required to, utilise his great knowledge.
The collapse of OW Bunker in early November 2014 has left a legacy of uncertainty surrounding the right to payment for bunkers, and who should pay. In February 2016, BIMCO added a new clause to BIMCO Terms 2015 recommending to purchasers of marine fuels to incorporate into their bunker supply agreements the words: “The United Kingdom Sale of Goods Act shall apply to this Contract”. This was a bid to prevent the “double jeopardy” arising for bunker buyers after UK courts ruled that that the UK Sale of Goods Act 1979 did not apply to contracts signed with OW Bunker as an intermediary for the supply of bunkers on credit. The result of this ruling is that owners were now required to pay OW or OW Bunker’s assignee ING Bank, but were not protected against claims for the same stem by the physical suppliers that have not been paid by OW.
In early May this year, IBIA’s legal working group highlighted a decision (pending appeal) by the Federal Court of Canada in the Canpotex case might point to a more fair and balanced way forward. That ruling suggests all parties in the sales chain should get only what they originally bargained to get, meaning OW would only be entitled to its trader margin with the rest of the payment going directly to the physical suppliers. Crucially, the ultimate buyer would only make one payment corresponding to the sum contracted for the fuel supplied.
Speaking at a Platts bunker conference in Rotterdam in May this year, Zederkof noted that – independent of BIMCO Terms 2015 – there is also a BIMCO Bunker Non-Lien Clause for Time Charter Parties dated November 27, 2014. This had been initiated by P&I clubs prior to the OW Bunker collapse, but the timing turned out to be good, he observed. The non-lien clause offers protection to ship owners and prevents suppliers from arresting a vessel for non-payment. The result of this, Zederkof warned, could be that suppliers would not risk selling bunkers on credit and ask for cash in advance. He questioned if the shipping industry was prepared to operate without the billions of dollars of credit financed by bunker companies worldwide, and as such there is a need to find alternative solutions.
Zederkof will bring a deep understanding of what BIMCO’s bunker contract means as it stands, where potential weaknesses are, and some fresh thinking on how to bring balance and fairness to make a success of this important document.