493. PST Energy 7 Shipping LLC v OW Bunker Malta Limited (the “Res Cogitans”) [2015] EWHC 2022 (Comm) ; [2015] EWCA Civ 1058; [2016] UKSC 23

Bunker supply contract – not a sale in terms of Sale of Goods Act – nevertheless enforceable

The Facts

Ship owners entered into a contract (termed a “sale”) with OW Bunker Malta for the supply of bunkers (110 metric tons of gasoil and 1000 metric tons of fuel oil), payment 60 days from date of delivery on OW Bunker Group’s 2013 terms, reserving ownership in the bunkers pending payment.

A chain of transactions followed. OWBM contracted with its Danish parent company, OW Bunker & Trading AS (OWBAS) on the same terms. OWBAS contracted with Rosneft Marine UK on Rosneft terms. Rosneft contracted with RN-Bunker, Russia (also on Rosneft terms) which delivered the bunkers to owners in Tuapse on the Black Sea.

OWBM’s right to payment from owners was assigned to its bankers.

Rosneft paid the ultimate supplier, RN-Bunker thereby acquiring title to such bunkers as had not already been consumed on owners’ vessel.

Insolvency of the OW Bunker Group supervened and Rosneft was the only supplier which had parted with money.

Rival claims for payment from owners were made by OWBM’s bank and Rosneft.

The bank instituted arbitration proceedings against owners for payment. Rosneft did not participate.

In jeopardy of paying twice, owners disputed the claim. In simple terms their argument was that because OWBM had not paid for the bunkers they never owned them. In consequence they could not deliver and so pass ownership and so qualify for payment in terms of the Sale of Goods Act.

Findings

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