Courts In New York And Singapore Reach Opposite Conclusions On The Validity Of Interpleader Applications Arising Out Of The OW Bunker Bankruptcy

On 7 November 2014, OW Bunker A/S ("OW"), a global supplier and trader of marine fuel, filed for bankruptcy in Denmark. Further bankruptcies of OW subsidiaries and affiliates swiftly followed, including the bankruptcy of certain U.S. and Singapore-based OW entities.

Protective interpleader proceedings were brought in the U.S. and Singapore by vessel owners and charterers who found themselves the subject of competing claims by third-party physical suppliers of the fuel, OW entities and/or ING, the bank to which it is alleged that OW assigned its rights under certain fuel supply contracts in December 2013.

Interpleader proceedings are designed to protect a party facing multiple claims in respect of a single obligation, by asking the court to determine the entitlement of competing claimants and, in the interim, granting equitable relief by making a form of anti-suit injunction to restrain the competing claimants from proceeding elsewhere. OW, which had contracted to supply fuel to various vessel owners and charterers, often sub-contracted with third-party fuel suppliers who would physically deliver the bunkers to the vessel. In the wake of the bankruptcy, some suppliers sought to enforce maritime liens directly against vessels, regardless of whether the shipowners or charterers had already paid the amounts owed to the OW entities with whom they had contracted.

In two recent decisions, the Federal District Court in New York (New York Court) and the High Court of Singapore ("Singapore Court") reached opposing conclusions on whether interpleader proceedings relating to: (i) contractual (or 'in personam') claims; and (ii) maritime lien (or 'in rem') claims that were asserted against the vessels that had received the fuel, could be brought in those courts.

New York Proceedings

In the New York proceedings, in which this firm is acting, the third-party fuel suppliers argued that the New York Court lacked jurisdiction to give interpleader relief and adjudicate on the maritime lien claims against the vessels because:

The maritime lien in rem claims against the vessels were distinct from the in personam contractual claims against the shipowners and charterers, so the claims were not competing. Not all the vessels had been arrested or present in the jurisdiction when actions were commenced and injunctions issued, and the relevant parties had not consented to the substitution of the amounts paid to the court in place of their maritime liens. On 2 July...

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