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The dispute arose out of a FOB contract concluded between our client (a Swiss trading company) and a Turkish buyer. The contract was agreed upon amidst the maritime hostilities in the Black Sea region due to russian aggression.
Under the terms of the contract, the Buyer should have presented the performing vessel to one of the Odesa ports so our client could load the goods and ship them to Turkey. As the performance of the contract involved the JCC inspection on the way to the loading port (under the then-effective Grain Corridor Initiative), the contract contained a number of atypical performance conditions. In particular, the buyers’ obligation to present the performing vessel was considered fulfilled not upon arrival at the loading port but rather to the place of the JCC inspection.
The buyer failed to comply with the above obligations, citing the force majeure (due to the temporary suspension of russia’s participation in the Grain Deal) as an excuse. The buyer alleged that the said event led to the impossibility of providing the vessel, taking into account the military risks on the way to loading port.
As the buyer’s failure to present the vessel led to substantial damages, our client decided to initiate the arbitration, seeking appropriate redress. Our legal team directed the Tribunal’s attention to the fact that the buyer was under the obligation to present the vessel not at the Ukrainian port of loading but specifically at the JCC control point in Turkey. Considering that this place was and remains far beyond the boundaries of any military actions, nothing could have prevented the buyer from placing the vessel there and awaiting their turn for the JCC inspection.
After a long-lasting exchange of written submissions between the parties, the Tribunal fully satisfied the client’s claim, awarding the damages in the amount of about USD 600,000 together with interest. The Tribunal, in its award, admitted that the Buyers’ declaration of force majeure and the related defence arguments were without merit. These proceedings once again highlighted how important it is to properly understand the scope of contractual obligations – in the case at hand, the obligation to present the performing vessel. Moreover, the Tribunal provided a useful explanation of what can be considered a force majeure event in the circumstances of ongoing war in Ukraine.
The AGA Partners’ team was represented by partner Ivan Kasynyuk, as well as senior associate Dmytro Izotov and associate Viktor Romaniv.