In a recent decision, Greek courts held that owners were not liable for payment of delivered bunkers in favour of a physical supplier who had a sale contract with a trader. In SEKA v Owners of the m/v CE BREEZE and PANAGIA ARMATA, the Piraeus Court of First Instance confirmed the long established principle that, under Greek law, a supplier can only pursue payment against the party with which it has contracted.
In Greek courts privity of contract is king
In a recent decision Greek courts held that owners were not liable for payment of delivered bunkers in favour of a physical supplier who had a sale contract with a trader. In SEKA v Owners of the m/v CE BREEZE and PANAGIA ARMATA, the Piraeus Court of First instance confirmed the long established principle that, under Greek law, a supplier can only pursue payment against the party with which it has contracted.
In October 2014, owners instructed the Piraeus office of OW Malta (OW) to provide m/v CE BREEZE and PANAGIA ARMATA with certain quantities of bunkers. OW Malta, acting as trader, subsequently instructed a physical supplier, SEKA, to supply the agreed bunkers to the said vessels. OW Malta entered into two separate contracts, i.e. one with the owners and one with SEKA. However, OW’s bunker sale confirmation and invoice referred to SEKA’s standard terms and conditions (which didn’t include a "retention of title" clause). Following OW’s collapse, and despite the fact that owners had already paid OW, SEKA asked for direct payment of the bunkers from owners, by forwarding them the relevant invoice addressed to the Owners and/or Managers and/or Charterers and/or Master and/or OW.
SEKA argued that owners were liable for payment on the basis that:
- both the vessel port agents and the chief engineer who signed the Bunker Delivery Note (BDN), acted as authorised agents for the purchase with the intention of concluding a sale contract between SEKA and owners, and thus binding owners;
- SEKA's invoices (incorporating SEKA's terms and conditions) provided that owners were liable to settle those invoices.
It should be noted that even though SEKA's invoices were addressed to both OW and owners, the terms and conditions were not expressly included in SEKA’s delivery receipt, and reference to them was made only in SEKA’s invoices which were issued after the delivery of the bunkers.
The Court, rejecting SEKA’s application for security measures, held that two distinct contracts were concluded, i.e. one between OW and SEKA, and one between OW and owners. No contractual agreement existed between owners and SEKA.
In arriving at its decision, the Court considered the different terms of the two sets of contracts, i.e. the purchase price, the credit period, the jurisdiction and the applicable law. The Court also stated that the mere sending of the invoice to the owners, or the signing of the BDN by the chief engineer, did not suffice to hold Owners liable for payment.
Finally, the Court held that OW did not act as agents and/or brokers on behalf of the owners. OW had no authority to enter into an agreement on Owners behalf, and acted as a separate entity in its own name. OW acting, as trader, entered into a separate contract with SEKA, and bought the bunkers so as to sell them subsequently to the owners under a second, separate contract.