AGA Partners successfully represented large agricultural holding in London arbitration. The dispute arose under a contract for the sale of commodities for a total value of about USD1,6 million.
The respondent refused to supply to our client 10,000 metric tons of corn, alleging that the client breached previous contracts. During arbitration proceedings, the respondent asserted that he had a right to withhold the goods under the new contracts until all issues under previous contracts are settled.
The arbitral tribunal found that the respondent was not entitled to withhold delivery of goods and fully satisfied our client’s claim awarding USD700,000 of damages plus arbitration fees and expenses. The tribunal clarified that the respondent’s position could have prevailed only if it had been proved that the contracts can be construed as one single transaction.
Partner Iryna Moroz commented on this situation:
“Under English law, by default, each contract constitutes separate transaction and should be analyzed in isolation. Accordingly, a seller cannot simply withhold delivery of goods under one contract due to alleged violations of another agreement. This seller’s right can arise only in limited cases. For example, a seller may be entitled to withhold further delivery of goods under the contract if a buyer fails to pay for the goods already delivered under the same contract. In the present case, our team has managed to prove that each contract was treated by the parties as a separate independent agreement.”