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In ING Bank N.V. v. M/V Temara, et al, 2016 AMC 2387 (S.D.NY Aug. 24, 2016) one of the issues before the court was whether an order of bunkers (quantities of fuel) by a charterer of a ship from a bunker broker, not acting as an agent of the vessel, creates a lien in favor of a supplier acting as a subcontractor of the bunker broker.

The vessel, the Temara, was owned by Cimpship Transportes Maritimons, S.A. (“Cimpship”) and was chartered by Copenship Bulers A/S (“Copenship”). Copenship contact O.W. Bunker & Trading A/S/ (“OW Bunker”) for the Temara to be supplied with bunkers at an upcoming stop in Balboa, Panama. OW Bunker responded by sending Copenship a Sales Order Confirmation for the sale of 400 metric tons of fuel, each costing $536. The Order Confirmation also contained certain terms and conditions. The agreement did not make any reference to OW Bunker acting as the Copenship’s agent or possessing the power to bind the Copenship to any agreement.

After the agreement between Copenship and OW Bunker, OW Bunker utilized the services of OW Bunker USA, Inc., which in turn contracted with CEPSA to physically supply bunkers to the vessel. CEPSA’s confirmation document listed O.W. Bunker USA Inc. as the Seller, CEPSA as the Buyer, and the Temara as the vessel , recited the fuel quantity as 400 metric tons, but listed the lower unit price of $526. OW USA also memorialized this contract in its own Purchase Order Confirmation. Neither confirmation reference OW Bunker or Copenship, but both referenced the vessel. CEPSA issued an invoice to OW USA, however, CEPSA was never paid the amount listed in the invoice.

CEPSA sought to establish a maritime lien for necessaries as set forth in the Commercial Instruments and Maritime Len Act (“CIMLA”). The court noted that as a general rule, maritime liens are disfavored by law. They can arise only be operation of law, and not by the agreement of the parties, and are strictly construed. Under the statutory scheme, a party claiming a maritime lien against a vessel must show it (1) provided necessaries, (2) to any vessel, and (3) upon the order of the owner of the vessel or a person authorized by the owner 46 U.S.C. § 31342(a). Necessaries include, among other things, supplies. CIMLA also lists “persons-presumed to have authority to procure necessaries for vessel,” which includes an officer or agent.

Agency is the fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that acts on the principal’s behalf and is under the principal’s control. Agency may result from actual authority, which can be express or implied, or apparent authority which results when a third party reasonably believes the actor has the authority to act o behalf of the principal and that belief is traceable to the principal’s manifestations. The burden of proving an agency relationship is on the party who asserts the existence of the relationship.

The parties did not dispute that CEPSA provided fuel bunkers, which are necessaries, to the Temara. Instead the question of whether CEPSA was entitled to a maritime lien turned on whether it furnished the bunkers “on the order of the owner of a person authorized by the owner” pursuant to 46 U.S.C. § 31342(a). Based upon the evidence, CEPSA entered into a contract with OW Bunker USA and there was no indication or expectation that either party was binding a distinct principal. As a result, CEPSA provided the bunkers on the orders of a subcontractor, not the owner of the vessel or someone authorized by the owner, which does not create a maritime lien. Further, the agreement between Copenship and OW Bunker does not create or establish any actual or apparent authority by which OW Bunker could bind Copenship or the vessel. The court also noted that contract did not evidence the existence of an agency relationship. Finally, CEPSA cited a Canadian case to support its position that a maritime lien was created. The Court, however, noted that the Canadian case was not binding on U.S. Courts and that the two countries have distinct statutory schemes setting for the requirements for maritime liens. The court was not persuaded and held that CEPSA did not have a maritime lien against the vessel.

CEPSA’s alternative theory of a maritime line was that is acted pursuant to orders from one authorized to act for the vessel’s owner based on the Bunker Receipt which was signed aboard the vessel following the delivery of the bunkers. CEPSA argued that the Chief Engineer, which signed the documents falls within the definition of “an officer or agent appointed by” the owner or charters. The court found the chief engineer did not have any role in the fuel’s delivery other than acknowledging the delivery. In addition, there was not indication that chief engineer was granted any particular authority by the owner. Chief engineers are not, without more, statutorily authorized to bind a vessel for the provisions of necessaries. As a result, the court held that limited role of the chief engineer did not support the weight of a maritime lien.