17 November 2020
Case study – problems with delivery for a foreign contractor due to COVID-19
SOME OF OUR CLIENTS HAVE BEEN FACING HARDSHIPS RESULTING FROM THE COVID-19 PANDEMIC. THE ENTERPRISES HAVE FOUND THEMSELVES IN AN UNUSUAL SITUATION. THE DIFFICULTIES ARE RELATED TO THE PERFORMANCE OF CONTRACTS CONCLUDED BEFORE THE PANDEMIC OR DELIVERY OF PRODUCTS. SOMETIMES THE SITUATION SEEMS LIKE A FIGHT BETWEEN DAVID AND GOLIATH WHERE A SMALL OR MEDIUM SIZE ENTERPRISE ENTERS INTO CONFLICT WITH A LARGE AND POWERFUL MULTINATIONAL CAPITAL GROUP.
We believe, however, that there is a solution in every situation. We invite you to read our case study where we present how we have helped our client to solve its problem.
Our client was a medium sized family business with an annual turnover of about 18 MEUR. The company manufactures the specialized industrial steel constructions. They signed a contract for delivery of goods with a Mexican company belonging to a multinational group with an annual turnover of about 5.000 MEUR. Place of delivery was Mexico.
Regretfully, after the conclusion of the contract and the finalization of the production the pandemic started. The Mexican contractor informed our client that they « were forced to suspend the acceptance of delivery » because their industry had suffered from the sanitary crisis.They raised the arguments related to force majeure.
Our client found himself in a very complex financial situation. The steel constructions manufactured for the Mexican contractor were already packed and ready to be shipped to Mexico. The client was waiting for the payment of around 0,5 MEUR upon delivery. This amount was significant for our client and almost unnoticeable for their tycoon oponent.
The client turned to our law firm with great concern as to whether they will have any chances in confrontation with such a powerful adversary.
How we helped?
At the first stage Agata Adamczyk analysed the contractual documents and presented her opinion on the admissibility of the termination or suspension of the contract based on force majeur or hardship. She also assisted the client in conducting correspondence preceding the judicial actions.
The contract was governed by the Vienna Convention on the contracts of international sale of goods (CISG) and by Mexican law. The exclusive jurisdiction in all disputes arising from or connected with the contract was Mexico.
For this reason, at the second stage an assistance was needed from a local lawyer who would take over the case and would help to recover the due money as soon as possible either through negotiations or through judicial actions.
Joaquin Rodriguez is a former member of AIJA and like Agata he currently is active on Legalmondo. ECIJA is a reputable multidiscplinary law firm ranked amongst the best in Digital Economy and Information Tecnology, with 18 offices worldwide and a large presence in LATAM. Joaquin himself is a very experienced partner of this firm specialised in international contracts, M&A, and compliance.
Joaquin immediately took over the case. Agata presented to him online the details of the dispute, her legal analysis and the proposed arguments based on the Convention.
The team of ECIJA without delay performed the legal analysis and presented additional arguments under Mexican law.
Our client engaged Joaquin who promptly commenced negotiations.
The Mexican lawyers were so efficient that within merely a couple of months they were sucessful in settling the case and recovering all the money for the Polish client. The goods were shipped to Mexico, fully accepted and the price was paid in full. The client avoided a long lasting and expensive court trial.
If you also need support because your business is suffering from the pandemic, do contact us. We have vast experience in international cases – together we will find the most cost-effective solution suitable for you.
17 November 2020 | Agata Adamczyk
Associate, PartnerCase study – problems with delivery for a foreign contractor due to COVID-19