AGA Partners successfully represented a Swiss trading company (Seller) in a dispute with a Turkish manufacturing and trading company (Buyer) in London arbitration, that arose out of a contract on sale of chickpeas on CIF FO delivery terms for a total value of more than USD1 million.
The dispute concerned the inspection procedure, designed to determine final quality of the goods. In particular, under terms of the sale contract the final quality was to be determined based on an inspection of the goods on loading on board of the vessel. Instead, the Buyer declined to take delivery and terminated the contract based on unsatisfactory results of an informal quality inspection, performed prior to commencement of loading procedures.
AGA Partners managed to prove that an informal quality inspection, allowed to be performed by the Buyer, and/or its results did in no way circumvent finality of quality inspection of the goods, envisaged in the contract. The Buyer’s termination of the contract was found to be premature, and, therefore, unlawful. The Seller was awarded damages in an approximate amount of USD350,000.
It is also notable, in the course of the proceedings the Buyer raised a challenge against the arbitrator, appointed by the arbitration authority instead of the Buyers, on grounds of an alleged lack of neutrality. In particular, the Buyer took position, that the arbitrator lacked neutrality given that he possessed the same nationality, as the legal representatives of the Seller. However, this challenge was dismissed as AGA Partners did establish that arbitrator’s neutrality could not be affected by his nationality in circumstances, where there were no other grounds to challenge his impartiality and/or independence.
“The successful outcome of this case demonstrates that where the contract is clear as to the parties’ contractual obligations, they may not be undermined by an uncertain correspondence between the parties. This is especially relevant with regard to quality clauses, possessing a fundamental nature, as they are aimed specifically to achieve finality as to the quality of the goods and at avoidance of respective disputes.”
The AGA Partners team was led by partners Iryna Moroz and Ivan Kasynyuk with support from senior associates Ievgen Boiarskyi and Iurii Gulevatyi, as well as from associates Yelyzaveta Holovan, Viktoria Tolochko and Pavel Lebedev.