The UK test case to avoid shipowners having to pay twice for bunker fuel supplied by failed Danish group OW Bunker has reached the end of the road with the country’s supreme court rejecting the latest appeal.

The supreme court judges today unanimously dismissed the appeal by the owner of the 75,000-dwt products tanker Res Cogitans (built 2004), Product Shipping & Trading (PST).

The judges decided that because the bunkers were consumed before they were paid for, that the supply of the fuel did not come under the UK Sale of Goods Act 1979.

PST ordered bunkers from OW subsidiary OW Bunker Malta in October 2014 under a contract that provided for payment 60 days after delivery and included a clause that property was not to pass to the owner until payment had been made.

The contract entitled PST to use the fuel, which was physically obtained by Rosneft Marines (UK) which obtained it from RN-Bunker, for the propulsion of the tanker from its delivery.

“It [the contract] was a sui generis (unique) agreement, with two aspects: first, to permit consumption prior to any payment and without any property ever passing in the bunkers consumed,” the judges ruled.

“Even if the contract were to be analysed as a contract of sale, in that it contemplated the transfer of property in any bunkers unused at the date of payment, OW Bunker could not owe any obligation to transfer property in bunkers consumed before payment. It would cease to be a contract of sale if and when all such bunkers were consumed before payment,” they added.

OW Bunker went bankrupt in November 2014 and ING Bank was appointed assignee of its rights.

It has led to a situation of double jeopardy where ING is demanding payment for bunkers contracted by OW, but the physical suppliers of the fuel are also seeking payment.

The ruling means shipowners, operators or charterers will have to pay ING, but suppliers will also be able to demand payment.

It is the fourth time the case for PST, which is part of Athens-based Petros Pappas’ Oceanbulk group, has failed in the UK courts.

An Appeals Court hearing in September 2015 upheld an earlier English High Court ruling and arbitration tribunal decision that the UK Sale of Goods Act 1979 did not apply to the deal.

A Greece-based lawyer following the case says he cannot see PST taking the case elsewhere.

The outcome was more or less “expected” and that it now sets a precedent, at least in the UK, that owners are obliged to pay OW Bunker, he says.

“They definitely have to pay OW Bunker and then they also have to settle with the physical supplier as well,” he added.

But he says that it seems like the owners will not have to pay in some jurisdictions, such as the US.

The UK Defence Club, which backed PST, describes the court’s decision as “disappointing” but calls on members to pay extra attention when signing bunker contracts.

It said:  “Given the outcome of this case, members and other operators will need to carefully review their bunker contracts in order to protect themselves from such situations arising in the future.”