Bunkers, Redelivery and Business Common Sense
In London Arbitration 17/15, the Tribunal applied what they termed ‘business common sense’ in determining the price that owners had to pay to charterers for bunkers remaining on board in excess of the quantities required on redelivery.
In the particular case, the Master had called for bunkers in excess of what charterers believed were required to achieve the quantity needed on redelivery i.e. about the same as on delivery. The charterers queried the quantity with the Master, but still arranged the bunker stem for the quantity as requested by the Master.
Following re-delivery, and when finalising their Statement of Account, charterers argued that the excess bunkers should be paid for at the charter price i.e. the fixed price stipulated in the charter for bunkers on delivery and redelivery, which was US$500 per MT. The owners argued that the market price in the redelivery area, US$328.50 per MT, should apply.
Price Paid and No More
The Tribunal noted that if either party succeeded in their argument, that party would gain a windfall profit as a result. Applying what they termed ‘business common sense’, the Tribunal ruled that the charterers were entitled to receive the price that they had paid for the excess bunkers and no more.
Had the facts been different, and the Master had not been at fault in ordering an oversupply of bunkers then there is legal authority for the proposition, where no price is stipulated in the charterparty, that owners would have had to pay the market price for the bunkers in the redelivery area, without regard to the price actually paid.
To avoid similar issues arising, Members may wish to consider including in their main terms an express provision dealing with the price to be paid for bunkers in excess of those required to achieve ‘bunkers on re-delivery about same quantity as actually on board on delivery’.
For assistance in this regard, Members are asked to speak to their usual FD&D contact