Because commodities are often traded internationally and the quality or condition of the material can be in question. Quality was either specified in the contract, or to be assessed based on the “usage in the trade.”
Condition had to be marketable and there were various factors that could make a supply unmarketable. The disagreement between the parties on the sale of a commodity – which is the classic commodity transaction – generally then turned
on quality or condition or both of these aspects. Very frequently there
were no sophisticated legal issues to be decided.
Because the tradition legal avenues of dispute resolution are often very difficult to enforce internationally and can be extremely complex, time consuming and expensive, arbitration has emerged as a more acceptable form of dispute resolution in the commodities industry, particularly where the products concerned are perishable. We have represented a number of commodities traders in international commercial arbitration proceedings because of the need to resolve a dispute about international commodities.