The AGA Partners team secured a successful outcome for its Client (the Sellers), a UAE agricultural trader, in a London-seated FOSFA arbitration arising out of a contract for the supply of Ukrainian-origin soybeans to a Swiss buyer on CNF terms to Egypt. 

The dispute arose after the Buyers failed to make payment against documents within the strict contractual timeframe, despite repeatedly confirming their intention to pay. As a result, the carrying vessel remained idle at the discharge port, exposing the Sellers to significant demurrage. 

During the arbitration, the Buyers sought to avoid liability by arguing that their payment obligation was discharged following a subsequent resale of the cargo to the end receiver and by challenging the validity of the default notice and demurrage claims. 

AGA Partners successfully demonstrated that difficulties with onward buyers do not excuse non-payment under commodities contracts and that the Buyers’ conduct amounted to a fundamental breach. The Tribunal confirmed the validity of the default notice, rejected the Buyers’ reliance on the post-default resale, and accepted that the Sellers acted reasonably in mitigating their losses. 

As a result, the Tribunal issued an award in favour of the Sellers, granting damages for default, demurrage accrued prior to termination, interest, and recovery of arbitration and legal costs. 

This case illustrates the strict nature of payment obligations in CNF trades and the serious financial consequences of delaying payment at destination, even where the goods are later resold. 

This arbitration victory was achieved through the efforts of Partner Iryna Moroz, together with Associate Andrii Tantsiura, and former Senior Associate Dmytro Izotov.