Gafta's headquarters "https://fortiorlaw.com/news/gafta-arbitration/" target="_blank" rel="noopener noreferrer">https://fortiorlaw.com/news/gafta-arbitration/ are in London, with additional offices in Geneva, Kyiv, Beijing, and Singapore. Among its various roles, Gafta is especially known for drafting standard pro forma contracts used in the grain trade, which significantly streamline and expedite the contracting process.

These standardized contracts allow sellers and buyers from different countries to bypass the need for negotiating every contract term from scratch. Instead, they only need to agree on essential elements like the type of goods, price, quality, delivery terms, and timeframes. The detailed terms are already laid out in the pro forma contract, making the transaction process much more efficient.

According to Gafta, more than 80% of the world's grain is traded under contracts based on their pro forma templates. In the Black Sea region, some of the most commonly used pro forma contracts include Gafta 48 (for bulk delivery on CIF terms), Gafta 49 (for bulk delivery on FOB terms), Gafta 78 and 78UA (for rail and road transport), and Gafta 88 (for container shipments).

Every Gafta pro forma contract includes a mandatory clause that any disputes arising under the contract will be resolved through Gafta arbitration, applying English law.

Deadlines for Filing a Claim Gafta arbitration imposes a one-year deadline for filing a claim, calculated from either the date of the bill of lading, the date of discharge, or the end of the delivery period, depending on the specific terms of delivery. In cases involving quality disputes where samples need to be examined, the deadline is shortened to just 21 days. The notice of arbitration must be submitted within these timeframes, and the formal claim itself must be filed within one year of issuing the notice. However, parties can request an extension for an additional year, allowing for a potential claim period of up to six years.

Gafta statistics reveal that the average cost of obtaining a first-tier arbitration award is approximately £14,654.65. This cost is closely linked to the amount of time arbitrators spend on the case—the longer the arbitration, the higher the cost. While this might seem expensive, it is relatively affordable compared to other arbitration bodies, such as the London Court of International Arbitration (LCIA), where the average cost is around $97,000. Therefore, Gafta arbitration is considered a cost-effective option for resolving disputes under English law.

The final cost of arbitration can exceed or fall below the initial deposit. If the costs are higher, the claimant will need to pay the difference. If the costs are lower (for example, if the parties settle the dispute amicably), a portion of the deposit may be refunded.

Example: In one case, we submitted a claim for non-payment of goods, agreed to a single arbitrator, and paid an £8,000 deposit. Shortly after filing, the defendant reached out, promising payment within a few days. Upon receiving the payment, we notified the arbitrator and requested the case be closed. Gafta then refunded £7,000 of the unspent deposit.

Gafta Arbitration Rules: Gafta 125 and Gafta 126 Gafta offers several sets of arbitration rules, with Gafta 125 being the most commonly used. Gafta 126 is designed for simpler disputes and provides an expedited process. Since Gafta 126 is less frequently applied, the focus here is on the standard Gafta 125 rules.

The Arbitration Process The arbitration process begins with both parties appointing their arbitrators, followed by the claimant filing a claim. After the deposit is paid, the defendant has 28 days to respond to the complaint. The claimant then has 21 days to reply to the defendant's response. However, the process often continues beyond this stage. Arbitrators may allow additional rounds of submissions upon request, each round typically lasting 7-14 days. There is no limit to the number of rounds, which can prolong the arbitration, especially in complex cases or when parties use these rounds strategically to delay the process.