FOSFA arbitration: what it is, its features, what it is for

Companies that produce and export sunflower oil, make a lot of transactions on sale and purchase. In doing so, disputes sometimes arise. This happens if any of the parties do not fulfill what was spelled out in the contract. When these situations arise, suppliers or buyers turn to FOSFA arbitration.

What is FOSFA arbitration

The FOSFA organization was formed in 1863 in London. Its purpose is to protect and develop the trade in oils, seeds and fats. The FOSFA organization has three lines of business:

• A platform that helps businesses to develop, share experiences.
• An organization that administers arbitration.
• A collective that develops model contracts. They are used by about 85% of organizations trading in oil.

About 50 types of FOSFA contracts have been developed. They differ in terms of delivery, requirements.

Features of FOSFA arbitration

All disputes on contracts are regulated by English law. There is a FOSFA clause that prohibits any party from suing the courts to get interim measures. When entering into a contract it is important to check whether it includes this FOSFA clause.

The parties can waive this provision of the contract. If they do not, and a party seizes the cargo during the period of the dispute, the other party has the right to apply to the High Court in London. In this case, the costs will be reimbursed by the party who breached the FOSFA clause.

Parties to contracts are bound by the rules that were valid at the time the contract was signed. If the rules have been changed by the FOSFA organization at the time of the dispute, it is necessary to follow what is written in the contract. The parties shall use the version of the rules that were in effect when the contract was signed.

The fees for arbitration services are as follows: after filing a claim within 30 days, the claimant pays a deposit of £5,000 at first instance. On appeal, a deposit of £10,000 will be required. The party who loses will repay these costs. The winning party is reimbursed 60-80% of the costs. If no lawyers were involved, the arbitrators may decide not to reimburse the costs.

How disputes are heard in FOSFA

The standard rules of arbitration are as follows:

• The claimant appoints its own arbitrator.
• Within 30 days, the other party also appoints an arbitrator for itself.
• The FOSFA Federation appoints the arbitrator. He serves as the head of the tribunal.
• If the parties wish, a sole arbitrator shall be appointed by the parties.
• The application and other documents are submitted in writing or electronically by the claimant and the respondent. On their basis, the arbitrators make decisions. In some cases, an oral hearing is initiated.
• In the exchange of documents, the plaintiff provides the claim, the defendant gives a response.
• This is followed by the claimant's objection to the withdrawal.
• The parties, with the permission of the arbitrators, may express their objections again. However, this delays the process.

An appeal can be made within 28 days from the date of the award. FOSFA will appoint five arbitrators. The respondent has 21 days to prepare its response. The tribunal may allow the parties to make clarifications. New evidence can be submitted as the case is being considered afresh.