Australia: Legal position of jurisdiction following the collapse of OW Bunkers

This is a series of pieces based on Shipowners’ Club recent set of articles on the global legal impact of the collapse of OW Bunkers last year, and the subsequent debate on whether owners owed money to the liquidator or to the physical supplier of goods. Law firm Holman Fenwick Willan provided much of the technical detail.

Australia is an ‘arrest-friendly’ jurisdiction, where ships can be arrested quickly and efficiently. It is widely accepted, however, that the Admiralty Act does not, as a matter of Australian law, permit the arrest of bunkers separately from the ship on which they are loaded.

A claim in respect of bunkers supplied to a ship would fall within the definition of ’general maritime claim‘ under the Admiralty Act, because it would constitute “a claim in respect of goods, materials or services supplied to a ship for its operation or maintenance”. However, it would be necessary for a claimant to establish a cause of action directly against the shipowner (rather than against a time charterer) in order to proceed in rem against the ship concerned. Ordinarily, therefore, it would be difficult for a physical supplier to establish a direct cause of action sufficient to arrest the

ship, in circumstances where bunkers have been supplied to the account of a party other than the shipowner (e.g. a time charterer).

After a lower court ruling, and a successful appeal in 2015 and 2016 respectively in the Sam Hawk case, the Australian law position on the enforceability of maritime liens arising by operation of foreign law remains that a foreign law maritime lien will not, in principle, be enforceable in Australia where the same circumstances would not give rise to a maritime lien under Australian law.

HFW has published a briefing note on the Full Court’s appeal decision in the “Sam Hawk” and the practical implications arising from that decision.