Senior Associate Ievgen Boiarskyi will be a guest lecturer on "Drafting Arbitration Agreements and Arbitration Clauses" within the course "International Law and Arbitration" organized by the Business Consulting Academy (BCA).
AGA Partners' Partner Ivan Kasynyuk, Senior Associate Pavlo Lebediev and Associate Anastasiia Shevchuk delivered a seminar on the latest challenges in commodity trade in the Black Sea region. Active interaction with the audience resulted in a great discussion. Pavlo Lebediev also spoke at the panel "Price Assessment, Contracts and Insurance in International Trade" together with other speakers of the conference.
After the CIF sale contract between the parties had been performed, the dispute emerged with respect to demurrage due from the buyer to the seller, accrued due to a delay in discharging operations.
The crux of the dispute was the weather at the port of discharge. Under fundamental rules of the laytime calculation, time does not count for the period of bad weather (rain, snow, storm, etc.). The position of the buyer was that most of the relevant time at the port of discharge there had been raining, that prevented conduct of discharging operations. Accordingly, the final demurrage amount was rather insignificant. At the same time, the sellers’ position was the opposite. They alleged that there had been almost no rain during the relevant time period, so that all this time should be counted as laytime, increasing the amount of demurrage.
In support of their positions both parties provided various pieces of evidence, including, from witness statements of the port workers, meteorological reports, statements of facts regarding other vessels in the relevant period of time and weather expert reports.
After a long-lasting exchange of written submissions between the parties, the tribunal dismissed the seller’s claim in its entirety, confirming the calculations submitted by the buyer. As a result, the buyer had to pay only one-seventh of the sum initially requested by the seller.
The Order of St Sophia is awarded to women who, through their professional, charitable and social activities, contribute to the development of all spheres of modern life in Ukraine, are informal leaders in various fields and have a positive impact on the country's public life.
- Managing market volatility in grain markets
- Exchange traded contracts for grain derivatives after the Black Sea conflict
- The role of OTC instruments
In this case, the Ukrainian organic producer initiated London arbitration with the claim to recover the debt for the delivered goods. On behalf of the buyers, AGA Partners disputed this claim on both substantive and procedural grounds.
In particular, our position was that the seller’s claim shall be deemed barred due to its failure to timely pay the arbitration deposit. In response, the seller’s counsel argued that their client was prevented from transferring the funds to the UK arbitral institution by Ukrainian martial law.
To resolve this alleged problem, the arbitral institution exceptionally allowed the seller to pay the arbitration deposit to the bank account of the Ukrainian entity. Nonetheless, the seller did not pay the arbitration deposit.
As a result, the sole arbitrator upheld our objections and declared the seller’s claim barred.
The dispute arose out of three contracts for the СIF delivery of Brazilian soybeans to Turkiye. The goods were loaded with excessive moisture content and further deteriorated while staying at anchorage in Ukrainian waters. Upon completion of the voyage, the surveyors revealed heavy smell, mould and high temperature of the cargo. Our client sought negotiations and made several without prejudice proposals to accept the goods with allowances corresponding to the actual quality of the goods. Failing to reach an amicable solution, the client refused to pay for the delivered goods due to their non-contractual quality and incomplete tender of shipping documents. The seller treated the refusal to pay as default and terminated the contracts.
In arbitration, the seller argued that the quality must be determined at loading and the condition of the cargo at discharge was irrelevant. According to its position, the difference of 0,8% in moisture content at loading was merely a slight discrepancy generally contemplated by businesses in commercial trade. The seller also alleged that it was entitled to payment as the broker received all necessary shipping documents. This argument was supported by the allegation that the client waived the right to reject the goods by suggesting to accept the cargo with the allowance.
Both the first-tier tribunal and the board of the appeal held that the seller was not entitled to payment under the contracts and thus wrongfully terminated them. First, they determined that the moisture requirement constituted a condition of the contracts and the deviation from the maximum limit represented their repudiation. Second, the arbitrators agreed with our position that the seller failed to tender the full set of contractual shipping documents and, hence, did not trigger the payment obligations under the contracts. They did not consider without prejudice settlement proposals a waiver of the client’s rights.
On this ground, the tribunal awarded the client damages of around USD 1 million together with the compensation of interest, legal fees, arbitration and trade representative costs.
In this dispute, the Romanian seller concluded a forward contract on the sale of a large parcel of Romanian non-GMO corn to its partner in Türkiye.
To perform the agreement with its Turkish customer, the seller contracted the goods from regular suppliers in the eastern part of Romania. However, in August 2020, farmers in this region faced hot and dry weather which led to a significant reduction in the yield. The reduced amount of the harvested crop naturally triggered a spike in the prices of Romanian corn. The market fluctuations, in their turn, prompted the seller’s suppliers to deliver the goods to companies paying a higher price for them. As a result, the seller could not procure the necessary amount of corn from its regular suppliers.
There was nothing left for the Turkish buyer but to declare the Romanian seller in default and initiate arbitration to recover the losses incurred due to the increase in the price of the goods.
In arbitration, the seller took the position that the drought in Romania constituted a force majeure which released him from liability for the non-delivery of the goods. In support of this position, the seller’s counsel submitted the reports of the commissions allegedly appointed by the government. Those documents fixed that certain lands in eastern Romania and crops grown on them were damaged by the drought, either totally or partially.
Although the drought made the performance of the contract difficult, both the first-tier arbitrators and the appeal board held that the filed evidence did not allow it to excuse the seller from liability for the non-delivery of the goods.
As a result, the arbitrators supported our position and held that the seller was fully liable for the non-delivery of the goods. The arbitrators satisfied all claims filed in the arbitration – the damages of ∼700,000 USD, interest from the date of default and arbitration costs.
