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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Rise in bunker disputes prompts P&I club to advise members

23 Dec 2016 12:59 GMT

The Shipowners' Club offers advice to members regarding collating evidence and contract terms.



Mutual insurance association The Shipowners' Club says it has recently experienced an increase in the number of bunker quality dispute claims arising from the delivery of allegedly off-specification or contaminated bunkers. The claims are said to range from variation in the parameters of the bunker supplied to the presence of contaminants, such as ash and microbes.

As a result, Mudit Singh, Claims Handler and Correspondent Manager at The Shipowners' Club, has provided some advice to members regarding collating evidence and contractual terms.

Contract terms

Singh says that bunker buyers may find a supplier's terms and conditions "onerous", particularly the liability exclusion clauses and short time periods (commonly 15 days for quantity and 30 days for quality) within which a claim has to be presented in a jurisdiction of the supplier's choice. He therefore advises members to use the 'Standard Bunker Contract', issued by the Baltic and International Maritime Council (BIMCO), as a starting point when negotiating a supply contract.

Singh also stresses that it is important that the correct grade of bunkers, based on the engine type and applicable regulations, is ordered and specified in the sale and purchase agreement.

To avoid any confusion, Singh encourages shipowners to specify the grade of fuel by making a reference to their ISO 8217 grade. Buyers are also advised against the blending of bunkers in the receiving ship's tanks or in the hoses to ensure homogenous bunkers are delivered.

Prior to delivery

Prior to taking delivery, Singh says the ship's crew should ensure that the fuel specifications included in the bunker delivery note (BDN) correspond with the stemmed specification.

"Unfortunately, there have been instances of claims where the crew failed to perform these checks and when the discrepancy was realised, it was too late to rectify the mistake," Singh explains.

Sampling

Singh stresses that "sampling is the most crucial evidence to preserve, as it will be relied upon if a dispute later arises regarding the quality of bunkers supplied."

Before the bunkering operation commences, Singh says that samples of marine fuel already in the receiving ship's tanks should be collected and the mixing of new and old bunkers should be avoided as much as possible.

Singh points out that, in most cases, the agreed sampling procedure includes presenting the ship's crew with samples taken on board the bunker barge. In this scenario, Singh says the ship's crew should attend the sampling on the barge to ensure that correct sampling procedures are followed and sufficient quantity of these samples is retained for future analysis.

The ship's crew also needs to make sure that the samples retained for analysis are in addition to the mandatory MARPOL samples, Singh stresses.

Post-delivery

Newly supplied bunkers should only be used once their samples have been analysed and they are found to be on-specification and free of contaminants, Singh says. Not doing so would expose the ship's machinery to damage from off-spec and/or contaminated bunkers and the owners of the vessel to a breach of regulations governing the specification of bunkers to be consumed by the vessel.

If the bunkers are found to be off-specification or contaminated, they should not be used and a surveyor should immediately be appointed to collect samples.

Depending on the degree to which the bunkers are found to be off-specification or contaminated, an analysis of these samples will need to be carried out. Bunker quality experts may also need to be appointed to advise on mitigation of damage to the ship and to suggest further appropriate analysis which bolsters the claim/defence.

"Timely action and notification is the key to avoid expensive claims and successful indemnity action against third parties involved in the bunker quality dispute," Singh concludes.

In September, Bunker Index reported that another P&I Club, West of England P&I, provided advice to its members on how to avoid bunker disputes and how to handle them if a claim arises.

The Loss Prevention Bulletin 'Bunker Quality Disputes Part 1: Practical and Technical Measures' deals with the actions and steps that should be considered in order to avoid off-specification bunker disputes, whilst the Claims Guide 'Bunker Quality Disputes Part 2: Legal and Claims Handling Considerations' sets out the legal and claims handling steps that should be taken in the event of an off-specification bunker claim arising.




Related Links:

Insurer issues advice on new Singapore bunkering procedures
Gard issues alert on tougher at-berth emission requirements in California
P&I club advises members on how to detect 'capuccino bunkers'
New guides to help avoid bunker disputes and handle claims
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