- Eleventh Circuit Affirms District Court’s Denial of Maritime Lien Claim to Physical Supplier in First OW Bunker Case Decided by Court of Appeals in United States
- January 4, 2018 | Authors: Christopher K. Ulfers; William C. Baldwin
- Law Firm: Jones Walker LLP - New Orleans Office
On November 30, 2017, the United States Court of Appeals for the Eleventh Circuit became the first federal appellate court in the United States to resolve competing maritime lien claims in the aftermath of the OW Bunkers collapse. There are pending appeals in similar maritime lien actions in the Second Circuit, Fifth Circuit, and Ninth Circuit. A full copy of the Eleventh Circuit’s opinion in Barcliff, LLC v. M/V DEEP BLUE, et al., can be found here. In Barcliff, the Eleventh Circuit affirmed the United States District Court for the Southern District of Alabama’s decision that a physical supplier of fuel under contract with an OW Bunker entity did not have a maritime lien, but that OW Bunkers UK, a fuel broker and the contractual counterparty of the vessel owner, did have a maritime lien that was validly assigned to ING Bank.
The Southern District of Alabama’s decision, which was discussed at length in the October 11, 2016, edition of Jones Walker’s Admiralty & Maritime Newsletter, found that the physical supplier of fuel did not have a maritime lien for the supply of necessaries because the supplier did not have a contract with the vessel owner and, as such, did not supply fuel on the order of the owner or someone authorized to bind the owner. The district court determined that the physical supplier contracted with a fuel trader, part of the international OW Bunker conglomerate, which did not have authority to bind the vessel or the vessel’s owner. Rather, the fuel trader contracted with a broker, another OW Bunker entity, and the broker contracted with the vessel owner to supply the fuel. The broker, therefore, did have authority to bind the owner, which gave rise to a maritime lien in favor of the broker even though it did not physically supply the fuel. The court further found that the broker had validly assigned all rights in the recovery of its maritime lien to ING Bank. Accordingly, the court found that ING Bank, as an assignee, had a valid maritime lien for the supply of necessaries against the subject vessel.
On appeal, the Eleventh Circuit affirmed the district court’s decision. The Eleventh Circuit ruled that the physical supplier did not act on the order of the vessel owner or someone authorized by the vessel owner to bind the vessel and, therefore, did not satisfy the requirements for a maritime lien. The Eleventh Circuit affirmed, however, the district court’s conclusion that ING Bank had a maritime lien against the vessel as the assignee of the broker. The Eleventh Circuit explained that the broker had a contract with the vessel owner and, therefore, acted on the order of the vessel owner. The broker, in turn, contracted with a fuel trader, and the fuel trader contracted with the physical supplier. As such, the supplier did not have a contract with the vessel owner; instead, the supplier had a contract with an intermediate fuel trader who did not have authority to bind the vessel owner.Jones Walker attorneys R. Scott Jenkins and William C. Baldwin represented the vessel owner at trial in the Southern District of Alabama and on appeal before the Eleventh Circuit. Mr. Jenkins and Mr. Baldwin also continue to advise clients on similar maritime lien issues. We will continue to monitor these issues and update you as additional matters proceed through the courts of appeal.