In addition, the AGA Partners team is recognised among the leading companies in the following practices:
✔Agricultural and land law
✔International arbitration/International litigation
AGA Partners was traditionally recognized by the international rating The Legal 500 in three practices:
International trade - Tier 2
Private clients - Tier 2
Dispute resolution - Tier 3
In addition, personal recognition was received by:
Iryna Moroz - Leading individual in the practice of International Trade and Private Clients
Aminat Suleymanova - Leading individual in the practice of Private clients
Oleksandr Gubin - Rising star in the practice of Private clients
Pavlo Lebediev - Key lawyer in the practice of International trade
Yurii Bedenko - Key lawyer in the practice of International trade
Read more about the rating.
War is a time for unity. Looking at the results of the Chambers and Partners study of the Ukrainian legal market, the well-known term "legal front" comes to mind. Firms lined up not from top to bottom, but in a row, which is very symbolic today.
AGA Partners was recognized among the 12 leading law firms of Ukraine in the practice of Dispute Resolution, Ivan Kasynyuk and Iryna Moroz were included in the list of best lawyers in DR - Chambers Europe and Global 2023.
Sincere congratulations to colleagues and gratitude to researchers for such a rating of law firms and lawyers of Ukraine. Together to victory!
Read more about the rating at the link.
The decision of the Supreme Court has a precedential value for future cases regarding the recognition and enforcement of foreign arbitral awards in Ukraine. In particular, this relates to cases in the field of supply of agricultural products in accordance with standard GAFTA/FOSFA contracts.
Application for recognition and enforcement of the GAFTA award on compensation of damages in the amount of USD 476,000 was submitted to the Kyiv Court of Appeal in 2021. After reviewing the case materials, the Kyiv Court of Appeal rejected our client's application, concluding that there was no original of contract. According to the Kyiv Court of Appeal, given that the parties did not exchange signed originals of the contract with an arbitration clause, but instead concluded it by exchanging electronic scan copies, the contract and the arbitration clause were invalid with reference to some contractual provisions.
Disagreeing with this result, our client appealed to the Supreme Court. In the appeal, our lawyers explained that the contract in question is an example of one of thousands of agreements concluded in Ukraine every day regarding the export of agricultural products. Like most similar agreements, the contract in this case was governed by English law with a GAFTA arbitration clause. The lawyers of our team explained that under the terms of English law, a contract and an arbitration agreement can be concluded in both written and electronic form, and there is simply no requirement to exchange the originals of the signed agreement. It was emphasized that Ukrainian law also does not contain any such formal requirements, allowing the conclusion of contracts and arbitration agreements through the exchange of electronic copies.
After exchange of written documents between the parties, the Supreme Court supported our client's position and overturned the decision of the Kyiv Court of Appeal in full, recognizing the GAFTA arbitration decision and granting permission for its implementation on the territory of Ukraine. In its decision, the Supreme Court referred to Art. II of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, noting that:
“The term “agreement in writing'' shall include an arbitration clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams. For the validity of the arbitration clause, it does not matter whether it is drawn up as a handwritten text or with the use of technology; it is important that the written form is followed”.
We believe that this decision is of great importance for positive judicial practice in cases regarding recognition and enforcement of arbitral awards. The decision of the Supreme Court confirmed the guarantees of parties to contracts on the export of agricultural products regarding the possibility of enforcing the arbitration award even if the contract was concluded by electronic means, without the exchange of signed originals.
You can access the decision of the Supreme Court using the link.
The dispute arose out of the contract for the sale of 7,000 mt of Ukrainian milling wheat on a CIF Marmara delivery basis. While the seller was loading the vessel at the Ukrainian port of Kherson, the buyer’s surveyor took the samples of the goods and determined that their quality was not contractual. Given these problems with the cargo, the client refused to make payment against the certificate of the seller’s surveyor showing full compliance with the quality specification. In response, the seller terminated the contract because the buyer refused to pay for the goods.
After the seller commenced arbitration, the buyer revealed that the date of the bill of lading was inconsistent with the daily reports from its surveyor on the progress of loading. The seller’s solicitors, however, denied the argument on the backdated bill of lading and tendered the agent’s statement of facts showing the contractual shipment date. They further argued that, in any event, it was too late for the buyer to raise this matter in arbitration almost a year after the dispute arose.
In the end, the arbitrators upheld our position on the ground that the date of the bill of lading indeed contradicted the circumstantial evidence presented in the case. The tribunal considered such evidence sufficient to find that the bill of lading was not genuine and the seller wrongfully demanded payment for the cargo. It also noted that the buyer had the right to raise objections to the documents already in arbitration as they contained hidden defects which were not apparent on their face at the time of tender.
On this basis, the tribunal awarded the Turkish buyer USD about 300,000 in damages together with the compensation of the arbitration costs.
We are pleased to announce that Ievgen Boiarskyi, a senior associate at AGA Partners, will act as a guest lecturer for the course "Model Trials: International Aspect" for students of the Yaroslav Mudryi National Law University.
AGA Partners continues cooperation with the Ukrainian Bar Association in 2023! A lot of events and work are planned! Together to victory, each on his own front!
On February 4, Managing Partner of AGA Partners Aminat Suleymanova was among the speakers at educational conference organized by the International Academy of Family Lawyers dedicated to the issue of family law in times of uncertainty.
Aminat spoke at the session on the topic "Family Law Practice in a Period of Uncertainty", telling what changes the legislation has undergone during the period of russian aggression, how state institutions work now, and also clearly demonstrated what challenges lawyers faced in their daily work, including rocket strikes, lack of electricity, heating, internet and mobile communications, which, despite everything, continue to do their job with dignity!