Legrant has won a $300K USD case in GAFTA arbitration

October 17, 2019 · News

Legrant law company has protected the interests of the Ukrainian grain trader in GAFTA arbitration.

The Sole Arbitrator has satisfied Legrant’s claim in full and also dismissed the Respondent’s counterclaim. Total debt recovery estimated in about $300K USD, including arbitration fees and interest.

The parties have concluded the contract for delivery of wheat by rail on DAP terms. The contract was concluded under the English law, incorporated Gafta 78 proforma and provided for the installment deliveries.

The dispute has arisen due to Buyer’s failure to pay for the delivered installments. It emerged that the Buyers had previously obtained certain rights as for the Sellers under third-parties agreement. Thus, the Buyers were avoiding to perform direct payments under the Contract, trying to set-off the sums due under the Contract and the debt under the third-party agreement.

In addition, the Buyers also referred to errors in the presented documents as a ground for non-payments.

“Two days before expiration of the delivery period the Sellers had faced a difficult situation. They could be either declared in default for non-delivery, meanwhile the Buyers could fail to perform the further payments. Considering all the circumstances, the Sellers refused from further deliveries.

"The main challenge was that Gafta 78 provided for “each delivery to be considered as a separate contract”. It follows that in case of non-payment for one instalment you are not entitled to refuse from further deliveries”, Danil Hristich, the Senior Lawyer of Legrant, explains.

Further on, the Buyers declared the Sellers in default and claimed damages. The Buyers were also refusing to pay for accepted goods. The negotiations between the parties failed.

During the arbitration proceedings we proved that the Buyers were obliged to pay the invoices despite certain discrepancies in the documents. We have also argued the impossibility to offset the sums under the separate contracts. What is more important, the Sellers had the right to refuse from further deliveries due to partial non-payments due to the rare exception applicable in the current case. The Sole Arbitrator has concluded that the Buyers were the only party to be in default” Danil Hristich added.

The case was supported by Legrant’s Senior lawyer Danil Hristich and lawyer Sergey Platonov, under the overall supervision of the Managing Partner Tatyana Titarenko.