IMSML Website Article 33/2025: Meck Petroleum DMCC v The Owners and/Or Demise Charterers of Ship Or Vessel The ‘Global Falcon’ of The Port of Cook Islands [2024] MLJU 1378 - Arrest of a Ship for Unpaid Bunkers Supplied to a Ship’s Cargo Tanks

A quantity of High Sulfur Fuel Oil (HSFO) with a sulphur content of 3.5 percent m/m was supplied by the Plaintiff (MECK Petroleum DMCC, a UAE company which provides comprehensive marine services, including Bunker Trading, Lube Oil Trading, and Spare Parts Supply)(hereinafter referred to as MECK) to the Defendant (International Bird Shipping Co, the Registered Owner of the Vessel ‘Global Falcon’ registered at the Port of Cook Islands). On 15 July 2023, the HSFO was loaded into the ‘Global Falcon’ at the Port of Khorfakkan, UAE. The HFSO was loaded into the cargo tanks instead of the bunker tanks.

On 21 November 2023, the ‘Golden Falcon’ was arrested as security for the Plaintiff’s claim that was subject to an arbitration for unpaid bunkers valued at USD1,301,345.39. The issue before Mr Justice Ong Chee Kwan was whether the Plaintiff could lawfully arrest the Vessel under Section 20(2)(m) and (n) of the UK Senior Courts Act 1981 (UK SCA 1981) for goods supplied to a ship for her operation or maintenance, or for a claim for the construction repair or equipment of a ship in respect of dock charges or dues.

What was the Shipowner’s arguments for the Vessel being Released from Arrest?

The Defendant shipowner objected to the arrest on the following grounds:

[1] The HFSO was not supplied as bunker for the Vessel’s operations, but to an alleged charterer, as cargo for an on sale, see Paragraph [7];

[2] The Defendant shipowner was not a party that was liable in personam to the Plaintiff, ie not the ‘relevant person’ under Section 21(4) of the UKSCA 1981, as there is no contract between the Plaintiff and the Defendant owners for supplying of bunkers to the Vessel, see Paragraph [7];

[3] The HFSO was loaded into the cargo tanks as cargo, see Paragraph [8];

[4] The Vessel was not suited to use HFSO as bunkers, see Paragraph [8].

What was the Plaintiff’s Case for Arresting the Ship?

The Plaintiff submitted the following reasons for justifying the arrest of the Vessel:

[1] The terms of the HFSO supply was confirmed by Sales Confirmation Order, MECK 00484 dated 14 July 2023 to the ‘Owners and/or Masters and/or Charterers and/or Managers and/or Operators and/or MV Global Falcon, IMO 9399167’, see Paragraph [19];

[2] There was a Sale Confirmation setting out the terms of the HFSO of MECK Petroleum DMCC General Terms and Conditions, ie the MECK GTC and the Bunker Supply Contract, see Paragraph [19];

[3] Arrangements were made for delivery of the HFSO via the bunker barge ‘MT Star 2’, as evidenced by Bunker Delivery Receipt No. 14322 issued on 15 July 2023. This was endorse, stamped and signed, as well as received by the Master, see Paragraph [21].

When the HFSO was transferred from the MT Star 2 to the MV Golden Falcon, where was it loaded into?

Cargo tanks no.1 port and starboard, Cargo tanks no.2 port and starboard, Cargo tanks no.3 port and starboard, as well as Cargo tanks no.4 port and starboard. The loaded HFSO was verified by an independent marine surveyor, see Paragraph [28]. Note, that Global Spec Marine Inspection Services issue a Bunker Supply Report on 15 July 2023. It contained detailed information on the bunkering operation, including quantities received, draft measurements, sample distribution and correspondence involved between the parties. The report unequivocally confirms that a quantity of 699,740 HFSO was supplied to the Vessel as Bunkers, see Paragraph [64].

How did IMO Rules Affect the Sulphur content the HFSO Loaded on Board the Ship?

The sulphur content was 3.03 percent by weight, see Paragraph [28]. As of 1 January 2020, the International Maritime Organization (IMO) mandated a reduced upper limit on the sulphur content of ships under Regulation 14.1, Annex VI of the International Convention for the Prevention of Pollution from Ships 1973/1978 amended (MARPOL). The current allowable limit was 3.5 percent m/m to 0.5 percent m/m (ie mass by mass), see Paragraph [30]. This was applicable in Malaysia via Malaysia Shipping Notice MSN06/2019 issued by the Marine Department Malaysia (MARDEP). Note that both the Cook Islands (ie where the Vessel was registered) and the United Arab Emirates were parties to MARPOL Annex VI, see Paragraph [31]. If a Vessel was supplied with bunker fuel exceeding the applicable IMO limits (ie more than 0.5 percent m/m), it could only burn the fuel by installing a scrubber, ie an exhaust gas cleaning system, see Paragraph [32].

Why was the HFSO Loaded into the Cargo Tanks Instead of the Fuel Tank?

