Unpaid Bunkers - The Dilemma for Shipowners and Bunker Traders
Type
E-journal
Date
8 Apr 2016
Jurisdiction
United Arab Emirates
Taxonomy
Admiralty, Shipping & Navigation
Copyright
LexisNexis
Relevant company
Al Tamimi & Company
Legal reference
UAE Federal Law No. 26/1981
Analysis
Bunker fuel is the fuel oil used mainly in powering ships. It gets its name from the containers on board ships and in ports that it is stored in, which are called bunkers. Bunker fuel constitutes a fundamental element and one of the largest expenses in ships operation.
In difficult market conditions, this fact leaves bunker suppliers faced with delays in payment, non-payment or requests to provide credit terms.
One of the common features of bunker supply contracts is the allowance of all or part of the purchase price to be paid after delivery of the bunker fuel. For the past few years, when the market condition was difficult and the bunker prices were high, these credit terms affected bunker traders since they were left unpaid for the bunker they supplied. In addition, shipowners were faced with an unexpected risk of vessel arrest pursuant to the action in rem initiated by the unpaid bunker traders who supplied the vessel with bunkers at the request of charterers.