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Understanding FOSFA: Legal Implications in Commodity Trade

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Regardless of the type of business activities you do as a business, businesses such as yours can encounter potential commercial disputes. Naturally, you will try to ensure that your company avoids these as they take time and money away from your daily business activity. If you are part of a commercial disagreement, it is best practice to prevent litigation and resolve the business dispute using an alternative dispute resolution (ADR) method, such as arbitration. If you use arbitration, different arbitral bodies have different rules to follow for the arbitration proceedings. Therefore, this article will give you an understanding of the legal implications of FOSFA contracts and FOSFA arbitration regarding commodity trade.

What is Arbitration for My Commercial Dispute? 

Arbitration is an alternative dispute resolution (ADR) method for resolving a commercial dispute. It can be used where parties to a disagreement have agreed to turn to it when one arises. Here, parties appoint one or more expert arbitrators to make up the arbitral panel. 

Arbitration is a private process and is also neutral because parties to the arbitration can choose essential aspects of the arbitration, such as the law that applies and the venue for the arbitration. The arbitral panel will decide on the dispute by giving a final direction.  

What is FOSFA? 

FOSFA stands for the Federation of Oils, Seeds and Fats Association. It is an international trade organisation owned and funded by its members. FOSFA supports and facilitates companies in trading globally and shipping. It does so in terms of the following:

  • vegetable and animal oils;
  • vegetable and animal fats;
  • oilseeds; and
  • derivatives of the above. 

The purpose of FOSFA is to:

  • create international contracts which help to protect companies and therefore reduce risks when trading legally; and 
  • provide arbitration procedures to settle disputes in the commercial areas they cover. 

FOSFA also offers other services, such as FOSFA education and FOSFA reconciliation. 

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What is FOSFA Arbitration for my Commercial Dispute?  

FOSFA arbitration for commercial disputes is a neutral and impartial arbitration service and system. It aims to help companies like yours in their fields, where they use their standard contract forms to effectively and fairly resolve commercial disputes. 

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FOSFA also have:

  • a peer group of experienced and knowledgeable arbitrators for companies to draw upon;
  • a system in place for dispute resolution; and
  • rules, guides, and a code of practice.

What Are FOSFA Rules?

Some examples of FOSFA rules, guides and codes of practice include:

  • The Code of Practice for Arbitrators;
  • The Guide to Arbitration Appeals;
  • Rules of Arbitration and Appeal; Small Claims Single Tier Rules of Arbitration;
  • Arbitrator Time Sheets; and 
  • Rules of Arbitration for Brokerage, Commission And Interest.

If a company like yours falls into a commercial dispute and wishes to start arbitration using FOSFA, they give the other party simultaneous written notice. In this, they should details:

  • what the dispute concerns; and 
  • the name of the arbitrator they have appointed.

There is a time limit for doing this under FOSFA. This is in the Rules of Arbitration and Appeal document, which FOSFA produces. This set of rules is free for members and costs £15 if you’re not a member.

They detail this time limit as ‘90 consecutive days from completion of discharge of the goods’ on specified terms or ‘not later than 90 consecutive days from the date of completion of delivery’ on specified terms.

Key Takeaways

Arbitration is a form of alternative dispute resolution (ADR) that tries to resolve a commercial dispute. It is confidential and impartial, with an arbitration panel making a binding dispute decision. FOSFA is an international organisation, namely the Federation of Oils, Seeds and Fats Association. It assists companies globally trading in these areas, creating contracts to protect them and offering arbitration services. Their arbitration service is in place to resolve disputes fairly and honestly. For example, it provides you with a peer group of expert arbitrators. FOSFA also has its own rules, guides, and a code of practices (for instance, the Code of Practice for Arbitrators) that those using its services must abide by.  

If you need help understanding FOSFA in the UK, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions

1. What is FOFSA?

FOFSA stands for Federation of Oils, Seeds, and Fats Association. It is an intentional trade organisation that helps companies trade globally in specific areas, such as vegetable and animal oils. One way it helps them is by providing arbitration services. 

2. What is arbitration?

Arbitration is a form of alternative dispute resolution (ADR) used to resolve a commercial dispute. It involves impartial arbitrators making a binding decision on the issues in dispute. 

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Clare Farmer

Clare Farmer

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