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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

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  October 11, 2016 post, 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.

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About this Author

William Baldwin Maritime Law Attorney Jones Walker
Partner

Will Baldwin is a partner in the firm's Admiralty & Maritime Practice Group. Mr. Baldwin's practice focuses on maritime transactions and litigation. He regularly advises and represents clients on a wide range maritime law topics, including ship mortgages, marine financing, purchase and sale of marine assets, enforcement of ship mortgages, vessel seizures and attachments, maritime lien disputes, charterparty and master service agreement negotiation and drafting, contractual and indemnity disputes, arbitration, vessel construction and flagging, Jones Act compliance,...

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Christopher Ulfers, Jones Walker Law Firm, Admiralty and Maritime Attorney
Associate

Christopher Ulfers is an associate in the firm's Admiralty & Maritime Practice Group and practices from the New Orleans office. Prior to joining Jones Walker, Mr. Ulfers externed for Chief Judge Brian A. Jackson of the United States District Court for the Middle District of Louisiana and served as a judicial law clerk for Judge Susie Morgan of the United States District Court for the Eastern District of Louisiana.

Mr. Ulfers is a 2015 graduate of the Paul M. Hebert Law Center, Louisiana State University, where he received his juris doctor degree and Diploma in Comparative Law, summa cum laude, graduating in the top 1% of his class. During law school, Mr. Ulfers served as the Editor-in-Chief of Volume 75 of the Louisiana Law Review

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