FOSFA: Helpful Essentials

The Federation of Oils, Seeds, and Fats Associations (FOSFA) was founded in London in 1863 to safeguard and advance the oil, seed, and fats industries.

FOSFA works as a platform for growth and security, as the arbitration administrator, and as the production of standard pro forma contracts. The International Oils and Fats Association (FOSFA) claims that 85 percent of the world’s oil and fat commerce occurs under FOSFA contracts.

Currently, there are more than fifty FOSFA contracts. For the selling of vegetable oil and fish oil on FOB terms, for instance, FOSFA 53 is often used. When selling and buying the same commodity under CIF terms, FOSFA 54 is appropriate. Trading of European oilseeds and other commodities uses FOSFA 4a. Read on to know more about how FOSFA works. 

What are the most crucial points to keep in mind about the FOSFA arbitration?

Disputes arising out of FOSFA contracts are to be resolved by English law.

However, the so-called “Scott v. Avery” language included in the FOSFA model arbitration agreement has its own quirks. In contrast to the identical GAFTA arbitration provision, the parties to the FOSFA dispute cannot apply to the courts for interim remedies such as “global freezing orders” (WFO).

Excluding the model application, the FOSFA clause is appropriate if the parties have included such a thing in the contract but do not want to be bound by its provisions restricting the procurement of interim remedies. Suppose this condition is broken (say, by one party seizing property at issue). In that case, the other may seek an “anti-suit injunction” from the High Court of Justice, preventing the matter from being heard elsewhere in arbitration. Due to this ruling, the party found to be violating the provision is often required to pay the other party’s legal fees and court expenses.

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FOSFA: Crucial things to know

  • The guidelines and sample documents are not free to access. A copy of the old pro forma contracts and rules may be sent to FOSFA members upon request.
  • The arbitration rules and pro formas published by FOSFA are subject to frequent revisions. Such revisions may significantly impact the result of the arbitration process. For example, the statute of limitations for claims of inferior quality has been increased from 120 days to one year under the present FOSFA arbitration rules.
  • Restrictions in time. Time restrictions (i.e., when a notice of claim must be filed) are set differently under the FOSFA regulations depending on the nature of the dispute. One needs qualified lawyers to understand all the essential details and win the case. Make sure you have such specialists before beginning the arbitration process.

Arbitration fees

In England, FOSFA arbitration is among the most affordable business arbitration options. The applicant must pay a deposit of £5,000 at the first tier and £10,000 at appeal within 30 days of making a claim. It’s customary for the unsuccessful party to pay the associated expenses.

Unlike GAFTA, FOSFA allows the prevailing party to seek reimbursement of its legal fees from the unsuccessful one. However, this does not guarantee that it will be completely compensated. When deciding whether or not to award legal fees, arbitrators take several factors into account, including the parties’ behavior, the expenses’ relationship to the claim, etc. There have been outcomes in the FOSFA arbitration procedure when arbitrators have declined to recover the costs because they found the issue to be straightforward and unnecessary for legal representation.

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How does one go about getting a disagreement settled?

The FOSFA arbitration process consists of a first level and an appeal.

The responding party has 30 days from the date of the claimant’s appointment of the arbitrator to choose its representative. Another arbitrator, who will serve as the tribunal’s chair, will be chosen by the Federation. A lone arbitrator may be appointed if both parties agree to this.

The parties agree to only submit applications and documents electronically or electronically. The arbitrators’ proceedings and rulings will be based on these papers. Arbitrators may start oral proceedings in rare instances.

Challenging a first-tier arbitration award

Within 28 days of the award, any party may file an appeal with FOSFA. FOSFA appoints a panel of five arbitrators to serve as a Board of Appeal. In response to the request, the respondent has 21 days to submit their reply. After then, the parties might ask the arbitrators to continue their explanations, just as at the first level.

In the event of an appeal, the matter is reviewed again, and either party may present fresh evidence. The first and appellate arbitration decisions may be challenged in the High Court of Justice in London. Appeals may be filed, but only for a limited range of reasons.

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