The issue – Have Sellers jumped the gun + placed Buyers in default before a default has occurred. The shipment was for March/April 2021 CIF Rotterdam, payment by confirmed irrevocable Letter of Credit. Sellers, not having received an L/C, by 1 March 2021, placed Buyers in default on 2 March 2021. But Buyers could have contractually opened the L/C after the 2 March 2021 – even up to and including the 30 April 2021, and that it is Sellers, not Buyers, who are in default for wrongly terminating the contract.
This is an obvious defence to the claim brought by Sellers against Buyers. But the unrepresented Buyers have not raised it. They are only arguing about the market price on the date of the supposed default.
Does the Tribunal Act?
Pre the Arbitration Act 1996, the adversarial approach was applied. Then, arbitrators said little and certainly would have said nothing about Buyers’ failure to spot their defence. The 1996 Act, however, introduced a new element. S 34 states;-
“Procedural and evidential matters.
(1) It shall be for the tribunal to decide all procedural and evidential matters, subject to the right of the parties to agree on any matter.
(2) Procedural and evidential matters include —
(g)whether and to what extent the tribunal should itself take the initiative in ascertaining the facts and the law;”
S 34 brings into play the Inquisitorial approach. It is quite a sea change in outlook + practice and required a new mindset from arbitrators.
The first move is for you as Chair to discuss the issue with the Two Wingers. One arbitrator, appointed by Sellers, argues that Nothing is Said or Done. The other follows the thinking of the Act and advises Issuing Directions to the Parties.
EPISODE 3 ON 6 SEPTEMBER 2021
WHAT ACTION DO YOU AS CHAIR PROPOSE?