Fifth Circuit Joins Eleventh and Second Circuits In Denying Maritime Lien to Physical Supplier of Bunkers
In a long-awaited decision, the U.S. Court of Appeals for the Second Circuit became the latest U.S. court to hold that a maritime lien for a bunker supply belongs to the bunker trader, not the physical supplier of the bunkers. A copy of the decision can be accessed here.
On June 19 the U.S. Court of Appeals for the Fifth Circuit joined the U.S. Courts of Appeal for the Second and Eleventh Circuits in holding that a physical supplier of bunkers does not have a maritime lien (under the U.S. maritime lien act) against the vessel where the vessel ordered the bunkers from a bunker trader. The decision, Valero Marketing v. M/V ALMI SUN, can be found here.
The vessel owner’s agent contracted with O.W. Bunker Malta and requested the name of the company that would physically supply the bunkers. O.W. Malta informed the vessel’s agent that Valero would be the physical supplier. O.W. Bunker USA then contracted with Valero to purchase the bunkers. The only in rem claim asserted in this case was by Valero. Thus, the court did not have to decide if O.W. Bunker (or its assignee, ING Bank) had a maritime lien.
As with the decisions by the Second Circuit and Eleventh Circuit courts (see Lyons & Flood newsletters of June 14, 2018 and December 4, 2017), the court found that in order to have a maritime lien under the lien act, the bunkers must be supplied on the order of the vessel owner or a person authorized by the vessel owner, and that a bunker trader is not presumed to have such authority. As the court said:
These facts do not demonstrate that Valero provided the bunkers to the Vessel “on the order of the owner or a person authorized by the owner.” Valero provided the bunkers at O.W.’s request, and O.W. is not a “person [] presumed to have authority to procure necessaries”...Thus, Valero must show that an entity authorized to bind the ship “controlled [its] selection...and/or its performance.” The record, however, proves no more than the Vessel’s awareness of Valero, not that the Vessel “controlled” the selection or performance of Valero. Mere awareness does not constitute authorization under [the lien act].
[L&F comment: Now that the Fifth, Second, and Eleventh Circuits have each found against the physical supplier, it is fair to say that it would be surprising if any other Circuit court were to find to the contrary. As noted in prior newsletters, the issue is now before the Ninth Circuit.]
If you have any comments or questions regarding this newsletter, please feel free to contact Randolph Donatelli at rdonatelli@lyons-flood.com or Martin West at mwest@lyons-flood.com.
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