Res Cogitans

The demise of the OW Bunker group of companies in November, 2014, provoked litigation worldwide. In this industry leading case the Club supported the owner of the RES COGITANS in its efforts to avoid having to pay twice for fuel supplied to the ship. This culminated in a decision by the Supreme Court of England & Wales in favour of the bunker supplier.

The Supreme Court decided that the relevant bunker supply contract was not a sale of goods within the English Sale of Goods Act 1979. The court held that the contract was instead a licence to consume outside of the statute which did not require OW to transfer, or be able to transfer, property in the fuel. 

This interpretation came as a surprise to many within the industry. The average bunker contract is similar in nature to a sale contract and most buyers of bunkers had believed that they were entering into a contract for the purchase of goods. 

The Supreme Court recognised that the contract was ‘closely analogous to a sale.’ Nevertheless, it held that the relevant contract should be seen as a ‘sui generis’ transaction, i.e. a unique contract which was not a contract of sale:

“ … in its essential nature, it offered a feature quite different from a contract of sale of goods – the liberty to consume all or any part of the bunkers supplied without acquiring property in them or having paid for them. The obligation on the part of [OW] to be able to pass the property in respect of any bunkers not so consumed against payment of the price for all the bunkers cannot make the agreement as a whole a contract of sale.”

Further details concerning this case can be found in a Soundings bulletin.