Contract, Project and Claim Management as well as Supply Chain Management
in the Mechanical Engineering Industry

Claim Management Russia

Product Line for tempering of steel strip.
Volume About 30 million EUR.
Buyer Importer in Ural region / Russia.
Seller German exporter (55%) with internal consortium partner from Italy (45%).
Situation
  • The buyer has requested the seller in April 2012 to shift the time schedule by 1 year
  • At this time the seller had all equipment ready for delivery and had already effected the first partial delivery
  • Term of delivery is DDU place of receipt, including stamp of customs warehouse
  • Letter of Credit in amount of about 18 Mio. EUR provides for submission of a freight document as stipulated above
Special problem
  • The LC for the delivery rate has been opened by the Russian daughter of a Western European first class bank und has been confirmed by their Frankfurt daughter. During validity period of LC the Western European bank has sold their Russia business and was no more ready to extend the validity of LC
  • Due to the shift of time schedule by the buyer and the expiry of LC the export credit agency has terminated the contract due to increase of danger. Therefore the seller has declared the incurred fabrication costs less down payment as damage
Success That subject has been negotiated by the buyer and the seller. An addendum to the contract has been closed as follows:

  • The equipment will be successively delivered to the buyer and stored for one year
  • The buyer remunerates the seller the costs for project stop und restart, intermediate storage, extension of warranty and other direct costs in adequate amount
  • The amount of the delivery rate will increased by 5,5%
  • The buyer opens immediately a new LC with 180 days latest date for shipment and a deferred payment period of 360 days by a first class Russian bank

The LC matter has been settled by the seller as follows:

  • During the course of negotiation the seller has inquired the conditions for LC confirmation and forfeiting at sight without recourse with German banks
  • The seller has closed a contract with a German first class bank with a reduction of in total 1.9%; that mean positive balance of about 1,1 million EUR in favour of the seller consortium

Concerning export credit insurance the agency has confirmed further cover with extension of time schedule without extra premium.

Further information I gladly provide on request in a personal meeting.