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Kerchanshe wins in London over coffee disputes

By Muluken Yewondwossen

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The prominent coffee exporter Kerchanshe Trading PLC thrives on the international arbitration stage of litigation in London, where it was sued in a disagreement between two claimants.

The buyers, Equatorial Traders Ltd. and Kamba Coffee Ltd., filed complaints with the British Coffee Association (BCA) Arbitration Service alleging that the supplier, Kerchanshe, one of the top coffee exporters in terms of earnings and volume, was not fulfilling the terms of the parties’ entered contracts.

A disagreement emerged between the parties on the non-shipment of 2,240 (60 kg) bags of coffee, which was a partly contracted volume, in the Equatorial case.

Equatorial claimed in a September 20, 2023 claim that it had paid 170 US cents per pound (USc/lb) for 384 metric tons of coffee on a consignment of 6,400 (60 kg) bags and to export in February 2023, while the local company had transported 4,160 bags.

It claimed that after replacing the bean it had purchased at 184 US cents per pound from the market, it had sent the respondent a debt note for the USD 41,481 price difference on 2,340 bags, which the respondent had not paid. In response, Kerchanshe used the European Standard Contract for Coffee (ESCC) and contended in several articles that the client’s claim is void since the ESCC’s time restriction has passed.

“Whilst 4,160 bags were shipped in August 2023, this in no way implies that the whole contract had been changed from shipment in March 2023 to shipment in August 2023,” the Tribunal that recalled the contract was signed under the ESCC.

The Tribunal’s findings indicated that the contract was concluded with a shipment period in March 2023 for 6,400. Furthermore, it stated that the claimant neglected to place the respondent in default by the appropriate deadline for shipping in March 2023.

In another case, Equatorial also charged Kerchanshe for the delivery of 192 metric tons of beans, claiming that bean size did not meet the requirements set out by the Ethiopian Commodity Exchange (ECX) for export.

The Ethiopian Coffee and Tea Authority (ECTA) certified Sidamo 4 coffee was transported, according to the supplier, who also claims that “the ECX coffee contract is obsolete and bears no relevance to the international export of coffee.”

In its statement, it stated, “They continue to offer the parcels at a profitable margin describing goods as Sidamo grade 4 despite claimants requesting invoicing back and describing coffee as under grade (UG).”

The arbitration highlighted that both the claimant and the respondent had admitted that the arrival quality’s bean size was small, and that the claimant had later offered and sold the goods in accordance with the terms of the original contract.

According to the arbitration, “this has been evaluated by the Tribunal, as have the arrival samples.” The claimant presented a sample claiming it to be the pre-shipment authorized sample.Although the tribunal reported that it discovered that the coffee shipped had smaller beans than the unsealed pre-shipment approved sample, the landed sample outperformed the pre-shipment sample in terms of taste attributes, according to the Independent Coffee Laboratory’s evaluation in London.

Consequently, Kerchanshe Messer Equatorial Traders was sentenced by the tribunal to pay US cents 10.00/Ib.

The quality of the coffee that was delivered to Hamburg was also a factor in the Kamba Coffee claim. The customer and Kerchanshe signed a contract for the supplier to sell 2.4 metric tons of coffee at US cents 430 per pound, but the buyer insisted that the quality of the coffee it received fell short of expectations.

The claimant formally brought the case to arbitration on August 7, 2023, and the BCA registered it on September 5. The claimant contends that while the arrival parcel quality was assessed 78 percent below screen 14, the ECX grading guidelines suggest that the parcel is 85 percent above screen 14.

According to the responder who claimed that the ECX coffee contract was out of date, “the ECTA confirmed that the goods that were shipped were of Anasora grade one.”

It replied in the arbitration that “the claimant denied the respondent the opportunity to sample and evaluate the parcel.”

The tribunal declares that the claimant’s request for arbitration in this issue is time-barred, finding in favor of Kerchanshe.

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