Testing the Limits of Interpretation

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Shmilovits, Liron 

PST Energy 7 Shipping LLC v OW Bunker Malta Ltd (The Res Cogitans) was a contest between two arguably incredible propositions. On one side, the appellant shipowners submitted, by an ingenious argument, that they did not have to pay for bunker fuel which they had ordered, received and consumed. On the other side, the respondent oil suppliers countered that the Sale of Goods Act 1979 ("SGA") did not apply to the supply contract. The Court of Appeal opted for the least implausible outcome, holding that the supply contract was not a contract for the sale of goods, and so the shipowners did have to pay for the fuel. In policy terms, the Court’s reasoning challenges recent orthodoxy on contractual interpretation.

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