Simulation - IV

In 2019, Port Visaka Pvt Ltd (Port ‘V’) an Andhra Pradesh based entity entered in to a contract with Godavari Cuts Situated at Hyderabad for the supply of premium quality Seafood. It was agreed that Port ‘V’ would supply the premium quality Seafood to Godavari Cuts time to time when they demand. At the time of entering into this contract, the export of premium quality Seafood outside the State of AP was allowed according to the policy of the State of AP. Later, in the year 2020 State of AP restricted the export of premium quality seafood. Hence, Port V was only able to supply normal quality Seafood. It effected on the business of Godavari Cuts, because it could not satisfy the customers. It result huge loss to Godavari Cuts.

Godavari Cuts treated it as a default and initiated ad hoc arbitration proceedings, according to the agreement, where Hyderabad was the seat.

Conduct ad-hoc arbitration proceeding.

Solution:

In this situation, the first step in the ad hoc arbitration proceedings would be to determine whether the restriction on the export of premium quality seafood outside the State of AP constituted a force majeure event. If the restriction was unforeseeable and beyond the control of Port V, and it made it impossible for them to fulfill their obligations under the contract, then it may be considered a force majeure event.

If the restriction is not considered a force majeure event, then Port V may be considered in breach of the contract. However, if the restriction is considered a force majeure event, then the parties may need to renegotiate the terms of the contract. For example, they could agree to lower the price of the normal quality seafood, or change the terms of the agreement to allow for Port V to supply other types of seafood that are not subject to the export restriction.

The arbitrator would need to carefully review the terms of the contract and the relevant laws and regulations governing the export of seafood from the State of AP. They would need to consider any evidence presented by both parties, such as documentation of the restriction on the export of premium quality seafood, and the financial impact on Godavari Cuts.

Ultimately, the goal of the ad hoc arbitration proceedings would be to reach a fair and equitable resolution that balances the interests of both parties. This could involve the payment of damages by Port V to Godavari Cuts, or the renegotiation of the terms of the contract. The arbitrator's role would be to facilitate the negotiation and reach a mutually agreeable solution.