Interlegal lawyers succeeded in demurrage recovery at the loading port under FOB contract in the framework of GAFTA Arbitration

The Seller under FOB contract did not recognize its obligations on demurrage payment at the loading port, since the Buyer replaced the vessel without pre-advice upon the substitute vessel. In the process of contract performance, the Buyer nominated the vessel and provided arranged pre-advice to the Seller.

Vessel nomination complied with contractual terms and the vessel should have arrived within the agreed delivery period. Later, the Buyer replaced the vessel several times, always within the agreed delivery period and with almost the same ETA for each substitute vessel.

When the vessel engaged in actual contract performance arrived at the loading port, the Seller declared on non-readiness for loading, inter alia, due to vessel queue at the sea port. Demurrage arose due to delay in loading.

GAFTA Arbitration ordered that the Buyer’s obligation on pre-advice shall apply to the initial vessel only, and the Buyer is not obliged to provide pre-advice upon the substitute vessel which arrived within the delivery period and with the same ETA that the initial vessel.

In fact GAFTA Arbitration Award corresponds to ideas of the Association which amended the Nomination Clause on September 1, 2017, under which the Buyer’s obligations on pre-advice shall apply to the initial vessel only. The Buyer is not obliged to provide pre-advice in case of replacing vessel, if the substitute vessel arrives at the loading port not earlier than the first vessel’s ETA stated in pre-advice and within the delivery period set forth in the contract.
The Buyer’s claims were satisfied in full.

Interlegal paralegal Alexandr Zhuravskiy, junior lawyer Igor Derus, under the general supervision of senior lawyer Ekaterina Gadetskaya, leading expert in international trade and arbitration, led the case.