A GAFTA gaffe

An ITIC member, who is a surveyor, was appointed in 2013 by a buyer to sample a cargo of 3,000 MT of Ukrainian sunflower seed cake at a discharge port in Spain under GAFTA Rules. There was an underlying dispute between the buyer and seller as to the quality of the cargo. The surveyor, insured by ITIC, sub-contracted the job to a surveyor in Belgium, who in turn sub-sub-contracted the sampling to their office in Spain. The Belgian subcontractor was GAFTA approved. However, the Spanish office was not.

The buyer lost a GAFTA arbitration (and an appeal) because the Spanish surveyor was a) not GAFTA registered and b) made various mistakes in the sampling. The buyer therefore brought a claim in negligence against the appointed surveyor based in the UK.

ITIC insures members for their services carried out directly or through a subcontractor. Therefore, ITIC covered the claim in full, which amounted to GB£ 14,000 in GAFTA fees and US$ 61,545 representing their lost dispute. Unfortunately, the sub-contracted surveyor (both Belgium and Spanish offices) went into bankruptcy, removing any chance of a recovery.