Singapore: Legal position of jurisdiction following the collapse of OW Bunkers

This information is part of a wider article which offers a broad overview of the legal position across jurisdictions following the collapse of OW Bunkers. View the complete article or alternative jurisdictions.

Leading case

1. Precious Shipping Public Co Ltd and others v OW Bunker Far East (Singapore) Pte Ltd and others and other matters [2015] SGHC 187 (“Precious”)
2. The “Xin Chang Shu” [2015] SGHC 308 (“XCS”)

Summary of legal position

The Precious case arose from a breakdown of a chain of bunker supply contracts following the collapse of OW Bunker & Trading A/S. 13 end-buyers (“buyers”) of bunkers in Singapore faced claims from various physical suppliers (“suppliers”) and ING Bank (“ING”) as assignees of receivables of OW entities (“OW”) who were the intermediary sellers (“sellers”) of the bunkers. The buyers applied for interpleader relief to determine who payment should be made to.

The buyers needed to satisfy the Court that:

1. they were under a liability for a debt, money, goods or chattel;
2. they expected to face at least two competing prima facie claims; and
3. those claims were adverse.

The buyers needed to satisfy the Court that:

1. they were under a liability for a debt, money, goods or chattel;
2. they expected to face at least two competing prima facie claims; and
3. those claims were adverse.

The Court dismissed the buyers’ application as the 2nd and 3rd requirements were not satisfied.

The Court held that the arguments in support of granting relief, namely that:

(i) the buyers were fiduciary agents or bailees of the bunkers this was because retention of title clauses were present in the Suppliers’ contracts with OW which were incorporated into the contracts between the Buyers and OW,
(ii) the buyers had converted the bunkers as the title remained with the Suppliers,
(iii) the suppliers had a collateral contract with the buyers and could therefore bring a direct claim against them,
(iv) the suppliers were entitled to relief for the buyers’ unjust enrichment, and
(v) the suppliers could invoke a maritime lien against the buyers’ vessels in other jurisdictions, were factually and legally unsustainable.

The Court also found that the competing claims were not adverse as, unlike those of OW/ING, none of the suppliers’ claims were based on a contractual right to be paid for the bunkers, and the extinction of either set of claims would not have any impact on the other.

In XCS, a supplier arrested a buyer’s vessel to secure a claim for the price of bunkers supplied to OW Singapore (“OWS”), arguing that OWS acted as the buyer’s agent. However, no agency relationship existed as the buyer had contracted for the bunkers with a separate seller who had then contracted with OWS. The arrest was set aside and found to be wrongful.

Practicalities

Interpleader relief does not appear to be available to buyers facing claims from suppliers and intermediary sellers.

Though the Court did not determine the merits of the suppliers’ claims in Precious, from its assessment of the possible causes of action argued and the case of XCS, it appears suppliers will find it difficult to succeed in claiming against buyers where they have no contract with the buyer.

Contributing authors

Magdalene Chew and Lim Chuan, Asia Legal/Scott Pilkington HFW Singapore

Sign up to our latest news alerts

Enter your contact details to receive our news and insights.

Specify your role:

Please tick the following box:

All fields required