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AVELLUM successfully represents English trading company in GAFTA arbitration

August 2019 - Dispute resolution. Legal Developments by Avellum.

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AVELLUM secured a favourable award to the client in a dispute at the GAFTA arbitration for a total amount of more than EUR1.5 million.

As agreed by the parties under the contract of sale, our client delivered the goods to one of Iranian ports on C&F (cost and freight) basis and should have been paid within 10 days after delivery of goods to port warehouse.

However, upon delivery, final receiver posessed the goods without original B/Ls and seller’s approval. Buyers informed that no goods were in fact delivered and the port warehouse was empty. The buyers refused to pay for the goods and demanded back 50% pre-payment and damages, reaching EUR3 million in total.

Given the complexity of the situation, our client was forced to initiate criminal proceedings in Iran against buyers holding them liable for fraud and, at the same time claimed the balance price of the goods in GAFTA arbitration.

Particular difficulty was that buyers argued that our client was obliged to deliver the goods to the port warehouse and secure its receipt by buyers Nevertheless, our team successfully proved that the client’s obligation and risk of loss terminated when goods passed the ship’s rail. Thus, the Tribunal dismissed the buyer’s counterclaim and awarded our client full contract price together with damages.

Partner Iryna Moroz commented: “Unquestionably, C&F contracts may be modified in accordance with the parties’ consent. Such modifications, however, do not change the essence of the obligations and, most importantly, do not influence the risk allocation.”

The AVELLUM team was led by partner Iryna Moroz with support from senior associate Dmytro Koval and associate Iryna Ivanova.