According to the Looyd’s List Intelligence Vessel Report, the Vessel in question was a Double Hull ship. The tanks in between the two hulls can be used to store bunkers. There are pipes that link this type of tank to the others onboard the tanker. Hence the Vessel can load cargo and transfer it internally to the bunker tanks and then burn it as bunkers, and vice versa without any issue, see Paragraph [65].

Had the Plaintiff, who Arrested the Vessel, Discharged its Burden in Showing that the Vessel was supplied with Bunker and NOT Cargo?

A rather large quantity of HFSO was delivered to the Vessel. The Plaintiff had not offered an explanation as to why the Vessel was going to use such a large quantity as bunker, see Paragraph [87]. The Plaintiff had also not explained why the HFSO would be used as a bunker when the Shipowner had not declared that a scrubber would be installed on the ship, see Paragraph [88].

Is there a Difference between a Contract of Supply of Bunker Oil to Shipowners, as Opposed to a Contract for the Supply of Bunker Oil to the Ship?

According to Rubin JC (the High Court, Singapore), in The Golden Petroleum [1993] 3 SLR(R) 209 at para [32], held that the word ‘operation’ in respect of the phrase ‘goods or materials supplied to a ship for her operation and maintenance’ means anything done or procured to facilitate and ensure the profitable exploitation of the shipowner’s business with the ship as a vehicle. His Lordship followed the decision of the Court of Appeal of England and Wales in The River Rima that the goods supplied must have a sufficient and direct connection with the operation of a ship, and that there must be a link to the user of the goods with the defendant shipowner’s vessel, see Paragraph [93].

According to his Lordship, even if construed liberally, the phrase ‘operation of the ship’ must necessarily entail an aspect of consumption or an element of internal activity, function, utility or exploitation of the goods supplied, within or by the ship. In essence, according to Rubin JC, good supplied to the ship must be linked to the working or running of that ship. In his Lordship’s opinion, bunker oil supplied to the ship for sale to other ship cannot be conceived as goods supplied for her operation, see Paragraph [93].

So was the HFSO loaded onto the Ship as Bunker or Cargo?

The Plaintiff bunker supplier invoked admiralty jurisdiction under the UK SCA 1981, Sections 20(2)(m) and (n) to arrest the ship for unpaid bunker. Hence the Plaintiff has a legal duty to establish that it has a strong argument for the Court to exercise its jurisdiction, see Paragraph [98].

Unfortunately for the Plaintiff, Mr Justice Ong Chee Kwan concluded that there was overwhelming documentary evidence that the HFSO was MOT intended for the operation or maintenance of the Vessel, see Paragraph [99]. First, the most poignant evidence was that the quantity delivered was way too much to be for the purposes of the ship’s bunker. Mr Justice Ong Chee Kwan observed that the Vessel typically used about 7 metric tonnes per day of low sulphur fuel oil. This figure was inferred with the Vessel’s engine running at full speed at an output of 90 percent MCR (ie maximum continuous rating). At this rate, it would take more than one year for the Vessel to consume the 2,700 tonnes of HFSO at normal speed, and during the said period not earning any freight, see Paragraph [100]. The inference here is that the HFSO could not possibly have been loaded into the Vessel for her operation or maintenance. His Lordship concluded that the Plaintiff was not able to demonstrate that the HFSO was in fact to be consumed or used by the Vessel at all, see Paragraph [101].

Second, the Vessel was not fitted with a scrubber (ie an exhaust gas cleaning system) in order to consume the HFSO as bunker. This supported the contention that in order to comply with MARPOL, the HFSO was not intended for the Vessel’s consumption, see Paragraph [103].

What Evidence Put Forward by the Plaintiff did the Court Reject?

Both the Sales Confirmation and Bunker Delivery Receipt referred to the HFSO as ‘bunkers’. Mr Justice Ong Chee Kwan pointed out that the issue before the Court was whether the HFSO was intended for the Vessel’s operation and maintenance, not whether the HFSO can serve as bunkers. At no point could the Plaintiff show that the HFSO was indeed supplied for the Vessel’s ‘operation or maintenance’, see Paragraph [102].

Thank you for reading IMSML Website Article 33/2025

Stay tuned for the next IMSML Website Article 34/2025: Titimas Shipping & Trading Sdn Bhd v Eustacia Solutions & Ors [2024] MLJU 1670 - Allegations of a Failure to Comply with a Contract of Carriage for 12 Voyages and Fixture Note, Despite an Extended Laycan Date During the COVID-19 Pandemic

Signing-off for today,

Dr Irwin Ooi Ui Joo, LL.B(Hons.)(Glamorgan); LL.M (Cardiff); Ph.D (Cardiff); CMILT

Professor of Maritime and Transport Law

Faculty of Law

Universiti Teknologi MARA Shah Alam

Selangor, Malaysia

Tuesday, 19 August 2025

Note that I am the corresponding author for the IMSML Website Articles. My official email address is: uijoo310@uitm.edu.my