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.