This dispute arose under a sale contract due to a cargo quality claim with value of over USD2,000,000.00. Complication of the proceedings was caused by guarantee obligations contained in a contract that gave rise to three separate arbitrations: under the sale contract, guarantee obligations and sub-sale contract.
The Buyer purported to deny the finality of quality certificates issued at the loading port, based on an alleged fraud taken together with the following arguments: non-compliance of the goods with contractual description, non-satisfactory quality of the goods and non-fitness of the goods for an intended purpose under the Sale of Goods Act 1979.
It took several years for a first-tier tribunal and, subsequently, for an appeal board to consider the dispute due to its complexity, caused by concurrent arbitration proceedings against the final receiver, significant amount of evidence, involvement of numerous experts and witnesses to determine the quality of the goods delivered.
After complex and protracted arbitration proceedings, the appeal board ultimately rendered a final award fully in favour of the Client of AGA Partners, upholding the first-tier award. In particular, the appeal board dismissed all buyer’s claims and confirmed finality of quality certificates, issued at loading.
The arbitrators’ reasoning has an important impact on stability of international trade of commodities. The awards of both tribunals are clearly based on English law approach favouring finality and binding force of quality certificates, unless they were procured due to fraud or manifest error, putting on a challenging party a respective burden of proof.