CONTRACT DISPUTES AND DEFAULTS ARE BACK TO NORMAL IN 2013

摘要

The number of contract defaults, disputes and arbitration cases are returning to normal averages in 2013, after two years of surges to record levels caused by the record price volatility experienced during 2010/11.A record level of cotton price volatility caused a surge in the number of arbitration cases filed at the International Cotton Association (ICA) during the past two years. New arbitration cases at the ICA rose from 73 in 2010 to 242 in 2011 and to 247 in2012. These disputes were related to contract performance, weight and quality and involved the entire cotton supply chain, from farmers to merchants, and to textile mills. The unprecedented increase in prices caused a large number of growers in the USA,India (associated with a government ban on exports), Brazil, Tanzania and other countries to default on cotton contracts, to delay delivery, or to deliver smaller quantities and lower qualities than agreed in contracts with merchants. When prices declined sharply, a large number of spinning mills also defaulted on contracts by failing to issue letters of credit or to accept shipments of cotton. Most of these mills are based in Bangladesh, China, Indonesia, Pakistan, Thailand and Vietnam.