Can You Arrest Bunkers in Australia?

• Author: Quintin Alexander Rares
• Position: Barrister, 7 Wentworth Selborne Chambers; Unit of Study Co-coordinator and Lecturer, the University of Sydney Business School; Lecturer, the University of Sydney Law School. My sincere thanks must go to Charles Street and Frazer Hunt for their comments on an earlier version of this paper, and to Venetia Brown for her comments on the most recent...
• Pages: 111-121

(2015) 29 ANZ Mar LJ

111

CAN YOU ARREST BUNKERS IN AUSTRALIA?

Quintin A. Rares

*

Background

'Bunkers' tends to refer to the fuel inside a ship, though it can also refer to the tank those bunkers are stored in,

or the process of filling those tanks with fuel. In essence one can bunker their bunkers with bunkers. Inside the

ship might be many tanks in which fuel of varying specifications are stored.

Commonly, shipowners will charter their vessels on a time charter. The time charterer will most often buy the

fuel already in the tank when they sign their contract with the shipowner, and will thus own the fuel in the tanks

and will own additional fuel that they buy and fill the tanks with. At the e xpiry of their charter, the time

charterer will generally sell the remaining bunkers to the shipowner, who will be compelled to buy them at the

local market price, under the standard contractual provisio n/s governing these transactions.

However, a problem arises during the arrest of ships. In Admiralty courts, or courts otherwise vested with

Admiralty jurisdiction, a judge can order a ship be arrested, and if need be, sold after a maritime claim has been

brought against the ship itself; an action in rem.

The problem is that at the time of arrest, the ship will have a lot of items on her, which cannot be sold for the

shipowner’s dues, as the shipowner does not own them. Cargo is a good example of this and so are bunkers. The

difficulty posed by bunkers is that they are said to be practically difficult to separate from the ship (though no

case cited in this paper appears to have heard evidence to this effect). Because of this, courts generally sell the

bunkers with the ship and remit the proceeds of the bunker sale to the bunker's true owner, generally the

charterers.

However, what happens when there is a claim against the bunkers themselves for the evils of the charterers, but

not against the ship or its owners? Can you apply the same logic and sell the ship and the bunkers and remit the

cost of the ship back to the shipowners? Can you arrest the bunkers and hold them until one’s claim is paid, bail

is posted or a court releases the ship because the claim did not succeed or was dropped? The answers to these

legal questions will form the topic of this paper.

The British Position: What Did You Say, Your Lordship?

Most of the Australian case law in this area is derivative of the judgments of Sheen J.1 The problem is that there

are differing views as to what his Lordship said over the many cases he decided regarding bunkers.

The first relevant case in this regard is The Saint Anna.2 Here the contract was governed by the standard

Shelltime 3 clauses,3 set out below:

14. Charterers shall accept and pay for all bunker oil and boiler water on board the vessel at the time of

delivery, and Owners shall, on the expiry of this charter pay for all bunker oil and boiler water then

remaining on board . . . Owners shall give charterers the use and benefit of any fuel contracts they may

have in force, at home and/or abroad, if so required by Charterers, provided suppliers agree.

22. . . . If Owners require the vessel to proceed to any special port for periodical docking purposes no hire

shall be payable for time lost in proceeding to whilst at and after leaving such special port . . . all fuel

* Barrister, 7 Wentworth Selborne Chambers; Unit of Study Co-coordinator and Lecturer, the University of Sydney Business School;

Lecturer, the University of Sydney Law School. My sincere thanks must go to Charles Street and Frazer Hunt for their comments on an

earlier version of this paper, and to Venetia Brown for her comments on the most recent draft. My thanks also to Angus Stewart SC for his

comments on the conference paper I gave on this topic at the 2015 NSW ML AANZ conference. The errors and opinions in this paper are

entirely my own.

1 Sir Barry Sheen (1918 - 2005) was a British judge who served as Admiralty Judge of the High Court (Queen's Bench Division) from 1978

to 1993.

2 [1980] 1 Lloyd’s Rep 180.

3 Note the Shelltime 4 clauses (Dec 2003) are slightly, but for the purposes of this paper not materially, different: ‘15. Charterers shall

accept and pay for all bunkers on board at the time of delivery, and Owners shall on redelivery (whether it occurs at the end of the charter or

on the earlier termination of this charter) accept and pay for all bunkers remaining on board, at the price actually paid, on a “first-in-first-

out” basis… Notwithstanding anything contained in this charter all bunkers on board the vessel shall, throughout the duration of this charter,

remain the property of Charterers and can only be purchased on the terms specified in the charter at the end of the charter period or, if

earlier, at the termination of the charter’.