Presented by Presented by

ANDREW JACOBSANDREW JACOBS Managing DirectorManaging Director

A. A. PoortmanPoortman [London] Ltd.[London] Ltd.

CICILS Convention, Brisbane May 2nd 2010

CICILS DISPUTE RESOLUTION WORKSHOP - May 3rd 15:15-17:00 Case Study # 1

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Panel of Experts:Iman Reda GEDCO , CANADA

Shipper/processor Seller expert

Hassan Boubess HB AGROTRADE, SWITZERLAND Importer/distributor Buyer expert

Gerard Serfati COGESER PARIS, FRANCE Broker expert

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Background

Contract 123456 dated Oct 1st 2009

Seller: ABC Exporters, USA Buyer: XYZ Importers, LebanonCargo: USA Great Northern White Beans - Grade 2 or better50fcl shipment January at US$1125 mt cfr Aqaba [in transit toBhagdad]

Payment: irrevocable confirmed L/C to be opened by Oct-15Quality final at loading asper Official Grade cert issued by Rocky Mountain Bean Dealers Assoc/RMBDA or USDAContractual basis GAFTA 86/24/125L/C opened on time calling for Rocky Mountain Bean Dealers Assoc. and USDA Grade cert

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Facts •1 Shipment made during January, Seller presented USDA Grade cert with shipping documents •2 On presentation, Buyer requested missing Rocky Mountain Bean Dealers Assoc Grade Cert •3 Seller explained, asper contract, they could present either Rocky Mountain Bean Dealers OR USDA Grade Cert •4 Buyer's bank raised discrepancy with documents of missing RMBDA Grade Cert,which buyer refused to waive •5 Exchanges of email followed where Seller protested they had complied with contractual requirement to supply either Rocky Mountain Bean Dealer Grade cert or USDA Grade Cert, having inadvertently failed to pick up L/C called for both which is unreasonable, anyway trade recognises USDA Grade Cert as being paramount •6 Buyer refused to waive discrepancy unless Seller reduced invoice price by$250/mt, required by enduser to overcome missing cert

•7 As cargo had arrived Aqaba, and replacement market had softened, Sellers finally agreed a $175/mt reduction in invoice price

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8 Seller claimed to CICILS under Dispute Resolution process after payment had been completed, as they felt they had clearly been put under duress by Buyer, who had been tricky by inserting in L/C requirement both RMBDA & USDA Grade certs be supplied, and that Buyer had been influenced by lower prices in replacement market plus the weak position of Seller with cargo already arrived.

9 Buyer claimed they had no alternative, as they had agreed with end user to provide both RMBDA and USDA Grade Certs, BOTH stipulated in L/C to which Seller had not objected. The only way to clear the obstacle was to negotiate a price reduction which Seller had accepted, and which should be considered in full and final settlement of the dispute, no need for CICILS intervention

CICILS Convention, Brisbane May 2nd 2010

CICILS DISPUTE RESOLUTION WORKSHOP - May 3rd 15:15-17:00

Case Study # 2

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Panel of Experts:

Gord Pryde HENSAL DISTRICT CO-OP, CANADA Shipper/processor Seller expert

Alex Cherqi CIACAM, FRANCE Importer/distributor Buyer expert

Paul Lambert PL INTERNATIONAL, USA Broker expert

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BackgroundContract 246810 dated Jan 5th 2010 Seller: DEF Exporters, Australia

Buyer: UVW Importers, ShanghaiCargo: Australian Rapeseed - 2009 crop; 99% purity; 40% oil - for oil crushing50fcl in bulk, shipment latest March 15th at US$650 mt FOB BrisbanePayment: 20% against proforma prior to despatch of cargo from interior to port of loading,

bal. 80% C.A.D. on presentation through Buyer's bank on arrival of vessel at destinationQuality final at loading asper Indepenent Certificate of shipped weight & qualityContractual basis FOSFA

