AGA Partners successfully represented large agricultural holding in London arbitration in the dispute against an English trading company. The dispute arose under the contract for the sale of commodities for a total value of about USD1 million.
The respondent declared our client in default due to alleged failure to effect the payment for 5% of the goods within the terms prescribed by the contract. Our client, in turn, considered such declaration as groundless and premature. The client stated that the payment was made within contractual terms, but it was the respondent’s bank who delayed the release of funds.
After half-year of the proceedings, the arbitral tribunal found that the respondent’s default declaration was premature and fully satisfied our client’s claims awarding about USD200,000 of damages (including the amount of payment made by the client) plus arbitration fees and expenses.
Partner Iryna Moroz commented on this situation:
“Usually, parties envisage a detailed payment mechanism under a contract. Among other things, parties often define the moment when the payment is considered to be made within the meaning of the contract. Our team has managed to prove that the client’s obligation to pay was completed when the funds reached the respondent’s bank account.The tribunal, therefore, concluded that any delay of the release of funds in the respondent’s bank shall be for respondent’s responsibility”.