Gafta, or the Grain and Feed Trade Association, was founded in 1878 as the London Corn Trade Association. Headquartered in London, with additional offices in Geneva, Kyiv, Beijing, and Singapore, Gafta’s mission is to protect the interests of those involved in the grain market. It is particularly known for its development of standard pro forma grain trade contracts that simplify and expedite the contracting process. When sellers and buyers are in different countries, they can refer to a Gafta pro forma, which already includes detailed terms, rather than negotiating every detail anew.

Over 80% of the world’s grain shipments are based on Gafta pro formas, according to the association. Commonly used pro formas in the Black Sea region include Gafta 48 (bulk delivery on CIF), Gafta 49 (bulk delivery on FOB), Gafta 78 and 78UA (rail and road), and Gafta 88 for container shipments. These contracts generally stipulate that any disputes will be resolved through Gafta arbitration under English law.

Time Limits for Filing a Claim

Under Gafta rules, the time limit for filing a claim is one year, starting from the date of the bill of lading, the date of discharge, or the end of the delivery period, depending on the delivery terms. For disputes concerning quality, where sample examination is needed, the time limit is 21 days. The notice of arbitration must be submitted within this period, and the actual claim must be filed within one year from the notice. Extensions of up to one additional year can be requested, allowing a maximum postponement of 6 years.

Final arbitration costs may vary from the initial deposit. If the costs exceed the deposit, the claimant will need to pay the difference. If the costs are lower, such as in the case of a settlement, any remaining deposit may be refunded.

Example: We filed a claim for non-payment, agreed on a single arbitrator, and paid a £8,000 deposit. When the defendant promised payment, we notified the arbitrator and closed the case. Gafta refunded £7,000 of the unused deposit.

Arbitration Procedure

The arbitration process is relatively simple:

• The rules are contained in just 15 A4 pages, which is more concise compared to many national civil procedure codes.
• There are generally no oral hearings, so there is no need to travel to London. Decisions are based on the documents submitted electronically.

Who Covers Arbitration Costs?

Initially, the claimant is responsible for all arbitration costs. If the claimant wins the case, the losing party will cover these costs.

Recovering Legal Costs

According to Gafta Arbitration Rules, legal costs are recoverable only if both parties agree. In most cases, such agreements are not in place, so legal costs are typically not recoverable.

Dispute Resolution Process

Gafta provides two arbitration rules: Gafta 125 and Gafta 126. Gafta 125 is the standard procedure, while Gafta 126 is used for simpler disputes and provides an expedited process. The following details pertain to the Gafta 125 rules.

Initially, the parties appoint arbitrators and the claimant files a claim. After paying the deposit, the defendant has 28 days to respond, and the claimant has 21 days to reply. The process may involve additional rounds of clarifications if requested by either party, which could extend the duration of the arbitration if the case is complex or if the parties engage in excessive back-and-forth.

All correspondence is managed through Gafta’s secretary, with no direct contact between the parties and the arbitrators. Oral hearings are rare and are only conducted if deemed necessary by the tribunal. Virtual hearings are available, which help reduce overall costs.

Challenging the Award

Gafta offers an appeal process for challenging the initial arbitration award. The appeal allows a full review of the case, without needing to justify the reasons for the appeal.

The appeal procedure is similar to the initial arbitration process, with a three-member panel if the first-tier award was made by a sole arbitrator, or a five-member panel if made by a three-arbitrator tribunal. Additionally, parties can challenge the award in the High Court of Justice in London, but such challenges are limited and rarely succeed.