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Facts•1 Jan 7th Seller asked Buyer to nominate shipping line & indicate loading date in Brisbane, emailing scans of C/T & Pro-Forma invoice for 20% pre-payment •2 Buyer immediately responded that, due to sudden announcement of new import regulations, buyer needs "Guarantee free from blackleg weed contamination" in c/t•3 Seller advised Buyer that best they could do is provide cargo "practically free of blackleg weed seed" but impossible from Australia to guarantee "totally free"•4 Buyer reverted saying they had not yet signed contract, nor had they passed Pro-Forma invoice for 20% prepayment, requesting under these exceptional circumstances [of changed government regulation = Force Majeure] for Seller's understanding and agreement to cancel the contract •5 Seller declined to cancel and pressed for confirmation from Buyer of their intention to complete obligations and pay Pro-Forma invoice •6 Buyer repeated that, without blackleg free guarantee, exceptional circumstances prevents shipment & offered Seller $10/mt to washout contract •7 Seller refused, advising under such circumstances they had no option but to put Seller in default, claiming $50/mt price difference to resell domestically

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8 Seller submited to CICILS that, at time of concluding, Buyer had not requested guarantee of "free of blackleg seed", which is 'unachievable' from Australia. Whilst contract had not been signed, nor pro-forma pre- payment invoice paid, the transaction had undeniably been concluded by email exchanges. Unliteral action by Buyer [to require change of specification to something "unachievable"] resulted in Seller incurring losses which should be refunded

9 Buyer claimed transaction was not confirmed as contract had not been signed [nor pro-forma pre-payment invoice paid, which would signify business confirmed]. Further, it was beyond Buyer's control when Chinese Government introduced new import regulations shortly after order was placed ["Force Majeure"] Buyer acted responsibly notifying Seller as soon as changed regulations known, even offering wash-out fee to help Seller, but $50/mt penalty is unreasonable.

CICILS Convention, Brisbane May 2nd 2010

CICILS DISPUTE RESOLUTION WORKSHOP - May 3rd 15:15-17:00

Case Study # 3

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Panel of Experts:

Huseyin Arslan - ARBEL PULSE & GRAIN, TURKEY Shipper/processor Seller expert

Manuel Guasch - ALIMENTOS NATURALES, SPAIN Importer/distributor Buyer expert

Orhan Sirt - ORHAN SIRT, TURKEY Broker expert

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Background

Contract 13579 dated July 1st 2009

Seller: GHI Exporters, Argentina Buyer: MNO Importers, Italy

Cargo: Argentine White Alubia Beans

2009 crop 170/100gr 0,5 + 0,5 + 2 30fcl shipment November at US$1050 mt cfr Naples

Payment: 60 days from B/L date

Quality & Weight final at loading asper Independent Survey cert

Contractual basis GAFTA 86/24/125

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Facts• 1 Shipment made during November, Seller presented Independent Survey cert with shipping documents • 2 On container discharge [45 days from B/L date], Buyers sampled cargo noticing trace presence of pink coloured Alubias which notified to Sellers •3 Seller explained they checked pe-shipment sample and noticed no contamination of pink-colured Alubias•4 Buyers informed their investigations suggest the pink colour was due to "seed treatment inoculation" which makes cargo unfit & unsafe for human consumption, as chemicals used in seed treatment can be injurious to health if consumed, so they were unwilling to pay invoice •5 Survey of delivery was made by mutually agreed surveyor and samples were drawn. In 5kg only 1 pink coloured seeds were found but Surveyor confirmed during sampling, when bags were out-turned they could spot occasional 'pink' Alubia [treated seed] •6 Buyer refused pay documents, as cargo contaminated with treated seed as being "not Sound & merchantable, not Fit for Human consumption" and required Seller's to collect cargo, repaying landing expenses and Survey costs. Sellers reluctantly complied •7 Seller suggested as rate of possible contamination was only say 2 beans in 50kg or 85,000 beans therefore 99.99% free from defect, and that after rehydrating, blanching and processing any contamination would be insignificant and not pose a threat to health, that rejection incorrect

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8 Seller reasoned that level of possible contamination was insignificant, could not have been picked up on normal sampling and that Buyer was in default for not paying documents on 60th day as required by the contract

9 Buyer claimed that they were within their rights not to pay as cargo was not Sound & Merchantable, nor Fit for Human Consumption. Despite admitted low level of contamination, Sellers had failed to display good manufacturing practice for allowing cross contamination between Seed Beans and Consumption Beans. Buyers further claim $150/mt for replacing cargo at short notice

CICILS Convention, Brisbane May 2nd 2010

Any questions ?

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