Legal Corner

Legal Corner

Use your head

Legal update from Triton 3-2016

There is an increasing trend to hold CEOs, board members and also accountants liable for business disruption. The OW Bunker bankruptcy is no exception. The Danish bankruptcy administrator has sued OW’s management including the board, as well as the former accounting firm Deloitte and, notably, the private equity firm that put OW Bunker on the stock exchange, for USD 470 million.

There is also an additional claim by 26 investors for the sum of USD 120 million. The expectation is to collect from the defendant’s Errors and Omissions (E&O) insurances. When considering that OW Bunker was listed on the Copenhagen stock exchange on 28 March 2014, and went bankrupt on 7 November 2014 with an estimated debt of USD 1.9 billion, the legal actions are not hard to understand.

The need for critical thinking

Although the OW Bunker case is extreme in many ways it is a reminder that corporate governance issues should not be taken lightly. Whilst it is easy to reduce compliance to a tick box exercise we all need to maintain a free mind and a critical thinking and ask questions like:

Is this really realistic? How does this work in practice?

Obviously, there does not seem to have been any reality check on OW Bunker’s trading activities – certainly if there was, it did not make it to the prospectus for the stock exchange listing.

Review your policies

According to OECD, the world’s total spending on insurance premiums has almost doubled since 2000. It is difficult not to make the reflection that society is becoming increasingly risk averse. As a result, insurance funded solutions in all areas, including shipping, are on the rise. As to the risk of being exposed for liabilities due to potential wrongdoings, corporate entities are well advised to review their E&O insurance policies. These polices will probably not get any cheaper in the future.

Follow the money

It is has often been said that policy makers tend to follow the money. On 18 January 2017 the certification requirements under the Maritime Labour Convention (MLC) enter into force, and the draftsmen’s intention was no doubt that there should be an insurance solution to this. The clubs in the International Group have stepped up to the challenge and will assist their members in providing the necessary certificates even though some of the risks are not covered by insurance.


 Anders Leissner
Director, Corporate Legal & FD&D

Previous Legal Corner articles 

UK Supreme Court decides preliminary issue against owners - Triton no 2 2016
Guidelines on place of refuge - Triton no 1 2016
It’s not what you do, it’s how you do it - Triton no 3 2015
Reflections - Triton no 2 2015 
A wreck removal convention ahead - Triton no 1 2015
We need to talk - Triton no 3 2014
What it is all about - Triton no 2 2014
The Shipping Blue(s) - Triton no 1 2014

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