Bunkers and bunkering could give rise to varying disputes between parties to a charterparty or bunker supply contract. Disputes relating to bunkers could broadly be divided into three catego- ries: quality disputes, disputes regarding quantity and problems as a result of the bunker supplier’s insolvency. The quality of fuel may also be a source of concern in terms of compliance with MARPOL Annex VI and stricter sulphur-content regulation. A dispute on the quality of bunkers may involve the shipowner, charterer, bunker supplier and/or a possible intermediary, such as a bunker broker. In this circular we have chosen to focus on disputes relating to bunker quality.

　　The quality of bunkers is an important issue for both the ship- owner and the charterer in order to ensure a smooth opera- tion of the ship. In case the bunkers delivered on board are not within speci cation or otherwise unsuitable for the engine, this may result in severe damage to the vessel. This might in turn lead to delays and substantial consequential losses. Further- more, arrangements may have to be made to de-bunker, which may be associated with large costs and could also mean devia- tions from the planned route.

　　Disputes between Owners and Charterers

　　Under a time charter it is normally the charterer’s obligation to provide and pay for bunkers within a certain speci cation, which is normally set out in the charterparty. However, under e.g. English law the obligation of the charterer goes beyond that: the stemmed bunkers also have to be reasonably t for the particular vessel’s engines.* This naturally implies that the charterer has been made aware of any particular characteristics or requirements of the engine. The shipowner should thus make sure that the fuel speci cation is properly and clearly set out in the charterparty, by referring to international bunker speci cation standards and stating special requirements of the engines. It should be noted that the most recent interna- tional fuel speci cations allows for i.e. higher contents of cat nes than the recommendations of many engine makers. The legal situation under Nordic law is probably similar to the one in England. The requirement as to tness for purpose may also be expressly included in the bunker clause in the charterparty, which is usually the case. The shipowner however bears a heavy burden of proving that the stemmed bunkers were in fact o - spec and that there is a causal link between the poor quality of the bunkers and the machinery damage. Provided the ship- owner is able to lift the burden of proof, the liability imposed on the charterer may be substantial.

　　Disputes between the bunker purchaser and supplier

　　The party responsible for providing for the vessel’s bunkers, either the shipowner himself or a charterer, enters into a con- tract for the supply of bunkers onboard. It should be noted that the bunker purchaser’s contracting party is often not the actual fuel supplier. This may give rise to complex legal situations and attempts by the bunker seller to shove the responsibility on to the actual supplier.

　　The bunker supplier usually uses its own standard terms and conditions of sale, which are favourable to the supplier and may be di cult for the buyer to renegotiate. The bunker purchaser should therefore be aware of short time bars for the noti ca- tion of a claim (sometimes as short as 7 days after delivery) and limitation of liability clauses contained in the supply contract. The prospects of negotiating amendments to the contract will depend on buyer’s bargaining position. The bunker supplier has a duty to deliver bunkers within the speci ed grade of marine fuel and it is therefore important that the bunker order con- tains an appropriate description of the fuel to be supplied. The selection of a bunker supplier is usually a commercial decision of the shipowner, but should be a balancing of quality and price aspects.

　　The importance of collecting evidence

　　If a dispute as to bunker quality arises, the outcome of the dispute will usually be in the favour of the party being able to present the strongest evidence. It is therefore crucial to collect su cient proof of the bunker contents and the incident. Bunker samples are usually drawn in connection with the bunkering and the shipowner needs to ensure that the samples are rep- resentative of the entire delivery. By following the sampling procedures issued by the major fuel quality testing services of Veritas Petroleum Services (VPS) or Lloyd’s FOBAS, bunker pur- chasers can obtain representative samples which are accepted and signed by the supplier’s representative. It may well be that these are the only reliable samples, as the bunkers may then be mixed with bunkers previously supplied. It is important that the samples are properly sealed and labelled. In case the samples have been taken from the bunker barge and the shipowner has not been invited to the sampling, a protest should be issued and sample labels should be signed “For receipt only”. One bun- ker sample should always be retained on board. Useful docu- mentation in a bunker quality dispute may be ship’s log books, oil record book, maintenance records, bunker tank contents records, consumption records, bunker receipts, photographs of damaged parts, survey reports, correspondence etc.

　　Insurance cover

　　For shipowners the standard Hull & Machinery (H&M) insurance will cover damage caused to the ship engines by bad bunkers. The damage to hull (DTH) element included in Alandia’s Char- terers’ Liability Insurance will cover the charterer’s liability to owners for damage to the vessel as a consequence of the char- terer supplying unsuitable bunkers to the ship. Alandia Charter- ers’ Liability Insurance now also o ers coverage for the char- terer’s liability for extra bunker handling costs due to defective, contaminated or un t bunkers.

　　How to avoid damage due to bad bunkers: Fuel Management.*There are a range of commercial, operational and contractual aspects that may be taken into consideration when trying to prevent bad bunker damage from occurring. The checklist below also serves as a summary of this circular.

　　1. Fuel purchasinga. Selection of fuel speci cation. Ensure that the fuel is suit- able for the vessel’s engine and in compliance with engine makers’ guidelines and environmental legislation.

　　b. Using fuel speci cations. Make sure that the speci cation is communicated to the bunker supplier and properly set out in the charterparty.

　　c. Be selective when choosing bunker supplier.

　　d. Be aware of the fuel supplier’s terms and conditions of sale.

　　2. Fuel delivery

　　a. Shipboard preparations. Make sure that receiving bunker tanks are as empty as possible before delivery, or at least avoid mixing 50/50 with new and old fuel. Check that the sampling device is clean and fully operational.

　　b. Sampling and documentation. Agree on sampling meth- ods with the supplier in advance. Follow procedures issued by major fuel quality testing services of VPS and Lloyd’s. Establish onboard procedures for bunkering, sampling and testing and for reporting and documenting irregularities.

　　c. Testing. Consider taking pre-delivery samples from the barge tanks and investing in an onboard test kit. It is re- commended that a continuous drip sample is drawn at the vessel’s fuel manifold throughout the entire bunker delivery. Avoid using the new bunkers until the analysis results have been received.

　　3. Fuel Analysis

　　a. Chose an experienced and independent laboratory for analysis of the bunker samples.

　　b. Use the testing services to identify problem fuels and collect evidence.

　　4. O -spec or unsuitable bunkers on board

　　a. Have a contingency plan for the most serious and likely scenarios.

　　b. Are the stemmed bunkers still useable? Many fuels which deviate slightly from the speci cations may be consumed onboard, provided that the crew is aware of the problem and takes the necessary measures. In case the bunkers may cause serious damage to the machinery, de-bunkering should be arranged.

　　c. In case the defective bunkers may cause or have already caused damage to the vessel, contact your H&M (ship- owners) and P&I insurer (time charterers).

　　d. Involve technical experts and possibly also legal experts as early as possible.

　　e. Put the bunker supplier and time charterer on notice for a possible claim for the losses and costs incurred.

　　* Chapter 7 of the book Bunkers – An Analysis of the Practical, Technical and Legal Issues (Christopher Fisher, Jonathan Lux) has been used as a source of information for this part of the circular.

　　Source：Alandia Marine