William J. Honan

Michael J. Frevola

HOLLAND & KNIGHT LLP

195 Broadway

New York, NY 10007-3189

(212) 513-3200

ATTORNEYS FOR PLAINTIFF

WILHELMSEN PREMIER MARINE FUELS AS

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

WILHELMSEN PREMIER MARINE FUELS AS,

Plaintiff,

-againstUBS PROVEDORES PTY LTD. a/k/a

USS-UBS INTERNATIONAL and

RAECORP INTERNATIONAL PTY LTD.,

Defendants.

07 Civ. 5798 (CM)

AFFIRMATION OF

HANS M. BORGE PURSUANT

TO 28 U.S.C. § 1746 IN

SUPPORT OF PLAINTIFF'S

OPPOSITION TO DEFENDANTS'

MOTION TO VACATE

MARITIME ATTACHMENT

I, HANS M. BORGE, hereby affirm as follows:

1. I am a bunker trader/broker employed by Wilhelmsen Premier Marine Fuels AS

("Wilhelmsen"). The facts provided herein are based on my own personal knowledge.

2. I am providing this affirmation in support of the opposition of Wilhelmsen's

opposition to a motion to vacate maritime attachment filed by UBS Provedores Pty Ltd. a/k/a

USS-UBS International ("UBS") andRaecorp International Pty Ltd. ("Raecorp").

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 1 of 10
3. Wilhelmsen acts as both a broker and a supplier of bunkers to seagoing vessels at

a variety of ports worldwide. I have been employed in the bunker supply industry since 1979,

most of which time I have been employed by Wilhelmsen or predecessor companies to the

present Wilhelmsen company. Prior to 1979, I spent seven (7) years as a shipbroker. Before

becoming a shipbroker, I served four (4) years as an engineering officer and chief engineer in the

Royal Norwegian Navy after graduating from the Norwegian Naval Academy in 1964.

4. Wilhelmsen entered into a series of agreements with UBS to provide vessels

nominated by UBS with bunkers in the ports of Sasebo and Naha in Japan. With regard to

Wilhelmsen's claims in this proceeding, UBS nominated the following vessels on the following

dates:

a. the SS MAJOR STEPHEN PLESS at Sasebo on January 19, 2007;

b. the USNS SUMMER at Naha on January 31, 2007;

c. the USNS MARY SEARS at Sasebo on March 3, 2007;

d. the HSV WESTPAC EXPRESS at Naha on March 20,2007;

e. the USNS BOWDITCH at Sasebo on March 21,2007;

f. the SS MAJOR STEPHEN PLESS at Sasebo on March 26,2007;

g. the USNS MARY SEARS at Naha on April 9, 2007;

h. the HSV WESTPAC EXPRESS at Naha on April 20,2007;

i. the USNS BOWDITCH at Naha on April 23,2007; and

j. the SS CAPE JACOB at Sasebo on May 1,2007.

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 2 of 10
True copies of Wilhemsen's invoices to UBS for these services are annexed as Exhibit 1.

5. Each time that UBS contacted Wilhelmsen to bunker a nominated vessel,

Wilhelmsen replied with an e-mail confirming the UBS/Wilhelmsen agreement and which stated

the vessel nomination, the port at which the bunkering would occur, the date anticipated for the

bunkering, the type of fuel and quantity required, the application fuel specifications, and the

sales price offered by Wilhelmsen for that bunkering operation. Additionally, each of these

confirmations included an incorporation of the terms and conditions of the local supplier,

Sumitomo Corporation Europe Ltd. ("Sumitomo"), as governing the relationship between UBS

and Wilhelmsen. A true representative copy of a bunkering nomination confirmation by

Wilhelmsen sent to UBS is annexed as Exhibit 2. A true copy of the Sumitomo General Terms

and Conditions is annexed as Exhibit 3.

6. In accepting UBS's nomination, Wilhelmsen undertook to bunker the nominated

vessel under the terms of the Sumitomo General Terms and Conditions. Under those General

Terms and Conditions, Wilhelmsen would be responsible to UBS for a failure to bunker a vessel

in the specified Japanese port at the designated time. Wilhelmsen has successfully performed

each bunkering operation as was nominated by UBS.

7. Wilhelmsen did not use its own employees and services to physically supply the

bunkers that were requested by UBS for the nominated vessel. Instead, as is common in the

bunkering industry, Wilhelmsen used a local supplier to physically supply the vessel in

accordance with Wilhelmsen's instructions. In doing so, Wilhelmsen entered into a separate

contract with that local supplier, Sumitomo, to carryout the requested bunkering operations.

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 3 of 10
8. Sumitomo earned out each of the physical supply operations requested by

Wilhelmsen for the vessels nominated above in the subparagraphs of paragraph 4. After carrying

out each bunkering operation, Sumitomo would invoice Wilhelmsen between seven (7) and

fourteen (14) days after delivery to the vessel. Wilhelmsen's obligation to pay Sumitomo

required payment within thirty (30) days of delivery of the bunkers aboard the vessel. This is

standard within the industry. Wilhelmsen paid Sumitomo in full for each of the stated bunkering

operations. True copies of each of the payments made to Sumitomo are annexed as Exhibit 4 (in

certain cases, the amounts do not correspond directly with individual Sumitomo invoices because

the payments at issue at times were paying multiple invoices with one funds transfer).

