On 22 October the Court of Appeal handed down judgment in a case which has been anxiously watched by those in the industry following the insolvency of OW Bunker in November 2014. The case centres on the question of whether the contract between a shipowner and the OW Bunker subsidiary company for the provision of bunkers is or is not a contract for the sale of goods.
A unanimous Court of Appeal, the lead judgment being given by Moore-Bick LJ with a brief postscript from Longmore LJ, upheld the previous decision of Males J ( EWHC 2022 (Comm). Males J had himself upheld the decision of the arbitral tribunal in the first instance. The decision’s impact will be widely felt by the many parties who have been affected by the collapse of OW.
The decision of the Court of Appeal affirms the conclusion that the contract that the shipowner entered into with its counterparty, a subsidiary of the now-insolvent OW Bunker parent company, was not one to which the Sale of Goods Act 1979 applies. The practical effect of this is that OW Bunker subsidiaries are entitled to sue for the contract debt and shipowners may find themselves liable to pay the price twice for the bunkers that they procured.
Click on the link to read the full case note drafted by 20 Essex Street Chambers: OW Bunker case note