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OW Bunker ruling threatens uncertainty for 'hundreds' of cases: ING

OW Bunker ruling threatens uncertainty for 'hundreds' of cases: ING

04 Jun 2018

Source: Bunker Index

ING files petition for rehearing, arguing that Florida law has been applied at the expense of maritime law.

ING Bank has filed a petition for rehearing following the recent decision by the United States Court of Appeals to uphold a judgment made by a court in the Northern District of Florida, which ruled that physical supplier Martin Energy Services LLC should receive $286,200 plus interest for the supply of 300 metric tonnes of marine fuel to the vessel Bravante VIII in a deal involving the now-defunct business OW Bunker.

As previously reported, ING - as the lead participant in a syndicate that provided working capital for OW Bunker entities prior to their collapse - had appealed the district court's initial judgment that OW Bunker should receive $3,900, which was effectively the sales margin that the firm would have recorded as a back-to-back trader in the $290,100 direct deal it had with the buyer.

ING had asserted that the court had erred by awarding Martin the aforementioned payout for supplying the fuel, arguing that the bunkering certificate did not give rise to a contract between Martin and buyer Boldini; that there had been no direct contact between both companies; and that the vessel that received the fuel had already left the jurisdiction of the court, so it could not adjudicate in rem lien rights against the Bravante VIII. 

And in its petition for rehearing, ING argued that the decision to allow the supplier to recover in quantum meruit - i.e. based on the reasonable value of services provided - meant that Florida law was being applied at the expense of "the uniformity of admiralty law". 

ING asked the court if a rehearing should be granted in order to "prevent this decision from undermining the principle of uniformity in federal maritime law".

The financial services firm went on to suggest that "this conflict threatens uncertainty around hundreds of litigations arising from the OW Bunker collapse in November 2014 that have proceeded worldwide". 

Barcliff, LLC v. M/V Deep Blue

ING also referred to the OW Bunker-related case Barcliff, LLC v. M/V Deep Blue, where a court decreed that Radcliff did not possess a maritime lien for the bunker stem it delivered to the Deep Blue in November 2014, and that ING did have a maritime lien by virtue of OW Bunkers UK's assignment of that right in the Security Agreement.

"It is unfortunate that Radcliff supplied the fuel and was not paid. But by entering into a contractual relationship exclusively with O.W. USA, Radcliff became O.W. USA's creditor. It is assuredly not the only one. O.W. USA's other creditors are doubtless vying for repayment in bankruptcy court. Rather than pursue its claim there, Radcliff elected to go after Technip for the full amount by asserting a lien on the Deep Blue, even though Technip purchased the fuel from O.W. UK and was contractually obligated to pay O.W. UK for it. It was Radcliff's right to gamble, but its choice should elicit no sympathy," ING said.

ING noted that, just like Radcliff in the Barcliff case, Martin "effectively ignored its contractual claim against OWBUSA, and gambled on obtaining the full amount of its claim by asserting a quantum meruit claim against the vessel owner." But unlike Barcliff, Martin won its case.

Triple liability

In its petition for rehearing, ING suggests the decision to grant Martin $286,200 had created a scenario where a vessel and its owner could be subjected to triple liability - once in rem, for failure to pay its counterparty, subjecting the vessel to a statutory maritime lien claim, and twice in personam - once to the physical supplier under principles of Florida law where that law applies, and once to ING (as assignee of the applicable OWB entity) under English contract law for the invoice amount.

ING is requesting that the court grants a rehearing; reverses the district court's judgment; finds that Martin has no legal claim to the funds; and orders disbursement of the funds to ING.

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