EMEA News
OW Bunker UK Test Case: Res Cogitans Physical Supplier Has No Valid Claim to Payment, Respondents Argue
Rosneft Marine (UK) Ltd (Rosneft), the physical supplier in the so-called "Res Cogitans" OW Bunker UK test case, has no valid claim to payment from the ship owner.
That was the argument Tuesday from Robert Bright, QC, acting for respondents OW Bunker Malta (OWBM) and ING Bank (ING), as proceedings got underway at the UK Supreme Court for what looks to be the final decision on who bunker buyers should pay for fuel bought through OW Bunker following the company's collapse in 2014.
The Case
As Ship & Bunker has previously reported, the case involves PST Energy 7 Shipping LLC (PST Shipping), who had contracted with OWBM for bunkers that were physically delivered to its vessel Res Cogitans by a subsidiary of Rosneft.
At the point at which OW Bunker went bankrupt, no money had changed hands for the bunkers - OW Bunker had not paid Rosneft, and PST Shipping had not paid OW Bunker.
So far, three lower courts have found that the Sale of Goods Act 1979 (SoGA) did not cover contracts signed with OW Bunker as an intermediary for the supply of bunkers on credit.
For the bunker buyer, this means they are liable to pay ING (as OW Bunker's assignee) as a contractual debt, with the physical supplier able to claim for payment for the actual bunkers, effectively leaving the buyer to pay for the same bunkers twice.
The latest hearing is intended to finally settle the matter of who should be paid, and will likely set precedence for a large number of other bunker buyers who are in a similar situation.
PST Shipping are reported to be seeking either a declaration that they are not responsible for payment for the bunkers supplied under the contract with OWBM, or for damages for breach of contract, arguing that OWBM was incapable of passing them the title to the bunkers.
A win for ING / OWBM could mean PST Shipping and all buyers who are in a similar position are open to paying both ING under a contractual debt, as well as the physical supplier for the actual bunkers.
Day 1 - OW Bunker / ING's Position
Speaking on behalf of OWBM and ING Bank, Bright told the court, in reference to Rosneft's claim, that the shipowner should tell them "to get lost," asserting that the physical supplier does not have a legitimate claim for payment after they delivered bunkers via OWBM, Lloyds List reported.
As it has been previously argued, PST Shipping was not actually purchasing the bunker fuel, rather, it was paying OWBM for a lawful right to consume the bunkers - and in fact this buying of fuel by intermediaries to sell a licence to consume on to the vessel owners is well known as being standard industry practice.
In legal terms, Rosneft consented to the sale of bunkers to OWBM in order that they be sold on to PST Shipping.
PST Shipping therefore then took possession of the bunkers, but not ownership of them, and as such, there is no basis for claim from the physical supplier.
Day 1 - PST Shipping's Position
Jonathan Crow, QC, meanwhile, acting on behalf of the appellants, PST Shipping, argued against the previous three rulings that the SoGA did not apply.
If it is intended that money is at some point going to be paid for the transfer of property, then the SoGA must apply, he argued.
Further, the fact that there are retention of title clauses in the contract is proof enough that there is intention for a sale to take place, he added.
The case continues.
Last week, Ship & Bunker reported that a recent ruling in the U.S. could also spell bad news for physical bunker suppliers after the court found that the vessel owner did not specifically direct OW Bunker to hire the physical supplier, meaning conditions for a maritime lien by the physical supplier to apply had not been met.
