Let the Discussion Continue – The BIMCO Terms 2015 Standard Bunker Contract: Addressing Consistent Inconsistency

In a recent article for the shipping industry magazine Bunkerspot, firm principal J. Stephen Simms analyzes past attempts and the rationale behind developing consistent international marine fuel sales terms and conditions. Since the 1990s, the Baltic and International Maritime Council (BIMCO) – mostly comprised of shipowners and typically representative of their interests – has attempted to work with the International Bunker Industry Association (“IBIA”) and other marine fuel supplier groups to construct a set of consistent international marine fuel sales terms and conditions. In each of the various iterations of these attempts, the proposed terms have been rejected due to their perception of either being too favorable to shipowners or suppliers. Until recently, achieving a consistent set of sales terms has been a very low priority in the marine fuel industry. The “BIMCO Terms 2015 – Standard Bunkering Contract” is the most recent attempt at proposing consistent terms and conditions. This coincided with the November 7, 2014 OW collapse, which has highlighted the inefficiencies and unnecessary costs associated with inconsistent sales terms. In particular, the recent U.K. High Court decision in PST Energy 7 Shipping LLC and another v OW Bunker Malta Ltd (the “RES COGNITANS”), [2015] EWHC 2022 (Comm) has exposed the uncertainty that sellers and buyers in the bunker provision transaction must now contend with due to inconsistent terms and choice of law provisions between multiple sellers, brokers, and the physical supplier. Indeed, the High Court’s ruling in that case may force the owners to pay twice for the same bunkers and simultaneously does not guarantee the supplier any right to payment, which could produce the absurd result that both the buyer/owner and seller/supplier could ultimately suffer a loss.

The BIMCO Terms 2015 should be strongly considered in the interest of avoiding similarly irrational results in the future as well as the unnecessary expenditure of time and resources to resolve disputes based on sales terms inconsistencies. Although the BIMCO Terms 2015 still require discussion and analysis on significant issues, the terms provide a desirable starting point in moving towards uniformity. In the midst of the OW disputes, this is a particularly desirable aim for the industry – including both buyers and sellers.

For more information on BIMCO Terms 2015 and important considerations from the recent U.K. High Court decision, the RES COGNITANS, a PDF version of the full article is available here.