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  • 7.12.10-ARBITRATION-PRACTICAL CONSIDERATIONS

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  • Practical considerations

     
     

    Although the GCA arbitration system is designed so that exporters can use the system directly from source countries, it is advisable to have local representation at the arbitration. The GCA administration will provide all reasonable assistance to assure a fair hearing regardless of how far away a respondent may be, but there are certain facts and procedures of which the system assumes all participants have a good understanding.
    To protect oneself from oversight, it is a simple matter for an exporter to nominate a local importer to appear on their behalf in an arbitration. Most importers will perform this service free of charge and the practice is quite common. Local representation helps in a number of ways. First of all, documents and sampling usually move along more efficiently. When a piece of paper or a sampling order is misplaced, local people can trace the problem more quickly. Second, local representatives usually have more experience with the arbitration system and can guide the exporter through some of the details.

    For example, it is clearly stated that blanket contentions are not admissible in quality arbitrations. That is to say, one cannot simply ask for a quality allowance because 'the coffee is bad'. On the other hand, an experienced person would point out that a quality complaint should not only be detailed, but also be all encompassing. There have been quality arbitrations where a claimant has complained only about the grade of the coffee. When reviewing the samples the arbitrators also found cup deficiencies but felt unable to include the cupping problem in their award because the claimant did not claim on the cup. An experienced claimant would make a claim for certain grade defects (e.g. black beans, sour beans or husks) 'that sometimes reflect in the cup quality'.

    The need for local representation in technical arbitrations is more obvious. The details of why and how contractual obligations are determined can be complex. An exporter's experience is usually mostly sales oriented, whereas importers (and most technical arbitrators for that matter), have the broader experience of being both buyer and seller in the international coffee market.

    The final advantage to having local representation is gaining a better understanding of the award. Most awards are very simple statements like: 'Based upon the evidence submitted, we award X to the seller [or buyer], and the cost of the arbitration to the buyer [or seller]'. It is rare that an award includes any explanation as to why the arbitrators decided the way they did.

    Because most arbitrators are experienced coffee people, with equal experience as international buyers and sellers of coffee, they understand both sides of the transaction. Those who see the coffee trade from only one side, such as exporters, do not always appreciate why and how certain actions or lack of actions can cause their counterpart to suffer loss or damage, and it is not uncommon for some to feel they have been treated unfairly in the arbitration proceedings. Someone who has not experienced the business from both sides cannot always see how the other party was legitimately hurt by their actions and may sometimes think that the other party won the award because of a bias in the arbitration system.

    In quality arbitrations the arbitrators do not know who the parties are. They see only the complaint and the defendant's reply, without names. After this the coffee does the talking. Therefore, bias in quality arbitrations is virtually impossible. In technical arbitrations, the arbitrators do see the names of the parties but they are both buyers and sellers of coffee and so understand both sides of the business; before being appointed they are pre-screened about any personal contacts they may have with the parties to the dispute, and GCA legal counsel monitors the proceedings. A local representative might not know exactly how the arbitration award was decided, but they should have a clear view of the proceedings and be able to explain more or less how an outcome was determined. This is very helpful for an exporter in deciding whether or not to appeal.