9. Under the Wilhehnsen/Sumitomo contracts and the UBS/Wilhelmsen contracts,

transfer of possession and ownership of these bunkers occurred at the receiving flange of the

vessel being bunkered. In effect, possession and ownership instantaneously transferred from

Sumitomo to Wilhelmsen, from Wilhelmsen to UBS, and finally from UBS to the U.S.

Government.

10. Despite Wilhelmsen having bunkered nominated vessels at the request of UBS

through the retention of a local physical supplier, and despite Wilhelmsen having paid Sumitomo

for the bunkers provided to denominated vessels at UBS's request, UBS has not paid Wilhelmsen

for the vessel bunkerings listed in the subparagraphs of paragraph 4 above.

11. I understand that UBS has represented to the Court in this proceeding that UBS

has not paid Wilhelmsen because it has not provided adequate documentation to UBS of the

transportation and other costs associated with the total price of Wilhelmsen's bunkers invoices to

UBS. UBS previously has asked that Wilhelmsen provide such information to UBS.

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 4 of 10
Wilhelmsen does not have this information because the nature of the Wilhelmsen's contracts with

Sumitomo and the nature of Wilhelmsen's contracts with UBS both were based on FOB (Freight

on Board) terms. FOB terms mean that the purchaser of the bunkers pays its set price for the

product delivered to the receiving vessel.

12. I understand that the principal of UBS, Mr, Bill Rae, has provided a statement to

this Court which states:

The dispute [between UBS and Wilhelmsen] arises out of Wilhelmsen's failure to

adequately document its invoices submitted to UBS. Because of the inadequate

documentation, the US Navy has refused to pay UBS. UBS, in turn, cannot pay

Wilhelmsen.

This statement by Mr. Rae misrepresents the nature of the contracts between Wilhelmsen and

UBS. As stated above, each of the contracts between UBS and Wilhelmsen for bunkering the

vessels at issue was arranged on FOB terms for delivery to the nominated vessel. In other words,

Wilhelmsen quoted a lump sum per metric ton for delivery to the vessel, which sum UBS could

accept or reject. The lump sum amount provided by Wilhelmsen Included all expenses of

transportation, storage and similar items. The one item that it did not include was for costs of

placing an oil spill containment boom around the vessel during the bunkering operation, which

amounted to approximately $1,500 per bunkering operation and which was reflected on each

Wilhelmsen invoice to UBS. This applies to Sasebo bunkering operations and is standard in

most parts of the main Japanese islands.

13. In connection with Mr. Rae's contention that UBS's attempts to obtain payment

from the U.S. government are being hampered by Wilhelmsen, I have attached three e-mails that

Wilhelmsen received from a U.S. government official who was involved in the review of UBS's

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 5 of 10
claims. That official, Mr. Rene M. Fry, is the Military Sealift Command's Fuel Manager and

Agency Program Coordinator. Mr. Fry first contacted me on his own initiative on May 21, 2007

in response to reports that he had received regarding Wilhelmsen not being paid by UBS. I

attach a true copy of his e-mail to me dated May 21, 2007 as Exhibit 5. We then exchanged emails over the next two days regarding Wilhelmsen's situation, a true copy of which I annex as

Exhibit 6. Wilhelmsen (through my colleague Knut Bjornebye) later received on August 31,

2007 a follow up e-mail from Mr. Fry hi response to our inquiries seeking to confirm whether

UBS was awaiting further payment from the U.S. government on vessels that had been bunkered

by Wilhelmsen. Mr. Fry's response stated that UBS had been paid in full for the bunkering of

vessels in which Wilhelmsen had participated, and that UBS's claims pending before the U.S.

government were for costs that were not covered by the government's contract with UBS and

were not approved by the government. Mr. Bjomebye forwarded me a copy of that e-mail, a true

copy of which I annex as Exhibit 7. The comments in Norwegian that accompany Mr.

Bjomebye's cover e-mail to me can be translated as follows: "Hans, I finally got something back

from Frey. That makes situation a little clearer. Let us discuss on Monday. Knut"

14. Prior to UBS making its bid on the U.S. Government contract, UBS contacted

Wilhelmsen's Singapore office to obtain information regarding bunkers prices in Japan.

Significantly, the inquiry made by UBS requested a "spot" price as opposed to an extended

contract price. In other words, UBS inquired about the costs of a one time fueling at the current

rates in Japan, rather than the cost of a long term requirements contract.

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 6 of 10
15. In addition to UBS's limited inquiry regarding "spot" market prices in Japan, it is

also important to consider that the price quotations for bunkers in Japan that are provided in

PLATTS Bunkerwire (a leading industry periodical that quotes market rates in a variety of

locations) states the price for fuel in Japan as the cost of marine diesel oil in Tokyo Bay. Marine

diesel oil is a black oil that is heavy and less refined than the fuel oil required in the vessel

nominations at dispute in this case. The fuel oil required for the vessel nominations in this case

was for gasoil, which is a lighter and more refined fuel that costs approximately $100 per metric

ton (approximately 15% greater price) more than marine diesel oil.

