International Cotton Association Sees Arbitrations Grow

By Jim.Robinson|July 5, 2012

So far in 2012, the International Cotton Association(ICA) has received 135 requests for arbitration, with no slowdown in sight.

With continued market volatility, the industry is seeing more and more parties failing to honor their contractual obligations. This is having a direct impact on the number of disputes brought for arbitration at the ICA.

By its own admittance, the ICA arbitration system has struggled to cope with the number of arbitrations this past year. In 2011, the Association received a staggering 242 requests for technical arbitration – over five times its normal yearly average.

As the pace continues, the ICA has been working hard to implement a series of improvements to reduce the cost and the time taken for arbitrations. It also plans to increase the quality and effectiveness of its awards procedure by introducing a pool of professional “ICA Chairmen”, who will monitor the costs and time of arbitrations and also the quality of arbitrators in order to produce more enforceable awards.

“The continued market uncertainty is creating a lot of challenges for us, but the situation has given rise to a number of new initiatives,” said Antonio Esteve, ICA president in a statement. “Enforcement of awards is still a big problem in some countries. The challenge here is to strengthen the effect of our default list. We aim to do this by making better use of “ICA Advisory Notices”. The notices inform our members about firms that have a direct link to companies on the default list either through legal, family or individual connections. We are now actively gathering intelligence to uncover these links and to find out who is trading with whom and where they are buying and selling their cotton.”