OW Bunker

OW Bunker A/S
Publicly traded aktieselskab
Traded as Nasdaq Nordic: OW
Industry Marine Fuel Traders
Fate Bankruptcy
Founded 1980
Founders Ove Wrists
Defunct 7 November, 2014
Headquarters Nørresundby, Denmark
Area served
 Worldwide
Number of employees
 622 (2013)

OW Bunker, founded in 1980, was a Danish marine fuel (bunker) company. It was the world's largest bunker supplier until its collapse on 7 November, 2014.[1] It went from IPO[2] to bankruptcy in less than a year.[3]

OW Bunker test case: the Res Cogitans

The dramatic collapse of the company led to litigation in the English courts. The case was given priority, progressing to the Supreme Court[4] in record time.

The particular factors of this extraordinary case were these: OW Bunker (OWB) was an intermediary supplier of bunkers to ships. In many cases, it subcontracted this to other wholesale suppliers, obtaining fuel from them on credit. OWB did not require its customers to make immediate payment for bunker, but instead allowed the ships to pay for bunker after it was consumed.[5]

After the bankruptcy, the ship Res Cogitans had consumed unpaid fuel, and no money had traded hands. Both OWB's assignee, and the subcontractor which had physically delivered the bunker were pressing the ship's owners for payment. To whom, if anyone, was payment due? Payment was due to OWB by contract, but the subcontractor claimed that the supply of bunker was not a sale of goods, the bunkers were still their property, and they were entitled to be paid by the ship if OWB was not able to pay on the ship's behalf.

The legal question was: "was the agreement to supply bunkers a 'contract of sale of goods' within the meaning of s.2(1)[6] of the Sale of Goods Act 1979 (as amended)?"; to which the answer was "No!".

Instead, it was a special one off arrangement to permit to consumption of bunkers without transferring property (i.e. ownership) in the goods to the consumer. The effect of this was that although the ships which had consumed the fuel may have paid for them, after OWB's insolvency, such ships were then liable to pay a second time to the original supplier, since property in the goods had not passed to the "buyer".[7][8]

The result was that the ship owners (hundreds were impacted by the bankruptcy) were indeed doubly liable for the fuel. This resulted in considerable rewriting of bunker supply contracts, in case another a similar insolvency occurred.[9][10]

References

  1. ↑ "OW Bunker declares bankruptcy throwing global marine fuel supply into question". http://www.parisguardian.com. Paris Guardian. Retrieved 10 November 2014. External link in |website= (help)
  2. ↑ Investopedia
  3. ↑ Ship & Bunker, "OW Bunker: How One of the World's Largest Marine Fuel Traders Went From IPO to Bankruptcy - Part 1, Founding to IPO". Retrieved 26 October 2015.
  4. ↑ Supreme Court case report
  5. ↑ "In a Nutshell: What is the "Res Cogitans" OW Bunker UK Test Case and Why is it Important". Ship & Bunker. 24 March 2016. Retrieved 2018-04-21.
  6. ↑ Sale of Goods Act 1979 s.2(1): "A contract of sale of goods is a contract by which the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price.".
  7. ↑ Khasawneh, Roslan (11 May 2016). "UK court ruling in OW Bunker case may mean double payments for shippers". Reuters.
  8. ↑ The Baltic Briefing
  9. ↑ HFW report
  10. ↑ Steamship Mutual report


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