Forgive and forget: is small demurrage a reasonable excuse for arbitration proceedings?
10 September, 2023
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The Seller under CIF Contract applied to Interlegal; it delivered goods to the Buyer within the prescribed supply period and performed all the other appropriate terms of the Contract.
The Client applied for refund of costs paid as demurrage in favor of the Shipowner.
According to the Contract, the Buyer shall pay for the goods within 48 days from the date of receiving contractual documents by the bank; however, the Buyer could pay for the goods just a few days later, for its own reasons.
Having studied all the case circumstances, Interlegal lawyers sent a claim to the Buyer with a demand to reimburse costs paid as demurrage. With no reply, lawyers recommended the Client to apply to the arbitration.
Just after initiating arbitration proceedings, the Buyer proposed a pretrial dispute settlement. The Parties agreed that the Seller will receive paid costs, while arbitration proceedings terminated.
As famous and experienced market players, the Parties understood all the risks of applying to arbitration for charging a small amount. In the Seller’s opinion, the most optimal way was to recover demurrage in the form of further contracts, without time/cost spending for arbitration proceedings. The Buyer also understood and supported the Seller’s unwillingness to pay arbitration & legal fees with freezing funds.
Due to step-by-step actions, detailed analysis and clear strategy, Interlegal lawyers restored and implemented the Client’s contractual and lawful rights.
Interlegal law team led the case: junior lawyers Denys Bakaiev and Larysa Karakach, managed by partner Alexey Remeslo
