Professional Documents
Culture Documents
September 2015
OWBM's response was that the contract was not one to which the Sale of Goods Act
applied, but was rather a claim for a contractual debt. As such, OWBM did not need to
demonstrate that it could pass property in the bunkers at the time of payment.
The dispute was referred initially to London arbitrators, who held that it was not a contract
falling within the Sale of Goods Act. The shipowner appealed to the High Court.
The court considered the fact that the shipowner had been given permission to consume the
bunkers prior to making payment for them. Once bunkers are consumed, the property in
them is extinguished and cannot be transferred. Where a sale contract states that the seller
retains title to the goods but gives permission for those same goods to be consumed, the
parties must be taken to have understood that title to the goods may never be transferred to
the buyer.
The court noted that, in order for a contract of sale to fall within the Sale of Goods Act, four
conditions must be met:
The contract must be for goods
The seller must undertake to transfer good title in the goods
The goods must be paid for by the buyer and
There must be a link between the payment and the transfer of title.
If a contract contemplates payment for the goods being made without the buyer acquiring
title to those goods because property in the goods has been extinguished by their
consumption, the requirements of the Sale of Goods Act have not been met and the act
does not apply.
In answering the question of what an owner is paying for under a bunker supply contract if
not title in the bunkers being purchased, the court held that the buyer is paying for a lawful
right to consume those bunkers.
The court made clear that it was not the existence of a retention of title clause alone which
prevented the bunker contract from being a contract of sale within the Sale of Goods Act; nor
was it the delivery of goods to a person with permission to use them in a way which would
result in their consumption, as this would usually infer that property in them was intended to
pass to that person. Rather, it was the combination of the retention of title clause and the
imminent consumption or destruction of the goods that resulted in this being a contract that
fell outside the Sale of Goods Act.
OWBM's obligation under its contract with the owner was to deliver bunkers on board the
vessel and to give the owner permission to use those bunkers before payment was made.
In its contractual arrangements with Rosneft, OWBM had secured permission for the owner
to consume the bunkers; it had thus fulfilled its contractual obligations, for which it was
entitled to be paid. Meanwhile Rosneft had no claim under English law against the owner,
since it had given permission for the bunkers to be consumed without payment being made.
The court did not consider the fact that Rosneft could arrest the vessel in other jurisdictions
by asserting a maritime lien to secure payment.
This decision has been appealed to the Court of Appeal.
Specifically, the Bill will provide powers to stop, board, divert and detain a vessel where
there are reasonable grounds to suspect that it is being used to facilitate the breach of an
immigration law; to search a ship and anyone and anything on it; to arrest any person
reasonably suspected of being guilty of an offence of facilitation; and to use reasonable force
in the exercise of these powers. The powers would apply in UK territorial waters; there
would also be a power for hot pursuit beyond the 12 mile limit. The powers mirror those in
the Modern Slavery Act 2015 and also already exist in relation to drug smuggling and
modern slavery. However the power to seize offending ships is not proposed in the
Immigration Bill.
The UK Chamber and the Royal Yachting Association met the Home Office on 13 August,
and neither organisation raised objections to the principle that Border Force cutters should
also be empowered to stop ships engaged in people smuggling. Discussion focused instead
on concerns related to safety and liability: for example, about the safety of ordering ships to
stop in Traffic Separation Schemes or in circumstances where they might be stranded on an
ebbing tide; about diversions to unsuitable ports (that are too small for merchant ships, say,
or excessively difficult for yachts to reach in the prevailing weather conditions); and about
costs associated with unwanted port calls.
The UK Chamber does not believe that interceptions of merchant ships will be either
numerous or frequent. The Border Force cutter fleet comprises just five vessels, two of
which are in the Mediterranean. Moreover, where a merchant ship bound for a UK port is
identified as being engaged in people smuggling, the Border Force may be expected as a
matter of practice, and for reasons of common sense and the safety of its own personnel
to wait and attend the ships arrival in port rather than to attempt to intercept it at sea. The
chamber has suggested that guidance to this effect be included in any Code of Practice
published to support the new powers.
Places of Refuge
ICS and other industry associations are continuing to promote the proper implementation by
governments of the existing international and regional legislation on places of refuge, in
particular the IMO Guidelines on Places of Refuge for Ships in need of Assistance
(Assembly Resolution A.949(23)).
At the EU level, work is continuing on the initiative of Member States, supported by the
European Commission and EMSA, to develop a set of Operational Guidelines on Places of
Refuge, based on the requirements of the EU VTM Directive and the IMO Guidelines. ICS is
participating actively in this work in close collaboration with ECSA and other industry
associations, in particular the International Group of P&I Clubs, IUMI, Intertanko and WSC,
as well as the International Salvage Union. ICS co-ordinated the submission of industry
comments to the Commission earlier this year. Although the proposed guidelines are still at
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the discussion and drafting stage, the Commission decided to submit a paper to the IMO
Maritime Safety Committee meeting in June (MSC 95) to inform other IMO States of the
work that is in progress in the EU. ICS and the other industry associations agreed that this
would send a positive signal to IMO and agreed to co-sponsor the INF paper. The paper was
generally welcomed and some non-EU States made positive comments expressing a wish
for IMO to receive further information on the outcome of the work, notably Japan and Liberia.
ICS has accepted an invitation to participate in an EMSA table top exercise in Malta on 1
September to test the proposed guidelines. The European Parliament TRAN Committee has
been following the project with interest and a presentation is expected to be made to the
Parliament in the coming months.
Meanwhile, the European Sea Ports Organisation (ESPO) and the Federation of European
Private Port Operators (FEPORT) are continuing to lobby for compensation for ports and
terminal operators for financial losses sustained when accommodating a ship in need of
assistance. ICS and the International Group, in consultation with ECSA, initiated
discussions with the two organisations earlier this year to better understand, and hopefully
allay, their concerns. The ESPO position on financial damages sustained in places of
refuge and the International Groups response (supported by ICS and ECSA) were circulated
with the notes for the last Committee meeting (MLC(15)01 of 13 January, Annexes 2 and 3).
A meeting was suggested to discuss any continuing concerns. In response, however, ESPO
advised that it had decided to conduct a detailed study of the issues and proposed to meet
when the results of its risk assessment exercise were known, probably later in the year.
Bar Association for Commerce, Finance and Industry Big Meet, 14 October
2015
The Bar Association of Commerce Finance and Industry (BACFI), which aims to provide
representation, education and support for employed barristers, is holding a Big Meet on
Wednesday 14 October 2015 at Middle Temple. The Big Meet consists of a speed
networking event, followed by an informal dinner. It will provide an opportunity for lawyers
from different backgrounds to meet, exchange details and follow up interesting new contacts
over dinner.
The timetable for the event is as follows:
Speed Networking 18:00-19:00
Drinks Reception 19:00-19:30
Buffet Supper 19:30-22:00
The ticket cost for the Networking, Reception and Supper is 45.00. The ticket cost for the
networking event alone is 10.00.
Any lawyers within member companies may be interested in attending. The Chairman of the
UK Chambers Legal, Insurance and Documentary Committee (LIDIC), Tim Reading of BP
Shipping, is Junior Vice-Chairman of the BACFI.
Members wishing to register for the event, or who have any queries, should email
events@bacfi.org or call 01525 222 244. The BACFI website is www.bacfi.org.
www.bacfi.org
For further details on all the items in this edition of Legal and Documentary News, please
contact Tim Springett (tspringett@ukchamberofshipping.com or 020 7417 2820 or
Katrina Ross (kross@ukchamberofshipping.com or 020 7417 2880).