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  • QA 005
    Question:
    Does delayed shipment due to lack of shipping space constitute Force Majeure ?
    Background:
    Even though the loaded container may be available an export vessel may not have the space to carry it, for example when traffic is heavy. Can an exporter claim force majeure if shipment is delayed beyond the contracted period because shipping space was not available? And if the buyer disagrees, how and from who can redress (if any) be obtained?
    Asked by:
    An exporter in Peru
     
    Answer:

    Force majeure might apply where the partial performance, delayed performance or total non-performance of the contract is as a result of unforeseeable and insurmountable occurrences,wholly beyond your control. But only if these came into being after the contract was concluded, and if the goods were available on time.

    Remember also that the burden of proof is on you, the shipper, whereas in case of arbitration the final decision will in any event rest with the arbitrators. In this respect it is well to recall that all parties to a transaction must always exercise due diligence: that is, they must be able to prove that at all times they acted correctly…

    Most buyers will cooperate in instances where delays are inevitable. Amicable solutions are always the best. Of course buyers are entitled to be kept fully up to date at all times and it is in your best interests to ensure this is done.

    The actual question is not whether you are entitled to claim force majeure, but rather whether you will be in a position to make a successful defense if you do so claim. Many details will have to be provided if force majeure is to be claimed successfully. For example: (1) Was shipping space requested well ahead of time, especially if space problems were already public knowledge? (2) Is there documented proof that the cargo was properly booked but that subsequently it was refused, i.e. shut out? (3) Did you inform the buyer of the situation? As soon as you yourself became aware of it?  This last point assumes of course that you did not already know of the problem at the time the contract was concluded…

    There are important differences between the definition of force majeure in the European and the US standard forms of contract, and we recommend you familiarize yourself with these. 

    For more information go to 04.03.04 and 04.05.08 (Link below). To download the standard contracts themselves visit www.ecf-coffee.org (European Contract) and www.green-coffee-assoc.org (GCA Contract).

    Amicable settlement of differences is always the best solution.  Arbitration should only be seen as a last resort but if an amicable solution proves impossible then arbitration is the only option. In the coffee trade disputes are not taken to a court of law: they are resolved through arbitration instead. Secondly, there is of course no guarantee that the arbitrators will find in your favour. All arbitrations are decided on the basis of the facts and the facts only. We would also repeat that all parties to a transaction must always exercise due diligence: that is, you must be able to prove that at all times you acted correctly.         

    How and where to apply for arbitration depends on the contract you signed.
     If it was based on the standard form of contract of the Green Coffee Association of New York, then arbitration will automatically take place in New York under that Association's rules. If the transaction was based on the European Contract for Coffee then the place where arbitration will be held should have been stated in your contract. Contact addresses for coffee associations in Europe that conduct arbitrations  can be found at www.ecf-coffee.org 

    Go to 04.05.08 through 04.05.10 for more on claims and related subjects. 
    Go to 07, Arbitration, for details of arbitration rules and procedures in Europe and the USA. (Links below).

    Posted 6 December 2004
     

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