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.