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AVELLUM wins swaps case in GAFTA arbitration

April 2019

AVELLUM successfully represented an Estonian company in GAFTA arbitration in a dispute regarding debt recovery under swap contracts.

Swap contracts provide for exchange of a floating price for a fixed price for the goods on a specified date, which makes them an effective instrument of hedging the risks arising out of market price fluctuations. Contrary to ordinary sale contracts of agricultural products, swap contracts do not provide for the physical delivery of the goods.

Swap contracts are frequently used on financial markets. However, they are still on a beginning stage when it comes to international trade of agricultural products in the Black Sea region.

AVELLUM is amongst the pioneers of successful dispute resolution under swap contracts in GAFTA arbitration. In their decision, the GAFTA Tribunal supported the claimant’s position and awarded the debt under swap contracts in sum of around USD150,000, as well as interest for the delay in payment.

Besides, AVELLUM has also successfully continued the practice of dispute resolution under the simplified procedure in accordance with GAFTA Arbitration Rules 126, which enabled the claimant to obtain the arbitral award within the shortest time-period.

The AVELLUM team was led by partner Ivan Kasynyuk, with support from senior associate Iurii Gulevatyi and associates Leila Kazimi and Victoriia Tolochko.

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