16. Furthermore, the PLATTS quotation for marine diesel oil in Tokyo Bay does not

take into account the cost of transporting that oil to locations remote from Tokyo Bay. hi the

context of both Sasebo and Naha, these locations are located considerable distances away from

Tokyo Bay and therefore require the incurring of significant barging expenses to place the

bunkers in position to fuel the nominated vessels. The expenses for coastwise barging are

especially significant in Japan because, similar to the U.S. Jones Act in U.S. waters, these

barging voyages were required to be performed by Japanese flag vessels and the demand for

such vessels is very high.

17. I understand that UBS has contended that Wilhelmsen acted as a fuel broker in

participating in the bunkering of the vessels at issue in this dispute. A significant part of

Wilhemsen's business does involve acting as a fuel broker, and Wilhelmsen is one of the larger

bunker brokers in the world. In this transaction, however, Wilhelmsen entered into separate

contracts with both UBS and with Sumitomo for the bunkering of the nominated vessel; UBS did

not enter into a direct contract with Sumitomo. Wilhelmsen's compensation for participating in

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 7 of 10
these transactions was not based on a commission resulting from the confirmation of a contract

between UBS and Sumitomo. Rather, Wilhelmsen was invoiced by Sumitomo for the fuel that

Wilhelmsen bought from Sumitomo, then Wilhelmsen invoiced UBS a greater lump sum amount

for bunkering the nominated vessels. In a broker situation, Wilhelmsen would be retained by a

party seeking to bunker a vessel and asked to investigate pricing amongst various local suppliers

to obtain the best rate in combination with the best service available at the port in question.

Wilhelmsen would then recommend which local supplier that should be used by Wilhelmsen's

client, at which time the client and the local supplier would enter into a direct contract. If that

contract was completed, Wilhelmsen's brokerage contract with the client would provide for

Wilhelrnsen to get a brokerage fee for bringing the parties together. This did not happen in any

of the vessel nominations involved in this dispute, and never was the arrangement between UBS

and Wilhelmsen for any of the bunkering that have occurred in Japan for UBS since Wilhelmsen

started performing under agreements with UBS in September 2006.

18, UBS also has threatened to take legal action against Wilhelmsen for an alleged

contamination of bunkers on the USNS Bruce C. Heezen delivered on October 23, 2006.

Documentation on the bunkers confirmed that the product was within specification when

delivered to the vessel. The last correspondence that we received on this matter, as far as I can

remember, was on November 21, 2006 when the clean barge certificate was produced.

19. I understand that UBS has characterized the primary purpose of Wilhelmsen's

involvement in this case as providing introductions to local suppliers in Japan and provided

extensions of credit to UBS through which UBS could complete its bunkering transactions with

local suppliers. Wilhelmsen's participation in bunkering operations extends to coordinating

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 8 of 10
fueling operations from the time that the vessel is nominated to the time when the bunkering of

that vessel is complete. This process requires coordination with the physical supplier to ensure

that the fuel to be loaded aboard the nominated vessel is positioned in time for the arrival of the

nominated vessel, and with the local port agents to ensure that the vessel fuel loading window

does not conflict with other vessel activities (such as loading ammunition or other activities that

would prevent the bunkering of the vessel at the same time). Coordinating these operations is a

skill obtained through Wilhelmsen's personnel having spent years in the industry and being

familiar with the capabilities of the market, the facilities available in various locals, its

relationships with local suppliers and with local port agents to coordinate operations, and its

knowledge of various competitors that it can use to obtain the lowest price for the vessel owner

or the vessel's representative. An added benefit that Wilhelmsen can improvise, which provides

Wilhelmsen a competitive advantage against some its competitors, is that Wilhelmsen's

reputation in the industry enables it to obtain bunkers on credit of local suppliers rather than

having to pay for those bunkers in advance. In this situation, Wilhehnsen's relationship with

Sumitomo enabled it to occur. If UBS did have some contact with Sumitomo because UBS did

have a local representative in Sasebo that it did communicate at times with Sumitomo. UBS did

not need Wilhelmsen to form the contact with Sumitomo, it needed Wilhelmsen to coordinate

operations for loading these vessels and to work with Sumitomo in completing the actual

refueling of the vessels when UBS requested it. Wilhelmsen also has the industry knowledge to

find the right supplier for the products sought by the vessel and also to find the right

characteristics of fuel that would suit the vessel of individual needs.

Case 1:07-cv-05798-CM-HBP Document 20 Filed 09/20/2007 Page 9 of 10
WHEREFORE, it is respectfully requested that this Court deny the Defendants' motion to

vacate the Order of Attachment issued in this proceeding, and grant such other and further relief

to the Plaintiff as may be appropriate.

I declare under penalty of perjury under the laws of the United States of America that the

foregoing is true and coiTect.

Executed this 20th day of September, 2007 at Lysaker, Norway.

HANS M. BORGE

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