Boone Star Owners Inc (Boone) was the registered owner of the Samatan, which was let on an NYPE time charter to Cargill International SA, who sub-let the vessel also on a NYPE time charter to Kristiania Marine BVI.

In August 2011, Kristiania Marine SA (Kristiania Norway) placed an order on behalf of its principal Kristiania BVI with Norwegian Bunkers AS (NB) for fuel oil and gas oil to be delivered to the vessel in Brazil. NB sent Kristiania Norway a standard form bunker confirmation. It identified the physical supplier as Petrobras and stated that its terms were subject to the physical supplier’s general terms and conditions. Petrobras’ general terms and conditions were never supplied, and neither Kristiania Norway nor Kristiania BVI requested a copy. NB knew that Kristiania BVI was not the owner of the vessel. In fact, NB knew that Kristiania BVI was a time charterer, but did not know which charterparty form was in use. Before delivering the bunkers, no agent of the owners or charterers notified NB (or Atlas or Petrobras) of the 'no-lien' clause in the charterparties, which were not public documents. The only attempt to give such notice was after the bunkers were delivered. The chief engineer of the vessel signed for the bunkers delivered and applied a 'no lien' stamp to the delivery receipt.

In the present motion for summary trial and judgment, the court was asked to determine whether Brazilian law applies to the in rem claim by NB against Boone. If it does, NB argues that it has a maritime lien over the Samatan, which was arrested in Vancouver, Canada, to cover the unpaid bunkers (USD 666,915.19). If it does not, Canadian law is deemed to apply and Boone  argues that the supply of bunkers to the vessel by NB does not give rise to a maritime lien.

Held:   Brazilian law applies to NB's claim, as it has the most links to the particular set of circumstances of this case. Brazilian law gives NB a maritime lien over the Samatan for the bunkers delivered in Brazil, and that maritime lien entitles NB to a summary trial and judgment in rem against the Samatan.

In the present case, there is no contract between the owners of the vessel (Boone) and the bunker suppliers (NB). The parties therefore agree that in such circumstances the proper law is determined not by reference to the choice of law provision in the bunker supply contract, but by an attempt to determine, on the basis of the facts and events of the case, which jurisdiction has the closest and most substantial connection to the transaction of supply (The Nordems). Absent a contract between the parties, the term 'transaction' is understood as the factual context of supplying the necessaries.

In Imperial Oil Ltd v Petromar Inc 2001 FCA 391 (at para 16-17), the Canadian Federal Court of Appeal, relying on jurisprudence of the Supreme Court of the United States, set out seven factors that Canadian courts must weigh to determine with which jurisdiction the transaction had the closest and most substantial connection. The seven factors are:

1. The place of the wrongful act;
2. the law of the flag;
3. the allegiance or domicile of the injured seaman;
4. the allegiance of the defendant shipowners;
5. the place where the employment contract was made;
6. inaccessibility of a foreign forum;
7. the law of the forum.

NB argued that the fact that fueling occurred in Brazil should take precedence over all the other factors. Citing Harrington J’s discussion of a similar factual situation in The Nordems (FC), it submitted that 'pride of place must be given to the place where the necessaries were provided'. NB also cited Janet Walker, Canadian Conflict of Laws, 6th ed, vol 2, pp 31-58, who argued that in circumstances where the fuel supply contract does not bind the ship owners, 'non-contractual elements, such as the nationality of the purchaser and supplier and the location of the transaction, assume greater importance'. Boone submitted to the contrary that the non-Brazilian factors greatly outweighed the Brazilian factors, arguing that Norway had at least three connections.

Gagné J held that all seven Imperial Oil factors should be considered. That said, in the present case, the place of delivery in Brazil should be accorded somewhat greater weight. Thus, the jurisdiction which had the closest and most substantial connection with the particular set of circumstances of this case was Brazil.

The expert witness on Brazilian law explained that by virtue of arts 470 and 471 of the Brazilian Commercial Code and art 2 of the Maritime Lien and Mortgages Convention 1926 (which Brazil ratified in 1931), the credit of the supply of necessaries was considered 'privileged' in relation to a ship. Marine fuel expenses gave rise to a maritime lien against a vessel because they were expenses incurred for the vessel’s preservation and because they were necessary for the continuation of the vessel’s voyage. Brazilian law would grant a maritime lien in favour of NB against the vessel even if the bunkers were ordered by Kristiania, the sub-charterers. He offered no explanation of Brazilian law principles as to how the supplier of necessaries is presumed to have contracted on the credit of the ship. 'Privileged' credits were considered to be the equivalent of 'tacit mortgages' on the ship. Accordingly, they had in rem effects, constituting a maritime lien that persisted and followed the ship, whether domestic or foreign, even if it was sold or transferred, to a different owner. This was confirmed by art 8 of the Maritime Liens and Mortgages Convention 1926 and by art 470 of the Brazilian Commercial Code.

As Boone did not challenge this exposition of Brazilian law or cross-examine the witness, the court was satisfied that NB had met its burden to allege and prove that Brazilian law provided, in the context of this claim, a maritime lien in favour of NB over the Samatan.