Bunker trader failed to show owner authorized fuel

Where a bunker trader asserted a maritime lien based upon nonpayment of fuel bunkers, but it failed to show the owner or a person authorized by the owner ordered the bunkers, its lien was denied.

Background

This dispute concerns whether an international trader of bunker fuel is entitled to a maritime lien on a vessel under the Commercial Instrument and Maritime Lien Act or CIMLA. The district court held that the bunker trader failed to show that it procured the vessel’s fuel “on the order of the owner or a person authorized by the owner,” and denied the maritime lien.

Choice of law

The parties dispute whether Singapore or US law applies. Singapore law prohibits maritime liens on vessels as a means to obtain payment for bunkers. As the court concludes below, the specific facts of this case do not permit a maritime lien under United States law. So regardless of whether the court follows Singapore law or United States law, a maritime lien is not permitted, and the outcome is the same. The court therefore follows the district court’s sound approach and forges ahead with applying United States law regarding the existence of a maritime lien on the vessel.

Merits

To prove the existence of a maritime lien under the CIMLA, a party must show the following: (1) “a person providing necessaries”; (2) “to a vessel” and (3) “on the order of the owner or a person authorized by the owner.” There is no dispute that Sing Fuels was “a person providing necessaries” and those “necessaries” were provided “to a vessel.” Accordingly, the sole question before this court is whether Sing Fuels acted “on the order of the owner or a person authorized by the owner.”

At the outset, there is no argument or record evidence indicating that Sing Fuels acted “on the order of the owner” when ordering the July bunkers. Thus, Sing Fuels is only entitled to a maritime lien if it can show it ordered them “on the order of … a person authorized by the owner.” Under these circumstances, Sing Fuels needed to demonstrate that either Mylonakis or Medmar is “a person authorized by the owner.” It failed to do so.

According to Sing Fuels’s own theories at trial, Mylonakis was supposedly a fuel broker for Medmar, not Autumn Harvest. Mylonakis may have been authorized to procure the July bunkers by Medmar, but he clearly was not permitted to do so by Autumn Harvest, the vessel’s owner.

As for Medmar, not only did none of its representatives testify at trial, Sing Fuels submitted no evidence suggesting that Autumn Harvest authorized Medmar, as its agent, to order the vessel’s July bunkers. This is unsurprising because Medmar, as a sub-charterer, had no relationship with Autumn Harvest. In sum, Sing Fuels simply failed to show how it acted “on the order of the owner or a person authorized by the owner” under the CIMLA.

As opposed to grappling with the CIMLA’s explicit requirement under § 31342(a), Sing Fuels rests its entitlement to a maritime lien entirely on Mylonakis being Medmar’s apparent agent, which would trigger the CIMLA’s statutory presumption and grant Mylonakis tentative authority to bind the vessel. As a charterer, Medmar’s agents have presumptive authority to procure necessaries on behalf of the vessel. But under the CIMLA’s terms, the rebuttable presumption of authority to bind a vessel is only applicable if an agency relationship indeed exists, including one involving apparent authority.

When analyzing apparent agency, the district court concluded that “Mylonakis, the fuel broker, was not the agent for MedMar Inc., and, thus, could not establish the maritime line [sic] on behalf of Plaintiff.” This finding is not clearly erroneous by any means.

Affirmed.

Concurring opinion

Wilkinson, J., concurring:

I agree with the majority that Sing Fuels has failed to show that Mylonakis, the fuel broker with which it dealt, was acting as an agent of anyone with authority to bind the vessel. It therefore is not entitled to a maritime lien, and I concur in the majority opinion. I write, however, to note the pitfalls that may arise in the future with cases like these, which threaten to destabilize the basic principle of admiralty law that suppliers of necessaries such as bunker fuel must be able to rely on maritime liens to ensure payment.

Sing Fuels Pte Ltd. v. M/V Lila Shanghai, Case No. 21-1607, July 1, 2022. 4th Cir. (Floyd), from EDVA at Newport News (Jackson). Briton Paul Sparkman for Appellant. Dustin Mitchell Paul for Appellee. VLW 022-2-161. 29 pp.