OW Bunkers: End of the road for shipowners as the Supreme Court upholds Court of Appeal decision

The Supreme Court has issued its highly anticipated verdict in the Res Cogitans matter, rejecting the latest appeal by the Owners. The full citation is PST Energy 7 Shipping LLC and another vs O.W. Bunker Malta Ltd and another [2016] UKSC 23.

The issues before the Supreme Court were the same as those previously before the Court of Appeal: (i) was the contract a sale contract within the meaning of section 2(1) of the Sale of Goods Act 1979; and (ii) if not, was the contract subject to any implied term that the immediate bunker supplier should perform its obligations to its supplier, in particular by making timeous payments to its supplier?

The Supreme Court held that a bunker supply contract is not a sale contract within section 2(1) of the Sale of Goods Act. As a result, Owners have no defence under the Sale of Goods Act, to a claim for the price of the bunkers. The Supreme Court went further and stated that even if the contract had been one of sale within section 2(1), the immediate bunker supplier would not have been prevented from making a claim for payment of the bunkers.

The Supreme Court also rejected the Owners’ alternative ground of appeal that there was no basis or need for any implied duty on the part of the immediate bunker supplier. It follows that Owners could have no possible defence to the claim for the price on this basis irrespective of the fact that the immediate bunker supplier had not paid the physical supplier.

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