New BIMCO clause aims to reduce suppliers’ reliance on ship arrest for charterers’ unpaid bunkers

Ship owners can, on occasion, find themselves in the invidious position of suffering unexpected loss of hire due to a time charterers’ bankruptcy which is then later compounded by the arrest of their vessel by suppliers because the charterers have failed to pay for bunkers. A bunker supplier’s ability to arrest a vessel stems from a right of lien or retention over the bunkers that can be enforced in some, but not all jurisdictions, even though the owners 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 put their bunker suppliers on notice, prior to agreeing any bunker supply, that the bunkers will be bought solely on the charterers’ account.

According to Grant Hunter, Chief Officer of Legal and Contractual Affairs at BIMCO, “It is quite common in the industry for Masters to stamp bunker deliver notes with a statement that the bunkers have been purchased by the charterers and that there is no lien against the vessel. Unfortunately, once the delivery of fuel has taken place, this sort of notice is generally ineffective. The bunker suppliers need to be placed on notice before-hand and this is the practice that the Bunker Non-Lien Clause introduces. The Clause acts as a useful safety-net for owners when concluding a time charter in that solid charterers should have no problem agreeing to such a clause because they will of course pay for the bunkers they order. However, if the financial standing of a charter is in doubt, then they may be more reluctant to accept the responsibilities and liabilities imposed by the clause and this should create a warning flag to 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”.

The Bunker Non-Lien Clause for Time Charter Parties is now available to download from the clauses section of the BIMCO website and to users of IDEA2. A Special Circular has been issued to members which contains a copy of the clause and explanatory notes setting out the background to the clause.
Source: BIMCO