Arbitration proceedings as a step for amicable dispute settlement

In view of logistic crisis caused by the war in Ukraine, the Ukrainian traders shall do all the best in order to facilitate export of agricultural products – they find new sales markets, change the usual types of transportation and optimize the current business processes.

But the new business partners are not always fair and reliable. Following sunflower oil price reduction last summer, lots of European buyers rejected the goods they had ordered in advance. Many Ukrainian enterprises faced a situation when the goods were purchased, transportation costs were borne but payment was not received.

It was a large strike for new market players, such as newcoming small and medium trade companies – one of them was our Client.

When trucks with sunflower oil on boards were already en route, the German Buyer rejected them with reference to rapid changing the market price making its purchase unprofitable. The Buyer neither accepted nor paid for the goods actually delivered and discharged to the warehouse.

The Buyer not only failed to received costs for goods delivery but also incurred essential losses due to cargo storage, transport idle stay, search of new buyers and many others.

Having analyzed in detail the documents and correspondence between the Parties, Interlegal lawyers fixed the potential legal mechanisms for dispute settlement. Our Client wished to preserve further business relations with the Buyer, so it chose pretrial settlement.

First Interlegal sent a Notice of Default to the Buyer, as prescribed by the Contract FOSFA No. 57. Later, our law team commenced claims handling and negotiations with the counteragent.

However, the Buyer did not want to join the constructive dialogue between the Parties, so the Client decided to initiate arbitration proceedings in accordance with FOSFA Rules of Arbitration and Appeal.

Following formation of arbitration board and feasibility of the Client’s legal position, the Defendant contacted the Seller for the purpose of amicable dispute settlement. Interlegal lawyers facilitated for the Seller optimal terms for dispute settlement and signed amicable agreement with the Buyer.

As soon as the German counteragent fulfilled its contractual obligations, Interlegal law team initiated closing arbitration proceedings, since the dispute was settled in fact.

Therefore, due to the Client’s persistence and professional support by Interlegal lawyers, the Parties were able to settle the dispute and to renew trade.

Although arbitration proceedings are treated as the last step for dispute settlement, sometimes it may serve as one of the stages in setting-up the dialogue between the Parties.

Interlegal lawyer Ganna Domuschi, associate attorney Igor Kostov and junior lawyer Diana Mykhailova led the case