Gafta https://fortiorlaw.com/news/gafta-arbitration/ the Grain and Feed Trade Association, established in 1878 (formerly the London Corn Trade Association), is more than just an arbitration body. Based in London with offices in Geneva, Kyiv, Beijing, and Singapore, Gafta primarily serves to protect the interests of participants in the grain market. It is known for creating standard pro forma grain trade contracts that streamline and expedite the contracting process. Even when the seller and buyer are from different countries, they don’t need to renegotiate all terms every time; they can simply agree on the key details (such as goods, price, quality, and delivery period) and reference a specific pro forma, which includes more detailed terms.

Statistics show that over 80% of global grain shipments are based on Gafta pro formas. Common pro formas in the Black Sea region include Gafta 48 (bulk delivery on CIF), Gafta 49 (bulk delivery on FOB), Gafta 78 and 78UA (rail and road), and Gafta 88 for container deliveries. All pro forma contracts include a clause that disputes will be resolved through Gafta arbitration under English law.

Time Limits for Claims

Gafta imposes a one-year time limit for making a claim, starting from the date of the bill of lading, the date of discharge, or the end of the delivery period, depending on the terms. If the dispute concerns quality and sample examination is required, the time limit is 21 days. The notice of arbitration must be filed within this period, and the claim itself must be submitted within one year of the notice. Extensions of up to one year can be requested, allowing for a maximum delay of 6 years.

The final arbitration cost may differ from the initial deposit. If it exceeds the deposit, the claimant will need to pay the additional amount. If the cost is lower (e.g., due to an amicable settlement), the unspent deposit may be refunded.

Example: We filed a claim for non-payment, agreed on a single arbitrator, and paid a £8,000 deposit. Once the defendant promised payment, we informed the arbitrator and closed the case. Gafta refunded £7,000 of the deposit.

Arbitration Procedure

The arbitration procedure is relatively straightforward:

• The arbitration rules are concise, fitting on 15 A4 pages, making it simpler than some national civil procedure codes.
• Typically, there are no oral hearings, eliminating the need to travel to London. Decisions are based on submitted documents and emails.

Who Covers the Costs?

Initially, the claimant bears all arbitration costs. If the claimant prevails, the losing party is responsible for the costs.

Legal Costs Recovery

Under Gafta Arbitration Rules, legal costs are recoverable only if the parties agree. In most cases, there is no such agreement, so legal costs cannot be recovered.

Dispute Adjudication Procedure

Gafta offers two arbitration rules: Gafta 125 and Gafta 126. Gafta 125 is the standard, while Gafta 126 applies to simpler disputes and provides an expedited process. This description focuses on the standard Gafta 125 rules.

Initially, the parties appoint arbitrators and the claimant files a claim. After the deposit is paid, Gafta gives the defendant 28 days to respond, followed by 21 days for the claimant to reply. The process may involve additional rounds of clarifications, which could extend the arbitration if the case is complex or if parties misuse the process.

All case correspondence is managed through Gafta’s secretary, with no direct communication between the parties and arbitrators. Oral hearings are rare and typically held only if deemed necessary by the tribunal. Virtual hearings are available, which reduces costs.

Challenging the Award

Gafta allows for appeals against the first-tier arbitration award. The appeal process involves a complete review of the case, without needing to justify the grounds for appeal.

The appeal procedure is similar to the first instance, with three arbitrators if the original award was made by a sole arbitrator, or five if it was by a three-member tribunal. Parties can also challenge the award before the High Court of Justice in London, but such challenges are limited and rarely successful.