Gafta is an international trade association with over 1,900 members in 100 countries.
The institution has a range of standard form contracts (around 80 in total), which are adopted by companies for their international trades. It is estimated that 80% of the world’s trade grain is shipped on Gafta’s standard form contracts.
Gafta contracts are governed by English law and provide for England to be the venue of arbitration.
Disputes heard by Gafta arbitration
The types of disputes that go to Gafta arbitration are international trade disputes and shipping disputes.
The international trade disputes often involve agricultural commodities, spices and general produce. Whereas the shipping disputes are about Letters of Credit, Free on Board (FOB) contracts and Cost Insurance and Freight (CIF) contracts
Arbitration Rules
Parties can use Gafta 125 Arbitration Rules for larger, more complex claims. These are the Rules which are most commonly used by the parties.
Gafta 126 Expedited Arbitration Rules is available for smaller claims, and permits the use of a sole arbitrator only.
Arbitrators
Gafta arbitrators are specialists and in order to be accepted as an arbitrator, they must have been actively engaged in the grain and feed trade for at least ten years. They are often practising traders or surveyors, so they understand the details of the disputes. They take a specific Gafta qualification and they are vetted for continual professional development.
Unique features
Interestingly, members of Gafta have access to the defaulters list of companies who have not complied with an award. This can inform members’ choices about who they trade with in the future.
Unlike other arbitral institutions, the Gafta service is not available for all disputes. It is only available to parties who use Gafta’s standard forms of contract.
There are also strict limitation requirements. The Notice of Arbitration must be filed within a year of the delivery. Then the claim must be lodged within one year of the Notice of Arbitration.
That said parties can apply for extensions to postpone the progress of the claim for up to six years.
Costs
Members of Gafta receive a discounted fee for the arbitration service. Non members have to pay a fee of £1,700 to use the service, whereas members pay £1,250. Parties also have to pay a deposit, which ranges from £12,000 (where both parties are members) to £15,000 when both parties are non-members, and the tribunal is three members.
The deposit ranges from £8,000 - £11,400 for sole arbitrators.
The full list of fees can be found on Gafta’s website.
In comparison to other arbitral institutions, Gafta arbitrations tend to be at the lower end of the costs scale. The average cost of a first tier arbitration is £14,654.65, which is significantly less than many other arbitrations.
