Bunker Supply Agreement (UAE)

A Bunker Supply Agreement in the United Arab Emirates is a commercial contract between a marine fuel supplier (the bunker supplier) and a vessel owner or operator (the buyer) for the supply of marine fuel — commonly referred to as bunkers — to vessels at UAE ports. The UAE is one of the world's most important bunkering hubs, with the Port of Fujairah ranked among the top three bunkering ports globally by volume and Jebel Ali Port operated by DP World ranking as the largest container port in the Middle East. The UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023) governs maritime commercial transactions in the UAE, providing the legal framework for bunker supply contracts and the maritime liens that arise in connection with them. The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) governs merchant obligations between bunker traders and vessel operators, and the UAE Civil Code (Federal Law No. 5 of 1985) supplies the general principles of contract law.

Bunker quality in UAE ports is governed by ISO 8217 (the International Standard for marine distillate and residual fuels) and, since 1 January 2020, by the IMO Global Sulphur Cap implemented under MARPOL Annex VI, which limits the sulphur content of marine fuel to 0.5% by mass outside Emission Control Areas (ECAs). Very Low Sulphur Fuel Oil (VLSFO) and Low Sulphur Marine Gas Oil (LSMGO) are the principal compliant fuels used in UAE waters. The Fujairah Bunkering and Anchorage Association (FBAA) and the Fujairah Oil Industry Zone (FOIZ) are the principal industry bodies regulating bunkering activities at the Port of Fujairah. The Emirates National Oil Company (ENOC) and other licensed bunker suppliers operate under trade licences issued by the relevant Department of Economic Development or free-zone authority.

A maritime lien for the supply of bunkers to a vessel is a significant commercial and legal feature of UAE bunker supply transactions. The UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023) recognises specific maritime liens that arise by operation of law and attach to the vessel as security for debts incurred for its benefit, including the supply of necessaries such as bunkers. A bunker supplier that is not paid may arrest the vessel before the Dubai Courts or the Abu Dhabi Judicial Department to enforce its maritime lien for the unpaid bunker debt, provided that the supplier was contracted by a party with authority to bind the vessel — typically the owner, the bareboat charterer, or an authorised ship manager. The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) governs the evidentiary requirements for bunker supply claims, and the Bunker Delivery Note (BDN) signed by the vessel's chief engineer is the primary evidence of the quantity delivered.

A Bunker Supply Agreement in the United Arab Emirates is needed whenever a vessel owner or operator wishes to establish a credit facility and a framework for the regular supply of marine fuel from a UAE bunker supplier.

Shipping companies operating vessels through the Port of Fujairah require a Bunker Supply Agreement to secure credit terms and pricing arrangements with one or more licensed bunker suppliers. Fujairah's strategic position on the east coast of the UAE outside the Strait of Hormuz makes it the preferred bunkering location for vessels on the Middle East-Europe and Middle East-Asia trade routes, and a pre-agreed framework enables efficient scheduling of bunker deliveries to coincide with vessel calls.

Vessel operators transiting through Jebel Ali Port, operated by DP World, or calling at the Port of Abu Dhabi operated by Abu Dhabi Ports Authority require bunker supply agreements with suppliers licensed to operate in those ports. Port-specific safety and environmental regulations, including MARPOL Annex VI requirements enforced by the UAE Federal Environment Agency and port authorities, apply to all bunker deliveries, and a written agreement ensures that both parties acknowledge their respective compliance obligations.

ISM Code-managed vessels whose ship managers are based in Dubai Maritime City or JAFZA frequently use Bunker Supply Agreements to delegate bunker procurement authority to the ship manager, who executes delivery orders on behalf of the vessel owner under a pre-agreed commercial framework. The ship manager's authority to bind the vessel to bunker supply obligations must be clearly documented, because UAE bunker suppliers seek to establish a maritime lien against the vessel itself as security for unpaid debts.

Bunker traders and physical suppliers operating in the UAE free-trade zones also use Bunker Supply Agreements as master agreements governing a series of individual sale transactions for marine fuel, with each delivery governed by a delivery order that incorporates the master terms. This structure is consistent with the framework sale contract model recognised by the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022).

