Siobán Healy Q.C. and Clara Benn defeat jurisdiction challenge in latest twist in the OW Bunker saga

Siobán Healy QC
Clara Benn

The Commercial Court (Teare J) has handed down judgment in Cockett Marine Oil DMCC v ING Bank & OW Bunker Malta and Cockett Marine Oil (Asia) PTE Limited v ING Bank & OW Bunker Middle East DMCC [2019] EWHC 1533 (Comm), dismissing two jurisdictional challenges brought by customers of the OW Bunker group, formerly one of the world’s largest suppliers of marine fuels. Following the group’s insolvency in November 2014, OWB and its assignee, ING Bank, commenced proceedings to recover the price of bunkers delivered to the M/V “Ziemia Cieszynska” and the M/V “Manifesto”. The claims succeeded before the LMAA arbitrators, and the customers subsequently sought to challenge the Awards pursuant to section 67 of the Arbitration Agreement 1996 on the grounds that the arbitration clause in OWB’s standard terms had not been incorporated into the contracts.

Teare J emphasised that it was vital to look at the entire course of the negotiations to decide whether an apparently unqualified acceptance did in fact conclude an agreement. In both the cases before him, the parties did not on an objective assessment intend to become bound prior to the exchange of formal documentation making reference to OWB’s standard terms. In the case of the “Ziemia Cieszynska”, there was in any event a consistent course of prior dealing on the OWB terms. The Judge rejected the customers’ alternative argument that the contracts had been varied in favour of the physical suppliers’ terms.

The Judge also considered an apparently novel point, namely, the question whether the validity and effect of an assignment (in this case, the assignment between OWB and ING) was a question that fell within the ambit of a section 67 challenge. He decided that it was, and went on to find that the OWB/ING assignment was effective. In doing so, he reviewed the decisions of the Supreme Court, Court of Appeal and High Court in the “Res Cogitans” litigation, and held that bunker supply contracts were contracts “relating to the sale of oil products”, notwithstanding that they were not contracts of sale within the meaning of the Sale of Goods Act 1979.

The underlying Awards therefore stand and the customers remain liable to pay for the bunkers.

A copy of the judgment can be found here.

Date added: June 19th, 2019