9th Circuit Joins Other Circuits Denying Supplier Maritime Lien for Furnishing Bunkers

Bunker Holdings Ltd. v. Yang Ming Liber. Corp., No. 16-35539, 2018 U.S. App. LEXIS 28668, 2018 WL 4924364 (9th Cir. October 11, 2018)

By: Fatmeh Ali

In this maritime lien case, Bunker Holdings Ltd. furnished bunker fuel to the vessel YM SUCCESS in Nakhodka, Russia. The defendant in this case, Yang Ming Liberia Corp. (“Yang Ming”), ordered bunkers from the plaintiff O.W. Bunker Far East Pte. Ltd. (“OWB Far East”). OWB Far East bought the bunkers from Bunker Holdings under a separate contract. Then, Bunker Holdings supplied the bunkers to YM SUCCESS, billing OWB Far East for the payment. OWB Far East filed for bankruptcy which led Bunker Holdings to seize the vessel in the U.S. claiming it had a maritime lien for furnishing necessaries to the vessel.The sole issue of the case was whether Bunker Holdings provided necessaries “on the order of the owner or a person authorized by the owner” of the vessel. According to general maritime law, a party is entitled to a maritime lien if it provided necessaries to a vessel on the order of the owner or a person authorized by the owner. 46 U.S.C.S. § 31342(a).  The owner of the vessel is Yang Ming Liberia, Corp. However, Yang Ming did not place its order for the bunkers with Bunker Holdings, but rather with OWB Far East. For this reason, Bunker Holdings did not provide necessaries on the order of the owner. Furthermore, OWB Far East was not considered to be a person authorized by the owner. In order to assess whether OWB Far East is a person presumed to have authority to procure necessaries for a vessel, the court relied on 46 U.S.C. §31341(a). Under this statute, the list of persons presumed to have authority are the (1) owner, (2) the master, and (3) a person entrusted with the management of the vessel at the port of supply. Bunker Holdings did not offer any evidence that would support OWB Far East being an entrusted person. The court ultimately held that OWB was not authorized by the owner of the vessel. Therefore, the court held that Bunker Holdings was not entitled to a maritime lien against the YM SUCCESS.The trial court initially awarded Yang Ming the premiums paid on undertakings or bonds based on Rule 54(d)(3)(B) of the Local Rules of Civil Procedure for the Western District of Washington. However, federal courts may not award costs that are not authorized in 28 U.S.C. § 1920, such as the premiums at issue. For this reason, the court reversed the order which required Bunker Holdings to pay Yang Ming’s premiums for posting security to release the vessel.