More from the OWB bunker saga. Agency and conversion.

In The Cosco Felixstowe Shipowners ordered bunkers from D2, a bunker trader in Singapore who had contracted with OWBS to supply the bunkers. OWBS had in turn contracted with OWBC who had contracted with the plaintiff who physically supplied the bunkers to the vessel. Leave was granted pursuant to serve a writ out of the jurisdiction on D2 and OWBC under Order 11 rule 1(1)(f) of the Rules of the High Court that D2 had committed a tort (ie the tort of conversion) within the jurisdiction, and/or under rule 1(1)(d) on the basis that it was arguable that OWBC had entered the contract with P as agent for D2.

The Hong Kong Court of First Instance (Deputy High Court Judge Le Pichon) [2016] HKCFI 492 – 18 March 2016, has now denied D2’s application to set aside the grant of leave. It was arguable that there was a material difference between the terms of OWB’s contract in The Res Cogitans and P’s standard terms in the present case in that the latter provided no unambiguous authorisation to consume the bunkers for propulsion purposes prior to payment. The conversion would be constituted by OWBS’ contractual obligation to procure use of the bunkers before payment had been made. A clause in P’s contract that the buyer and the vessel owner would only use the bunkers for the operation of the vessel did not amount to consent by P to immediate consumption of the bunkers.

It was also arguable that there was an agency chain running from D2 to OWBC who contracted with the physical supplier, in which case there would be a contract with P made by an agent within the jurisdiction.

 

Shot by both sides? Interpleader proceedings in the OWB saga.

 

The bankruptcy of OW Bunkers in November 2014 has led to many shipowners facing competing claims for the supply of bunkers from ING as assignee of OWB and from physical bunker suppliers. In Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, http://law.justia.com/cases/federal/appellate-courts/ca2/15-97/15-97-2016-02-24.html, an interpleader was filed on behalf of shipowners and an injunction obtained preventing the imminent arrests of three of vessels by U.S. Oil Trading LLC, the physical supplier of bunkers. The Second Circuit has now rejected U.S. Oil Trading’s appeal. This contrasts with the position in Singapore last year where the Court of Appeal denied interpleader proceedings in similar circumstances. It reasoned that the suppliers’ in rem claims did not compete with ING’s contractual, in personam, claims. In the UK the shipping world awaits with bated breath the decision of the Supreme Court on whether the Sale of Goods Act applies to contracts for the supply of bunkers.

Bunkers and The Res Cogitans: leave to appeal

Hot news: the curious decision in The Res Cogitans [2015] EWCA 1058, to the effect that a sale of bunkers on reservation of title terms for immediate consumption was not a contract for the sale of goods (a decision commented on earlier in this blog on October 22, 2015) is to be appealed to the Supreme Court. Permission was given yesterday. See http://www.hfw.com/OW-Bunker-test-case-February-2016.