OW Bunkers: Singapore

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.

The leading cases in Singapore are:

1. Precious Shipping Public Co Ltd and others v OW Bunker Far East (Singapore) Pte Ltd and others- 2015 (Precious)

2. The “Xin Chang Shu” – 2015 (XCS)

The Precious case arose from a breakdown of a chain of bunker supply contracts following the collapse of OW Bunker & Trading. Thirteen end-buyers of bunkers in Singapore faced claims from various physical suppliers and ING Bank as assignees of receivables of OW entities who were the intermediary sellers of the bunkers. The buyers applied for interpleader relief to determine who payment should be made to.

The buyers needed to satisfy the Court that:

1. they were under a liability for a debt, money, goods or chattel;

2. they expected to face at least two competing prima facie claims; and

3. those claims were adverse.

The Court dismissed the buyers’ application, stating that the 2nd and 3rd requirements were not satisfied.

The Court also found that the competing claims were not adverse as, unlike those of OW/ING, none of the suppliers’ claims were based on a contractual right to be paid for the bunkers, and the extinction of either set of claims would not have any impact on the other.

In the XCS case a supplier arrested a buyer’s vessel to secure a claim for the price of bunkers supplied to OW Singapore (OWS), arguing that OWS acted as the buyer’s agent. However, no agency relationship existed as the buyer had contracted for the bunkers with a separate seller, who had then contracted with OWS. The arrest was set aside and found to be wrongful.

Concluding, interpleader relief does not appear to be available to buyers facing claims from suppliers and intermediary sellers. Although the Court did not determine the merits of the suppliers’ claims in Precious, from its assessment of the possible causes of action argued and the case of XCS, it appears suppliers will find it difficult to succeed in claiming against buyers where they have no contract with the buyer.