BIMCO launches the Bunker Non-Lien Clause

BIMCO has today launched the Bunker Non-Lien Clause, aimed at reducing bunker suppliers’ reliance on ship arrest as a means of resolving claims for bunkers ordered but not paid for by time charterers, often due to bankruptcy.

If a time charterer goes out of business during the currency of a charter,  owners can sometimes face a “double whammy” of loss of hire for the balance of the contract and then subsequent arrest of their vessel by bunker suppliers pursuing a claim for unpaid bunkers.

Bunker suppliers are able to arrest a vessel (in some, but not all jurisdictions) by enforcing a right of lien or retention over the bunkers for the money they are owed, even though the owners, under a time charter, are not a party to the bunker supply contract.

The Bunker Non-Lien Clause is an attempt to introduce a step-change into this process by requiring time charterers to notify their suppliers prior to purchasing bunkers that they will be bought solely on their own account, not the ship owners and that no lien will arise against the vessel.

Although bunker delivery notes are frequently stamped by masters with a statement that the bunkers have been purchased by the charterers and that there is no lien against the vessel, because the delivery of fuel has already taken place, this notice is often ineffective.

Grant Hunter, Chief Officer of Legal and Contractual Affairs at BIMCO, explained:

“This Clause acts as a useful safety-net for ship owners because solid time charterers should have no problem agreeing it – they fully expect to pay for the bunkers they order.

“If the financial standing of a charter is in doubt, they may be more reluctant to accept the responsibilities and liabilities imposed by the clause – acting as a warning flag to ship owners.

“Ultimately, if a charterer fails to comply with this clause, a Master has the right to refuse to take delivery of the bunkers – so it is a provision with some teeth”.