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  • The Lamwell team represented a Client in the Arbitration Court at the Bulgarian Chamber of Commerce and Industry

The Lamwell team represented a Client in the Arbitration Court at the Bulgarian Chamber of Commerce and Industry

  • INTERNATIONAL COMMERCIAL ARBITRATION
  • 19 August, 2024

Lamwell’s lawyers represented a Ukrainian state enterprise in the Arbitration Court at the Bulgarian Chamber of Commerce and Industry. Lamwell’s Client acted as a seller of goods under a contract with a Bulgarian company. Due to the outbreak of the war, the Client was unable to deliver the goods on time, and due to banking restrictions imposed during the martial law he was also unable to return the advance payment to the buyer. Ultimately, the buyer filed a claim with the Arbitration Court at the Bulgarian Chamber of Commerce and Industry, seeking to recover the prepayment from Lamwell’s Client, as well as to recover a penalty for late delivery and interest on the debt until full repayment. The buyer rejected the Client’s reference to force majeure events due to the fact that the latter did not comply with the seven-day time limit for notification of the occurrence of force majeure events foreseen by the contract.

During the arbitral proceedings Lamwell’s lawyers emphasized that, contrary to the claimant’s allegations, the period for the delivery of the goods had not yet expired at the time of the start of the full-scale war. Ultimately, this period was interrupted by events of force majeure. Given the well-known nature of the war in Ukraine, as well as the dangerous situation in Kyiv during the first days of the full-scale invasion, compliance with the deadline for notification of force majeure events was unnecessary and unreasonable. In addition, Lamwell’s lawyers emphasized that the respondent was deprived of the opportunity to return the advance payment until the banking restrictions on cross-border transfers were lifted, and therefore charging interest on the amount owed would be unfair and excessively burdensome for the Client.

The arbitral tribunal concluded that the sales contract had been terminated and the prepayment was to be refunded. However, the tribunal also agreed with the arguments of Lamwell’s lawyers that the delivery deadline had not yet expired at the time of the start of the war, that the existence of events of force majeure in Ukraine was a well-known fact, and that the respondent was deprived of the opportunity to return the advance payment at the legislative level. In view of this, the arbitrators denied the claimant’s claim for penalties and interest, only ordering the respondent to repay the advance payment for the undelivered goods. This result was positive for the Client and allowed to minimize the Client’s financial risks associated with the impossibility of fulfilling the contract.

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