Settling commercial disputes

A Contract defines rights and obligations of the parties involved. In case of breach of the Contract the sufferer makes a claim on the party, which fails to meet its contractual obligations. It is more often the case that it is the Buyer who makes a claim on the Seller.

Most often the Buyer makes quality and quantity claims on the Seller. The cause for complaints may be poor quality, breakage, damage, short-weight, leakage, etc.

In case of short-weight it is recompensed by a load sent separately or at the time of follow-up shipments. In case of damage or faults, the goods at the Buyer's option, car be repaired Ml at the Seller's expense.

Sometimes if deviation in quality, within certain limits, the goods can be retained but with an allowance proportionate to the discrepancy in quality. This is usually the case with raw materials, foodstuffs or any other goods sent in bulk.

If the goods are missing, the Seller must necessarily locate them. Sometimes it is quite a problem as consignments may be lost when transshipped at some intermediate port or if sent to a wrong address, If the goods are not recovered, compensation must be paid by the party directly responsible for it.

If the Seller fails to deliver the goods by the date due, he is penalized. The rate of penalty Clause or the Clause of Agreed and Liquidated Damages.

If the delay is longer than 2 months, the Buyer has the option of canceling the Contract altogether but the Seller is to compensate for the loss incurred.

The Seller in his turn is entitled to make a claim on his counterpart if the Buyer fails to meet his contractual obligations.

The Seller may inflict penalties on the Buyer if there is a default in payment.

In an FOB transaction the Seller is entitled to compensate for extra storage expenses if the Buyer's vessel bound to pick up the goods fails to call the port in time.

In a CIF transaction the Seller may claim the demurrage if his own vessel stavs idle at the port awaiting unloading.

The demurrage claims may emerge from the Buyer -as, well if a \| Contract is signed on FOB terms of delivery. If it is a GIF contract. Buyer is liable to extra storage expenses when through the Seller's jpauit he cannot clear the goods from the customs within the period.

Financially, legitimate claims are in large part settled by debit or credit notes.

Settling commercial disputes by arbitration is practiced if the parties cannot reach mutual understanding. In. this case in accordance with the corresponding clause of the Contract the claim is submitted for arbitration, in Russia to the Arbitration Commission at the Russian Chamber of Commerce and Industry. Its Statute says that it is a standing arbitration tribunal, which shall settle disputes resulting from contractual and other civil-law relations in-tfee---«Mffs«=^-foreign trade, and other international economic and scientific-technological contacts,

If the parties do not agree upon a single arbitration, each of them appoints (or-efeeeses frarrrthe "listofArbitratoTjfr their own. In this case the latter should elect the chairman from the same List.

The three of them form the arbitration tribunal, which considers the case and makes an award by a majority of votes. The awards of I the Arbitration Commission are final and binding upon bothjgarties and are not subject to appeal.

Arbitration expenses, which are sometimes veryjagh* are-u"sually porne by the loser unless otherwise agreed upon.

For details see the rules of the Arbitration Commission 'at the W Russian Chamber of Commerce and Industry.