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Unpaid bunker invoices and no lien clauses in C/P

In some states, like in the US, ‘bunkers’ are considered as ‘necessaries’ and an unpaid bunker supplier has a maritime lien against the vessel. But what if the time charterer who orders the fuel has no authority to bind the ship as per C/P. Is a lien still created? The Lila Shanghai [2021] provides the answer.

The vessel was time chartered and then sub chartered to Medmar. C/P contained a clause stating charterers were not permitted to procure any supplies or services on credit of the vessel or owners. Medmar arranged for bunkers through various intermediaries. At the end of the chain was a fuel broker who contacted Sing Fuels (SF) to arrange for the bunkers. SF never reviewed the C/P not even to verify who they were dealing with. Charterers defaulted on their payments and after several months SF arrested the vessel.

As per the court Sing Fuels had to demonstrate that they supplied fuel on the order of the owner, or a person authorized by them. This Sing Fuels could not prove given the number of intermediaries involved. Importantly, they had ignored the C/P even though it knew no-lien clauses are not uncommon. To make matters worse Sing Fuels did not have a satisfactory excuse for the delay in bringing action against the vessel and doctrine of laches kicked in.

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