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Dispute resolution involving a third party dealer

Iraq is one of the Gulf countries that export crude oil, around 3,800,000 bbl/day. And oil is an important resource, and a number of industries import a huge amount of oils from the country.  A literal ‘gulf’ was created between two companies during the last week of November 2019 when a dispute arose between them, all due to the import of ‘crude oil’. 

Mr. Hemadi, a resident of Chennai, Tamil Nadu is the proud owner of the Group of Industries. His factory is involved in the production of bearings, and other types of machinery for multiple industries. His workshops need about 120 barrels of oil every year.

Mr A. Syed is the owner of Oils in Vishakhapatnam, Andra Pradesh. He has been the supplier of crude oil for the Group of Industries since 2005. There was no sign of disputes between the two only until October 2019, when Oil prices rose dramatically. Mr Syed and Mr Hemadi shared their experience of solving the dispute with the help of Privatecourt in an interview.

Like any other order made, Group sent an order of 50 barrels of crude oil to Oils on October 7, 2019. Oils accepted the order but did not send a confirmation to Group. Considering the 14-year-old, harmonious business relation, Mr Hemadi waited, in a hope to get confirmation soon. Two weeks later, a confirmation was sent to Group, along with the mention of the payable amount as 2985$, according to 59.7$ per barrel, which was roughly equal to 211935 INR. The deal was signed and some percentage of the total amount was paid as advance to Oils.

Never did Mr Hemady or his employees know that the delay in confirmation was due to some ongoing differences between Mr Syed and the Oil supplier from Iraq. Soon after the confirmation was sent, a series of excuses for delay in delivery started to develop suspicion within Mr Hemady.

Well, Released its hold on the two and the differences were solved. But it was the end of October already. The company was already under losses due to delays in production. A gulf was already created between two companies, Mr. Hemady was waiting for their last order to be received and break bonds with Mr Syed.

But this ‘last order’ was about to create a ‘seeming to be seamless’ war between the two companies. The involvement of the US has always affected the price of oil, worldwide. That year, within a month oil price, rose from 59.7$ per barrel to 63.2$ per barrel.

As soon as the oil was ready to ship, Mr Syed informed xys about the price-rise and Mr Hemady couldn’t take it. The huge difference between the prices would cost him about 12424 INR along with the increased shipping charges.

The ship was on the shore, production nearly stopped, threat call from the supplier and a possible betrayal from a friend, he was broke, both literally and figuratively!

Long disputes, economic losses and industrial shame brought both, Mr Hemady and Syed to Privatecourt in December 2019.

Privatecourt jury analysed their case and it went through a process of arbitration. Mr Hemady believed that Syed delayed the order on purpose, as “He somehow knew about the price rise”. While Syed explained in his defence that “Price rises are not planned”. Their doubts were cleared, considering all the proofs a decision was made. Finally, the difference in the amount was paid by both, Syed and Hemadi, 40 and 60 % respectively.

The dispute was resolved and productions started in the company, no bonds were broken, just like a satisfying carbon atom.

So not only did it solve their case in minimum expenditure, but PrivateCourt also saved them from humiliation and a long judiciary process, right from their homes. And now that both the companies have an arbitration clause of Privatecourt in an agreement, they have secured safe dispute resolution processes for the future.

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