A Bunker Supply Agreement governed by UAE law must contain the following elements to protect both the supplier's payment rights and the buyer's fuel quality and environmental compliance obligations. The forms-legal.com UAE Bunker Supply Agreement template addresses each component.

Party identification must record the full legal name, trade licence number issued by the relevant Department of Economic Development or free-zone authority, and registered address of both the supplier and the buyer. The UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023) and the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) require the buyer to have authority to contract on behalf of the vessel and to bind it to maritime obligations. Where the contracting party is a ship manager rather than the vessel owner, the agreement should confirm the manager's authority to purchase bunkers on the owner's account.

Vessel identification must name the vessels to be supplied. For framework agreements covering multiple vessels in a fleet, the agreement should permit the buyer to nominate vessels by delivery order, subject to the supplier's acceptance. The vessel's IMO number should be recorded to enable MARPOL Annex VI compliance tracking under the Bunker Delivery Note (BDN) system.

Fuel grade specification must identify the permitted grades — VLSFO (0.5% sulphur), LSMGO (0.1% sulphur), IFO 380 (only in non-ECA zones), or LNG bunker. The agreement must require compliance with ISO 8217 (latest edition) and MARPOL Annex VI sulphur limits, because the UAE Federal Environment Agency and port state control in UAE ports enforce MARPOL compliance.

Delivery ports must be specified. For Fujairah deliveries, the agreement should reference the Fujairah Bunkering and Anchorage Association (FBAA) port rules and the Fujairah Oil Industry Zone (FOIZ) regulations. For Jebel Ali or Abu Dhabi deliveries, the relevant DP World or Abu Dhabi Ports Authority port regulations apply.

Pricing basis must state whether the price is fixed per metric tonne, indexed to Platts MOPS or Argus Dubai, or quoted per delivery order. Pricing for VLSFO in Fujairah is commonly benchmarked to the Platts MOPS-based Fujairah FOB quote. The pricing mechanism determines the VAT treatment under Federal Decree-Law No. 8 of 2017 administered by the Federal Tax Authority.

Payment terms and credit limit must specify the payment period — typically 15 to 30 days from BDN date — the currency (AED or USD), and the maximum credit exposure. Late payment interest is recoverable under the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022). The supplier should reserve the right to suspend deliveries upon credit limit breach.

Quantity measurement and BDN process must establish that quantity is determined by the supplier's flow meter or shore tank, documented in the BDN signed by the vessel's chief engineer. The BDN is the primary document of title and the starting point for payment claims.

Quality dispute procedure must require the buyer to retain a sealed sample from each delivery for 90 days and to notify quality disputes within 15 days. Disputes should be resolved by independent ILAC-accredited laboratory analysis of the retained sample. A quality dispute does not suspend the payment obligation.

Maritime lien clause must acknowledge the supplier's maritime lien over the vessel under the UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023) as security for unpaid bunker debts, and confirm that the buyer's obligation to pay runs from the BDN date regardless of the vessel's subsequent employment.

Completing a Bunker Supply Agreement for use in the United Arab Emirates requires attention to the operational details of the bunkering arrangement and the regulatory framework governing fuel quality and environmental compliance. Gather the vessel's IMO documentation, the supplier's bunker trade licence, and the port authority approvals before starting.

Enter the supplier's details. Record the full legal name as it appears on the trade licence issued by the relevant Department of Economic Development or free-zone authority — JAFZA, DMCC, FOIZ (Fujairah Oil Industry Zone), or another. The trade licence number confirms the supplier's authority to conduct commercial bunker trading in the UAE.

Enter the buyer's details. Record the vessel owner's or operator's trade licence or company registration number. Where a ship manager is purchasing bunkers on behalf of the owner, confirm the manager's written authority to bind the vessel and the owner to payment obligations, because the UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023) ties maritime lien rights to the authority of the contracting party.

Enter the agreement date in DD/MM/YYYY format.

In the vessel details section, list the vessel(s) to be supplied by name and IMO number. For framework agreements covering a fleet, use the clause permitting delivery orders to nominate vessels as agreed.

Enter the delivery port(s). For Fujairah, state whether delivery is at the outer anchorage or at the berth. For Jebel Ali, confirm the terminal or berth designation. Port-specific MARPOL enforcement procedures apply at each UAE port, and the BDN must record the grade and sulphur content of the fuel delivered.

