When Germany's Bomin Bunker Oil Corp delivered fuel to a DryLog bulker at Balboa, Panama, in 2014, middleman OW Bunker was set to earn just $865 from a bill of more than $719,000.
But ING Bank, which took over OW's claims to unpaid bills when the Denmark-based fuel giant collapsed, has been pursuing payment for almost five years.
The Dutch bank and Bomin are squaring off in a US federal appeals court in New Orleans in one of the key remaining legal battles in the fallout from OW's collapse in 2014.
In the case in the US Fifth Circuit Court of Appeals, Bomin is challenging a judgment handed down in April in which District Judge Ivan Lemelle ruled against the German fuel supplier over bunkers that were delivered to a bulker in the days before OW descended into a messy liquidation.
However, the appeal may face an uphill battle, as ING's lawyers have amassed a series of victories in such cases.
The case centres on the 77,100-dwt Bulk Finland (built 2014), controlled by Monaco-based DryLog.
As companies in OW’s organisation have done in the past, OW Bunker Malta acted as the middleman in the transaction, taking an order from charterer Tatsuo Consulting for up to 1,300 tonnes of fuel oil and arranging it to be delivered by Bomin from its bunker barge.
Competing claims
Similar to many of the cases over fuel bills that were pending when OW collapsed, DryLog was faced with competing claims from Bomin and ING, which has been doggedly working to collect on the $700m credit facility that it had provided OW Bunker when it was still the titan of the marine fuels industry.
In late 2015, ING lodged a claim for more than $1.06m against the Bulk Finland in an arrest lawsuit in New Orleans.
$719,483.74
Bill for delivery of bunkers to the Bulk Finland
$865.45
OW Bunker's markup for arranging the bunkers, according to Bomin's lawyers
$1,061,672.40
ING's claim against the Bulk Finland
$700m
ING's revolving credit facility to OW Bunker
Lawyers for Bomin, led by Simms Showers principal Stephen Simms, argued that Bomin provided the fuel on its own contractual terms, which gave it the maritime lien that was to allow it to arrest the ship and be at the front of the queue on any claims against it.
But Lemelle, who sits on the US federal court for the Eastern District of Louisiana, ruled that the Bomin had no lien against the vessel.
In his order made in April, he said the key question was whether Bomin delivered the fuel on the order of the owner of the vessel or a person authorised by the owner, including a charterer or agent.
In this case, he determined Bomin delivered the fuel on the order of OW USA, another spoke of the OW Bunker umbrella.
"There is no material evidence that the owner of [the] Bulk Finland selected or intended that Bomin act as a subcontractor and physically deliver the fuel to [the] Bulk Finland," the judge wrote.
"These undisputed facts show that Bomin furnished the fuel bunkers on the order of OW Bunker USA, who is not a person statutorily presumed to have authority to procure necessaries on [the] Bulk Finland’s account, or an agent of the same."
Error in judgment?
But Simms has argued to the judges of the appeals court that Lemelle's claim was in error, as it overlooked the fact that the sales contract confirmed Bomin's lien on the vessel and that the physical supplier's title to the fuel was protected under the US Commercial Instruments and Maritime Liens Act (CIMLA).
He argued that Bomin's bunker barge delivered the fuel to the Bulk Finland on order from the charterer and the vessel, as they made connections for the two ships to link up.
"It is also critical to note here that Bomin by its terms — incorporated through OW’s terms — continues to retain title over the bunkers and, thus, the amounts that the vessel owes Bomin [not OW or ING] for those bunkers," the lawyer argued.
Lawyers for ING are not required to file their arguments to the Fifth Circuit court until the end of this month.
But lawyer James Bercaw, of New Orleans firm King, Krebs & Jurgens, successfully argued at the lower-court level that OW Malta's contractual terms apply in the case, not those of Bomin.
"Bomin’s terms and conditions applied to Bomin’s separate contract with its contractual counterparty, OW [Bunker] USA," he wrote. "To the extent Bomin has argued that its terms and conditions apply to OW Malta or Tatsuo, that argument is contrary to other provisions of the OW terms and conditions."
He wrote that the topic has been discussed at length in other OW Bunker cases.
