The dispute arose out of the contract for the delivery of agricultural products on FOB terms, the port of Aktau, Kazakhstan, with a total value of almost 3 million US dollars. The goods were to be delivered in several lots.
The buyer did not make full payment for the two delivered lots of goods. At the same time, the buyer counterclaimed damages, accusing the seller of non-delivery of the rest of the goods. The buyer claimed that the seller, allegedly not having the goods ready for loading at the agreed port, prevented the buyer from nominating and presenting the vessels for the remaining lots.
The arbitrators reached the conclusion that the FOB seller’s obligation to deliver the goods on board of the vessel is only activated once the FOB buyer presents the vessel. So, the Seller was not required to confirm the availability of goods before the arrival of the vessel, as long as he is able to deliver the goods upon arrival of the vessel at the port.
The decision in the case clearly demonstrates the usual rule in the grain trade: the FOB buyer should be the first to begin the execution of the contract, in particular, he must nominate the vessel and present it to the loading port of. The FOB seller, as a rule, is not obliged to confirm the nomination and the availability of the goods until the moment of arrival of the vessel.
The AGA Partners team has proven the client’s position in arbitration. As a result, the claim for debt collection was fully satisfied. The buyer's counterclaim for damages was rejected.
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