The Buyer rejected cargo acceptance despite the Quality Certificate: we know what to do!
3 June, 2025
26
In international trade of agricultural products, there are often attempts to unfairly challenge the goods quality, in particular, when the counterparty tries to refer to the results of inspections not prescribed by the contract. Our recent case shows a classic example of effective legal defense of an agricultural exporter from such manipulations.
How did it begin
Our Client, an Estonian exporter, entered into a contract with an Egyptian Buyer on supply of 6,000 MT of Ukrainian wheat on delivery terms CIFFO, Egypt. The contract stipulated that:
- The quality of the goods is final upon loading.
- It has been determined by the Quality Certificate issued by independent GAFTA surveyor;
- The surveyor is appointed by the Seller.
The Seller fulfilled its obligations to the full extent, namely: shipped the goods in due time, provided a full set of shipping documents, including the Quality Certificate issued by GAFTA surveyor.
Suddenly: rejection
Just before completion of delivery, the Buyer declared non-acceptance of the goods, allegedly due to quality non-conformity, referring to the results of express analysis carried out beyond the contract.
The Seller, in response, provided:
- Quality Certificate issued by GAFTA surveyor, which confirmed full conformity of the goods;
- Additional report from a laboratory agreed by both parties, which also certified conformity.
Later, the Buyer emphasized on a technical error in the draft report, showing that the seal number was incorrectly indicated. Later description was officially corrected, while the Buyer received confirmation that it did not affect the analysis results. Despite this, the Buyer rejected acceptance of the goods for the second time, demanded a new inspection, and, contrary to the contract, appointed another laboratory – in fact, artificially delayed acceptance. In turn, such delay caused the vessel idle stay and demurrage accrual.
Finally, after futile attempts to resolve the situation amicably, our Client:
- Declared the Buyer as default;
- Resold the goods at a lower price;
- Filed a claim on loss recovery to GAFTA arbitration.
In the framework of arbitration proceedings, Interlegal law team:
- Proved that the Buyer’s actions constituted anticipatory breach, which entitled the Seller to terminate the contract and to recover losses;
- Confirmed that grain quality was definitively fixed by the Quality Certificate issued by GAFTA surveyor duly appointed under the contract;
- Confirmed that so-called express analyses had no legal force and were obtained beyond the agreed procedures;
- Proved that re-inspection on the Buyer’s part was groundless and the technical error the Buyer referred to was immaterial;
- Argued that resale was a forced commercial necessity and that demurrage costs were directly caused by the Buyer’s actions.
Result: a convincing victory in arbitration proceedings!
GAFTA arbitration made an award in favor of our Client.
The Buyer was ordered:
- To recover losses amounting to USD 240,324.40 (difference in resale price);
- To pay demurrage amounting to USD 14,000;
- To pay arbitration fees.
Has your counterparty suddenly become too demanding in respect of product quality? Remember this case!
If you have faced groundless claims concerning quality, if you are dealing with a counterparty that openly abuses the goods acceptance procedure, please do not hesitate to contact Interlegal.
We know how to stop manipulation and effectively protect your interests in arbitration.
Interlegal partner Aleksey Remeslo and lawyer Larysa Roshu led the case.
