Earlier this month, we reported on a breaking Australian judgment in the " Sam Hawk" which, for the first time in Australia, upheld an arrest on the basis of a foreign maritime lien for the supply of bunkers. The decision was significant as it represented the first time that a foreign maritime lien had been recognised in Australia where Australian law did not otherwise also independently provide for a similar lien.

Following the decision, we have seen a small surge in arrest actions relating to outstanding OW Bunker claims. The arrests appear to be based on two main arguments:

  1. the bunker supply contract was made with Owners or Owners ratified the contract at the time of supply
  2. the bunker supply contract provided for a foreign maritime lien, which, following the "Sam Hawk", will now be recognised under Australian law.

In Australia, an arrest and demand for security will be upheld where there is at least a reasonably arguable case. When facing an arrest, it is important to consider whether there are grounds to apply to set aside the arrest for failing to disclose a reasonably arguable cause of action.

In the above example, it would therefore be necessary to consider whether there is any support for the argument that Owners are party to the bunker supply contract. This is a well-worn argument, both in Australia and internationally, and the answer will depend on the facts of the case. If there is little or nothing to establish this argument, then the arrest may be able to be set aside.

In the above example, it would also be necessary to consider as a threshold question whether it is reasonably arguable that any purported foreign maritime lien actually exists. If, according to the law which governs the foreign maritime lien, no such lien would arise in the particular circumstances of the bunker supply, then there would be no foreign maritime lien to be recognised in Australia. As a result, it may be possible to apply to have the arrest set aside.

If there are arguable grounds for the arrest action, then vessel interests must still take care in providing security, in order to ensure that they preserve:

  • any rights to seek substitute and/or cross-security from other parties in the charter chain – which may require (disponent) Owners to demand Charterers to provide security first
  • any rights in respect of claims arising as a result of any delay by the party responsible to provide security
  • jurisdictional rights relating to any claim for indemnity – e.g. if at all possible, it is preferable if the question of liability under the bunker supply contract is determined in the same jurisdiction as any question of ultimate liability under the Charterparty.

Our Transport team are experienced in assisting in relation to arrests Australia-wide and are available to assist vessel interests in relation to any arrest based on OW Bunker claims, foreign maritime liens or generally.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.