The four circuit courts to consider the question agree: A subcontractor is not entitled to a maritime lien simply as a result of supplying fuel to a vessel.
A subcontractor supplying marine fuel, known as bunkers, would have a maritime lien if “the vessel owner [had] direct[ed] the general contractor to use [the] particular subcontractor” that ultimately supplied the bunkers, the Ninth Circuit said in an October 11 opinion by Circuit Judge Paul J. Watford.
The four cases in the circuit courts, all decided within one year, entailed “nearly identical facts,” Judge Watford said. All four also arose from the bankruptcy of O.W. Bunker Group, a worldwide supplier of bunkers.
In each of the cases, the owners or operators of the vessels had contracted with O.W. Bunker to supply fuel. In turn, O.W. Bunker contracted with subcontractors who actually supplied the fuel. O.W. Bunker went bankrupt before paying the subcontractors, prompting the subcontractors to “arrest” the vessels and assert maritime liens for the price of the bunkers.
The cases all turned on 46 U.S.C. § 31342(a), which allows a supplier of fuel to assert a maritime lien if it “provid[ed] necessaries to a vessel on the order of the owner or a person authorized by the owner.”
Indisputably, fuel is a necessary. However, on summary judgment, the district court in the Ninth Circuit case had ruled that the subcontractor was not entitled to a maritime lien because it was not “a person authorized by the owner.” The district court was correct, Judge Watford said, because the vessel owner had not directed O.W. Bunker, the general contractor, “to select any particular supplier.”
The three prior circuit court opinions reaching the same result are Valero Marketing & Supply Co. v. M/V Almi Sun, 893 F.3d 290 (5th Cir. 2018); ING Bank N.V. v. M/V Temara, 892 F.3d 511 (2d Cir. 2018); and Barcliff, LLC v. M/V Deep Blue, 876 F.3d 1063 (11th Cir. 2017). To read ABI’s reports on those decisions, click here, here and here.
Four Circuits Now Agree, Fuel Subcontractors Don’t Have Maritime Liens
The four circuit courts to consider the question agree. A subcontractor is not entitled to a maritime lien simply as a result of supplying fuel to a vessel.
A subcontractor supplying marine fuel, known as bunkers, would have a maritime lien if the vessel owner had directed the general contractor to use the particular subcontractor that ultimately supplied the bunkers, the Ninth Circuit said in an October 11 opinion by Circuit Judge Paul J. Watford.