Getting paid in ship supply: terms, credit risk and maritime liens

The ISSA General Conditions of Sale start from cash: the purchaser pays the invoice before the vessel’s departure, in the stipulated currency, unless the supplier expressly agrees a later date. Credit is therefore something you grant, not something the buyer assumes. Once due, payment may not be withheld because of a claim, set-off or counterclaim.^[1]

The conditions also cut both ways on time: the buyer must raise quality claims in writing within 8 days of delivery and invoice complaints within 8 days of receiving the invoice. Send the invoice promptly — the clock for complaints runs from it.^[1]

The order may come from the owner, a ship manager, a time charterer, an agent or a trader buying for its own customer. That choice decides your security. US law presumes the owner, the master, a person entrusted with managing the vessel at the port of supply, and an officer or agent appointed by the owner or a charterer have authority to order necessaries. A trader that orders in its own name is a different matter.^[4]

The O.W. Bunker collapse in November 2014 showed what that means. The American Club’s review records that physical suppliers whose contract was with the bankrupt trader faced not being paid and tried to arrest the ships they had supplied, while owners risked paying twice. In the US, the Second Circuit held in 2018 that physical suppliers who delivered at the trader’s direction, rather than on the authority of the vessel or charterer, had no lien on the ships.^[12,13]

A shipping line’s insolvency is the other risk. When Hanjin Shipping failed in 2016, Ship & Bunker reported that it owed bunker companies around $64 million, and that a US court ruling protected Hanjin’s owned and chartered vessels from arrest. Check who you are extending credit to before the second order, not after the first unpaid one.^[14,15]

Under the ISSA conditions, orders and receipt notes are signed by the master or an authorised representative, and once the buyer takes delivery and signs the receipt note the goods are deemed accepted in every respect, subject to the 8-day claims window. Where goods are delivered to someone other than the ship — a forwarder or an agent’s warehouse — that party’s signed receipt is acceptance by the buyer.^[1]

• A written order or accepted quotation naming the vessel, the purchaser and the payment terms.
• A delivery note that repeats the order line by line, signed and stamped on board with the date and port.
• The invoice addressed to the purchaser named on the order, sent the same day where possible.
• Any certificates for safety items, copied into the file with the delivery note.

Small cash purchases on board are a separate flow. Cash to master is money the port agent delivers to the master on the owner’s behalf and shows on the port disbursement account, with a receipt signed by the master; if the ship will pay you from it, agree that with the agent before delivery.^[16]

The strongest security is against the ship itself. Whether you have it depends on the law of the place where you act, and the three systems a Gulf supplier meets most often differ.

• United States: a person providing necessaries to a vessel on the order of the owner or a person authorised by the owner has a maritime lien on the vessel, may sue in rem to enforce it, and need not prove that credit was given to the vessel. “Necessaries” include repairs, supplies, towage and the use of a dry dock.^[2,3]
• England: a claim for goods or materials supplied to a ship for her operation or maintenance is an Admiralty claim, but an action in rem against the ship needs the person liable to have been its owner or charterer, or in possession or control, when the claim arose — and to be its beneficial owner or demise charterer when the action is brought. Practitioners’ guidance is that England recognises no maritime lien for necessaries, only this statutory right.^[5,6,7]
• United Arab Emirates: Federal Decree-Law No. 43 of 2023 on Maritime Law, in force since 29 March 2024, replaced the 1981 law. It treats a debt for cargoes, materials, supplies, fuel and equipment supplied to a ship as maritime, so the ship can be attached before judgment, and allows attachment of another ship of the same debtor; the court must first accept a financial guarantee from the applicant. Its ranked liens include debts from contracts concluded by the ship agent or by the master outside the port of registry, heard only within six months of the due date.^[8,9]

Internationally, the 1993 Convention on Maritime Liens and Mortgages leaves supplies out of its list of liens — crew wages, personal injury, salvage, port dues and pilotage, and certain torts — though it lets states add national liens that expire after six months. The 1999 Arrest Convention, by contrast, counts goods, materials, provisions, bunkers and equipment supplied to a ship as a maritime claim for which she can be arrested.^[10,11]

• New buyer: payment before sailing, as the ISSA default, until there is a record.^[1]
• Credit only in writing, naming the purchaser, the period and the currency — and the ISSA conditions on the quote.
• Find out whether the buyer owns, manages or charters the ship; it changes what an arrest can reach.
• Chase within days, not months: the UAE six-month bar on agent- and master-contracted debts runs from the due date.^[8]
• Before arresting anywhere, take local advice — the UAE court will want a financial guarantee first.^[8]

GeoMarineHub shows the buyer’s payment terms on every request before you price a single line, so you choose the credit you give. Register as a supplier and see how it works for suppliers, or read how to win the RFQ in the first place.