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Editorial

AVELLUM successfully represented Swiss Company in GAFTA arbitration

December 2018 - Dispute resolution. Legal Developments by Avellum.

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AVELLUM represented a Swiss Company (“Claimant”) in GAFTA arbitration dispute under CIF sale contract with an Egyptian company (“Respondent”) regarding compensation of damages in the form of demurrage and interest for the late payment for the goods.

Through these proceedings, AVELLUM established a new practice of representing clients in GAFTA arbitration disputes, which are resolved by a sole arbitrator.

The dispute concerned correct calculation of laytime and responsibility for demurrage. The calculation of the incurred demurrage depended on who is responsible for the suspension of discharge of the goods.

While deciding upon this case, the decisive factors were specific acts and instructions of each party, since the party who gave direct instructions to suspend the discharge will be held liable. It should be noted that in the present case, the Claimant had not instructed to suspend the discharge, but did warn the Respondent about such consequences, which may incur if the Respondent fails to provide the payment.

After analysing all factual circumstances of the case, the arbitrator held that the discharge was suspended by the instructions of the Respondent, which misunderstood the situation, and, consequently, is liable for damages, which incurred thereafter.

This case once again demonstrates that in contracts governed by the English law, each word from the correspondence between the parties is important. Liability of the parties is established after overall examination of negotiations, correspondence, and acts of each party.

In his award, the arbitrator highlighted that despite the information provided in Statement of Facts (SOF), it was suspended by the Respondent and not the Claimant. Therefore, the arbitrator held the Respondent liable for demurrage incurred due to suspending the discharge. Additionally, the arbitrator obliged the Respondent to pay the Claimant the statutory interest for the late payment for the goods.

As a result, the arbitrator has awarded to satisfy the Claimant’s demand for the compensation of damages.

AVELLUM team was led by associates Dmytro Koval and Leila Kazimi, under the supervision of partners Ivan Kasynyuk and Iryna Moroz.

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