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.