MEC&F Expert Engineers : Shippers Pay Into US Court to Prevent Ship Detentions After OW Bunker Collapse

Thursday, January 15, 2015

Shippers Pay Into US Court to Prevent Ship Detentions After OW Bunker Collapse

Photo (c) OW Bunker A/S


SINGAPORE, Jan 14 (Reuters) – Shipping firms have paid millions of dollars into U.S. accounts to prevent their vessels from being detained due to non-payment of bills for fuel supplied by the bankrupt OW Bunker, indicating the impact from the collapse of the Danish firm was spreading.

OW Bunker filed for bankruptcy in November after losing almost $300 million in alleged fraudulent trading in Singapore, leading to claims by distributors who sold shipping fuel on behalf of OW Bunker but had not been paid.

Some 13 cases involving bunker bills totalling about $12 million have been filed at New York’s southern district court, a maritime lawyer said.

U.S. court documents seen by Reuters show 11 firms, including Germany’s Hapag Lloyd and European gas carrier Exmar, have agreed to pay about $10.3 million into court and a law firm’s trust account since November.

A bond for about $180,000 has been paid into court on behalf of Hapag Lloyd to cover unpaid bunker bills, said Peter Gutowski, a partner in Freehill Hogan & Mahar. Law firms acting on behalf of other companies declined or were unable to comment.

A New Jersey judge agreed last week that $938,607 be paid into a law firm’s trust account to cover unpaid bunker bills and prevent the detention of the 49,997 deadweight tonne container ship Cosco Piraeus, operated by Cosco Container Lines (Coscon).

Robert O’Connor of law firm Montgomery McCracken Walker & Rhoads, which acts for OW Bunker USA and OW Bunker North America and took action against Cosco Piraeus, said: “The ship is no longer under threat of arrest.”

The ship is one of 10 vessels deployed on an express service carrying consumer and other goods between Asia and the U.S. east coast. Coscon is a unit of China Cosco Ocean Shipping (Group) , China’s largest shipping company.

The U.S. payments follow similar cases in Singapore, where ship owners and operators have made payments into court rather than risk having their ship detained by firms seeking to enforce their claims for payment of fuel bills.

“Ship owners and operators lose thousands of dollars a day in revenue if a ship is detained or arrested,” said Chris Howse, partner in Hong Kong law firm Howse Williams Bowers, which is involved in several OW Bunker legal cases.

An arrest and any resulting delay could open the door for legal action by the vessel’s charterer, Howse added. (Editing by Henning Gloystein and Himani Sarkar)