• Claims, default, arbitration


    Submission of claims -  ECF contracts

    Quality claims. Not later than 21 calendar days from the final date of discharge at the port of destination.

    All other claims (technical claims). Not later than 45 calendar days from:

    • The final date of discharge at the port of destination, provided all the documents are available to the buyer, (i.e. the coffee has been shipped); or
    • The last day of the contractual shipping period if the coffee has not been shipped.

    These limits may be extended if the arbitral body at the place of arbitration (mentioned in the contract) considers that one or other of the parties will suffer undue hardship.

    Submission of claims  -  GCA

    Under GCA rules time limits are based instead on the filing of a demand for arbitration, not on when the defending party is notified.

    Quality claims: A demand for arbitration must be filed with the GCA within 15 calendar days from date of discharge or after all government clearances have been received, whichever is later.

    Other claims (technical claims): The only time limit is that a demand for arbitration must be filed with the GCA not later than one year from the date the dispute first arose. Usually one would expect to see a number of exchanges between the parties to the contract before this but there is no contractual obligation on either of the parties to do anything but file a demand for arbitration within the year. (Depending on the type of contract dispute, the United States legal system allows three to seven years for the filing of judgement. Quality claims are subject to a 15-day limit because quality deteriorates over time.)

    DEFAULT:    One of the parties does not execute its part of the contract. After declaring the offending party to be in default the injured party can claim discharge of the contract with or without damages (but excluding any consequential, i.e. indirect, damages). If the offender fails to pay these or disputes them then the matter shall be decided by arbitration.

    The default clause is stipulated separately in the ECF contracts, mainly because the notion of a claim assumes an incorrectly executed contract. Default on the other hand deals with the cost and damage to the injured party of the total and possibly wilful non-execution of a contract. As in the case of invoicing goods back for a radical difference in quality, there are no fixed rules for determining default damages. In the European Union the process depends on the arbitral body under whose jurisdiction the arbitration is held. The GCA contracts provide for arbitration in different US locations provided a location other than New York has been specified in the contract. If no location is specified then arbitration will automatically be held in New York with the arbitrators setting the damages if any are awarded.

    ARBITRATION: Any dispute that cannot be resolved amicably shall be resolved through arbitration at the place stated in the contract. Unless a different US location has been specified in the contract, the GCA contracts automatically place arbitration in New York, to be held in accordance with the law of New York State. However, the ECF is the umbrella body for a number of national coffee associations in sovereign countries, quite a few of which have their own arbitral bodies, rules and legal systems. (See 07, Arbitration.)

    In this context the most important are the United Kingdom (London), Germany (Hamburg) and France (Le Havre), followed by Italy (Trieste), Belgium (Antwerp) and the Netherlands (Amsterdam). All ECF contracts provide that disputes shall be resolved by arbitration but the actual commercial contract must state where this shall take place. If not then arbitration will be delayed while the ECF Contracts Committee determines where it will be held and the defending party may find itself having to deal with arbitration proceedings in a location it is not familiar with.

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