The Collapse of OW Bunker: One Year After

Date: 2 December 2015

Three members of Quadrant Chambers acted for Owners in the recent test case of (1) PST Energy 7 Shipping LLC & (2) Product Shipping and Trading SA v. (1) OW Bunkers Malta Ltd & (2) ING Bank NV. In that case, Owners sought in London Arbitration to pre-emptively challenge the right of OW Bunkers Malta (“OWB”) and its assignee, ING, to payment for bunkers supplied to the vessel RES COGITANS. They did so on various grounds, succeeding on all but the basis that the bunker supply contract was governed by the English Sale of Goods Act 1979 (“SOGA”) and that title to the bunkers had not passed. The Tribunal held that the contract was not governed by SOGA and that OWB/ING’s right to payment could be enforced as a simple debt. In the subsequent appeal to the High Court in London each side appealed and re-ran their arguments. The result was the same, with Owners losing on the SOGA point. The Judge sought, however, to insulate Owners from any claims by the supplier, leaving Owners free to pay ING with limited risk of double payment – as the Judge perceived it. The judgment has caused significant concern globally: not only to owners and charterers but also to suppliers. The decision of the English Court of Appeal (upon Owners’ expedited appeal) has just been handed down and will form the background to Stephen and Turlough’s presentation. This will focus on the legal significance and consequences of the RES COGITANS decision, as well as its practical implications for owners, charterers and suppliers. They will also consider the steps that those caught up in the fall-out from the bankruptcy of OW Bunkers can take to protect their position, including stays, pre-emptive proceedings and claims for indemnities.