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Barry Duggan "Grain and Feed Trade Association GAFTA - what it does, including its arbitration service" The South East Branch was very pleased to welcome Barry Duggan to the Ramada Hotel Tunbridge Wells on Tuesday 21 April 2009 to present his fascinating talk on the "Grain and Feed Trade Association GAFTA - what it does, including its arbitration service". Barry first entered the physical commodity business in the 1950s after completing his National Service. Since that time he has acquired a wide working knowledge of the international commodity business specialising in oils, seeds, grain and feeds and allied commodities. He was a qualified arbitrator with GAFTA for 35 years until his recent retirement. He has been involved in numerous GAFTA arbitrations both at first tier and at appeal level. He served on the contracts committee of that Association for 31 years and also served terms as a member of the arbitration committee. Barry explained to a small but very interested audience that GAFTA has an internationally respected arbitration service which provides parties who use GAFTA standard forms of contract with a system to resolve trade disputes in a fast and efficient manner. GAFTA is a world wide organisation. Aside from its offices in London, it has opened offices in Kiev, Beijing, Geneva and Australia. It was formed in 1971 by the merger of the London Corn Trade and Cattle Food Trade. As an organisation it has about 1,000 members in 90 countries from a diverse range of backgrounds. Its members typically are drawn from import - export, brokers, dealers, millers, brewers, banks and solicitors. The council consists of 22 members and all the members are drawn from within the trade. As a trade organisation GAFTA produces and operates a range of contracts along with arbitration and mediation procedures, it also sets policy and provides trade information. The contracts cover a number of trade scenarios including: CIF: Cost Insurance Freight. FOB: Free on Port. (Seller responsible until the goods pass the ships rail at port of shipment when the buyer becomes responsible) FAS: Free Alongside. (Seller responsible for all export documents, clearing goods for export and carriage to bring alongside a ship at the named port of shipment). FCL: Full Container Load. (Transportation by container). One of the perils of world trade is that a government act can ban or prohibit trade at anytime and without warning. Force Majeure risks are also high and may include crops failing; Livestock become diseased and transportation restrictions being applied; grain contamination or cross contamination; spoiling and inherent hazards in transit or shipping. The grain trade starts with the arable farmers, which is a vast chain. Buying and selling grain, seed or feed products. They may also sell direct for milling, malting and seed processing. The next tier consists of the traders and their support staff. There are also the processors and commodity shipping companies, as well as the merchant procurers and merchandisers who buy from store. The grain and commodities world is very much market driven, with a "buy cheap sell dear" to make a profit philosophy, with many parallels to the Stock Market. Barry explained that trading can be in Futures (Hedging) and explained terms such as "Sell Short", meaning same day trading of goods not in ones possession and "Buy Long" meaning they are owned when they eventually become available. However, GAFTA no longer smoothes out the markets. Understandably, establishing the seat of the Arbitration is very important in international trade. GAFTA contract terms set the price, quantity description, weight, measure, payment terms and delivery dates and method. 70-80% of the GAFTA contracts contain an arbitration clause, which is agreed at time of trade. The trade may occur through a Broker who then sets the terms or else agreement can be made verbally or by email, confirmed in writing later. Otherwise the Seller generally sets the terms. There are typically 200 arbitrations a year, conducted by GAFTA qualified arbitrators, who have attended trade education courses. Solicitors are now also admitted. The tribunal may consist of between 1 and 3 arbitrators and the arbitrators tend to specialise in a specific area. Following the 1996 Act, the Arbitration agreement must be in writing and it is not uncommon to agree the Seat as London, with English Law applicable. The arbitration rules cover comprehensively the Time Limits, Lapse of Claim (hence it is not uncommon to renew the claim every year) and how the arbitration is to be conducted, whether on documents only, what submissions are to be made and whether there is to be a formal meeting or hearing. Where a String Arbitration occurs it is important to have the same terms throughout the string or chain of arbitrations and it may be the case that parties are joined. As under the 1996 Act the arbitrator(s) can determine its own jurisdiction. There are strict appeal procedures and the Award narrative must quote whether or not it is a 1st tier Award. In the event of an Appeal, there is a Board consisting of 5 arbitrators. Reported by Colin Featherstone, Chairman of the SE Branch |
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