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Bunker supplier Equatorial loses $21.7m payment dispute case with MISC

Bunker supplier Equatorial loses $21.7m payment dispute case with MISC
Singapore-based bunker supplier Equatorial Marine Fuel Management Services has lost a seven-year long court case over a $21.7m bunker dispute with Malaysian shipowner MISC Berhad, the Singapore High Court has ruled.

In a 64-page judgement, Justice Judith Prakash concluded by saying that the plaintiff, Equatorial, has failed to establish liability on the part of MISC, the defendant, for the bunkers delivered under the disputed contracts, and the “plaintiff’s claim must therefore be dismissed with costs.”

The case originated during the period between June 2006 and 2008 when Equatorial delivered approximately 198,000 metric tonnes of fuel to MISC vessels via bunker supply contracts brokered through Compass Marine and OceanConnect, both bunker broking companies based in London.

Compass Marine and OceanConnect dealt with Equatorial and Market Asia Link (MAL), a Malaysian firm selling spare parts for ships and approved by MISC as its vendor of bunkers. Thereafter until the end of 2008 MISC purchased bunker fuels from MAL many times, and it did not have direct dealings with the two London brokers.

With Equatorial claiming $21.7m for non-payment of fuel delivered to MISC vessels under three bunker contracts that it concluded with MAL, MISC claimed that it is not liable as it was not a party to those contracts and Equatorial must look to MAL, the counterparty, for payment.

Prakash agreed with MISC and dismissed Equatorial’s claim on the basis that the bunker supplier failed to establish a link between MAL and MISC such that MISC was liable to pay for the bunkers.

MAL was registered with MISC only as a ship spares supplier since 2000. But from March 2005, MAL expanded its business with MISC to include the supply of bunkers. “We act as principals in all transactions, not as a broker, taking all responsibilities for the sale of bunkers and lubricants in the way of quantity, quality and effective delivery procedure,” MAL stated in a letter to MISC on 3 January 2005.

Equatorial’s position is that MISC granted MAL actual authority to act as its broker and to purchase bunkers as its broker or agent to fulfil bunker contracts.

“Equatorial’s submissions in respect of the Inference Argument focus on MISC’s approval of MAL as a registered bunker vendor, the manner in which the bunker contracts were awarded by MISC to MAL, the manner in which the bunker contracts were performed and the underlying relationship between MISC and MAL,” Prakash said, but added that it is “not clear to me what inference the court is being asked to draw under the Inference Argument.”

Back in 2012, the Singapore Court of Appeal overturned a ruling that prevented Equatorial from pursuing the case, which was originally judged that Equatorial’s claim was “plainly unsustainable.”