Select the fuel grade(s). VLSFO (0.5% sulphur) is the standard grade for open-ocean operations after the IMO 2020 Global Sulphur Cap. LSMGO (0.1% sulphur) is required in ECAs. IFO 380 (3.5% sulphur) may only be used for open-ocean operations outside ECAs. LNG bunkering is available at selected UAE terminals.

State the estimated annual volume in metric tonnes — indicative only, not a take-or-pay commitment. Enter the pricing basis and the payment terms in days from the BDN date.

Set the credit limit in AED to reflect the buyer's creditworthiness and the supplier's risk appetite. Both parties should sign through authorised representatives; electronic signatures are valid under the Electronic Transactions and Trust Services Law (Federal Decree-Law No. 46 of 2021).

A Bunker Supply Agreement in the United Arab Emirates is governed by the UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023), which is the primary statute for maritime commercial transactions and governs maritime liens arising from the supply of bunkers to vessels. The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) governs the commercial aspects of the supply contract between merchant parties, including payment obligations, documentary evidence, and limitation periods. The UAE Civil Code (Federal Law No. 5 of 1985) provides general principles on contract formation under Article 125, good faith in performance under Article 246, and compensation for breach under Articles 282 and 389.

MARPOL Annex VI, implemented in UAE waters and enforced by the UAE Federal Environment Agency and the port authorities, requires vessels to use compliant fuel with a sulphur content not exceeding 0.5% by mass on the open sea and 0.1% in designated Emission Control Areas. The Bunker Delivery Note (BDN) issued by the supplier must record the fuel grade, sulphur content, and quantity, and must be retained on board the vessel for a minimum of three years under MARPOL Annex VI requirements. Port state control inspections at UAE ports, administered by the Dubai Ports Authority and Abu Dhabi Ports Authority, verify BDN compliance.

ISO 8217 (latest edition) is the international standard for marine fuel quality and is incorporated by reference in most UAE bunker supply agreements. A fuel sample retained by the supplier must be made available to MARPOL inspectors and to the vessel in the event of a quality dispute. The Federal Tax Authority administers UAE VAT at 5% under Federal Decree-Law No. 8 of 2017 on bunker supplies; international maritime transport bunker supplies may qualify for zero-rating subject to FTA rules. The Commercial Companies Law (Federal Decree-Law No. 32 of 2021) governs corporate authority. Arbitration is governed by the Federal Arbitration Law (Federal Law No. 6 of 2018) where DIAC is selected.

Bunker Supply Agreements in the United Arab Emirates are vulnerable to disputes over fuel quality, payment, and maritime lien enforcement that experienced suppliers and buyers routinely encounter.

1. Failure to specify the ISO 8217 edition applicable. ISO 8217 is periodically revised, and a Bunker Supply Agreement that does not specify the applicable edition may leave the parties arguing which version applies when off-spec fuel is delivered. Always state the edition year, e.g. ISO 8217:2017.

2. No retained sample protocol. Without a contractual obligation to retain a sealed sample and a clear procedure for ILAC-accredited analysis, quality disputes cannot be resolved and must be litigated before the Dubai Courts on disputed factual evidence.

3. Contracting with a party without authority to bind the vessel. A bunker supplier that contracts with a time charterer who has no actual authority to pledge the vessel's credit may find its maritime lien unenforceable under the UAE Maritime Commercial Law (Federal Decree-Law No. 43 of 2023). Verify the contracting party's authority before extending credit.

4. Credit limit not monitored between deliveries. Allowing credit exposure to exceed the agreed credit limit without a formal written extension exposes the supplier to uncollectable debts if the vessel owner or operator becomes insolvent before payment.

5. No MARPOL Annex VI compliance confirmation. A bunker supply agreement without an express warranty from the supplier that fuel meets the IMO 2020 sulphur cap exposes the buyer to port state control penalties and vessel detention by UAE port authorities if off-spec fuel is delivered without warning.

6. No late payment interest mechanism. An agreement without a contractual interest rate for late payment leaves the supplier to rely on the default commercial rate under the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022), which may not reflect the cost of funding the credit extended.