In 2004, a Swiss company (Claimant) agreed to sell iron ore to a Chinese company (Respondent) pursuant to a contract governed by the 2000 Incoterms rules and the 1980 United Nations Convention on Contracts for the International Sale of Goods. Claimant sought reimbursement of demurrage costs incurred at the port of arrival due to Respondent's delay in taking delivery of the goods. Respondent argued that it was not given proper notification of the shipment and that under the applicable Incoterms rule demurrage costs were to be borne by the seller, which was 'liable for the chartering of vessel'. The parties agreed that references to CNF in their contract were to be interpreted as an adulteration of C&F, which corresponded to CFR under Incoterms 2000.

'Respondent's obligation to take delivery of the Goods and to pay demurrage charges

137. It is clear that Respondent was under an obligation to take delivery of the [Goods] upon arrival of the [ship] in the Port of . . ., including making all required arrangements for discharging the Goods. As submitted by Claimant, this conclusion follows from the CISG and the Incoterm CFR.

138. Article 53 CISG provides:

The buyer must pay the price for the goods and take delivery of them as required by the contract and this Convention.

139. Article 60 CISG provides:

The buyer's obligation to take delivery consists:

(a) in doing all the acts which could reasonably be expected of him in order to enable the seller to make delivery; and

(b) in taking over the goods.

140. Pursuant to Article 53 CISG, Respondent had the general obligation to take delivery of the Goods. Article 60(b) CISG provides that this obligation consists of taking over the Goods, that is, by physically accepting them.

141. The Incoterm CFR also sets out the seller's and buyer's obligations with respect to delivery of the Goods:

A4. Delivery. The seller must deliver the goods on board the vessel at the port of shipment on the date or within the agreed period.

B4. Taking delivery. The buyer must accept delivery of the goods when they have been delivered in accordance with A4 and receive them from the carrier at the named port of destination.

142. At the hearing, Respondent admitted that the buyer has "the obligation to take delivery of the goods" (Tr. p. 15). Respondent added that it did "[take] delivery of the goods" (Tr. p. 12) and discharged the cargo on 1 June 2004 (Tr. p. 20).

143. It is also clear that Respondent is liable for the costs of discharging the cargo. Indeed, "FO" as appended to the term CNF in Article 2 of Appendix No. 1 of the Contract stands for "Free Out" which is a:

[q]ualification to a freight rate denoting that the cost of discharging the cargo from the ship's hold is not included in the freight but is payable by the charterer or shipper or bill of lading holder, as the case may be. When qualifying a term of sale, it denotes that the purchase price of the goods does not include this cost which is borne by the Buyer. Often, daily rates of discharging and demurrage are incorporated into such contracts. Abbreviated to FO (Peter Brodie, Dictionary of Shipping Terms, 4th ed., LLP, London, 2003, p.107).

144. The Incoterm CFR also addresses the issue of costs:

B6. Division of costs. The buyer must, subject to the provisions of A3 a), pay

all costs relating to the goods from the time they have been delivered in accordance with A4, and […]

unloading costs including lighterage and wharfage charges, unless such costs and charges were for the seller's account under the contract of carriage […]

145. Under the Incoterm CFR, delivery occurs when the goods pass the ship's rail in the port of shipment (Incoterms 2000, p. 57). Demurrage costs are costs relating to the goods that are incurred after the goods have been delivered in accordance with the Incoterm CFR.

146. The Incoterms 2000 also provide that under the term CFR:

[T]he buyer is bound to accept delivery of the goods and to receive them from the carrier and if the buyer fails to do so, he may become liable to pay damages to the seller who has made the contract of carriage with the carrier or, alternatively, the buyer might have to pay demurrage charges resting upon the goods in order to obtain the carrier's release of the goods to him (Incoterms 2000, p. 9).

147. Accordingly, I find that under the Contract and the Incoterm CFR, with the qualification "FO", Respondent had the obligation to take prompt delivery of the Goods by discharging the vessel. I further find that Respondent had the obligation to bear the costs of discharging the Goods and costs associated with delays, such as demurrage charges, attributable to Respondent.

148. This finding is reinforced by the B/L itself, Claimant's Exhibit 3, which stipulates that the Goods are to be:

[…] delivered in the like good order and condition at the aforesaid Port unto Consignees or their Assigns, they paying freight as indicated to the left plus other charges incurred in accordance with the provisions contained in this Bill of Lading.

And to the left of the above text the B/L provides:

DEMURRAGE USD 22,000

149. The consignee is the person to whom goods are to be delivered by the carrier at the destination. Although the B/L indicates "TO ORDER" in the consignee box, Respondent was the intended recipient of the Goods at the destination, and Respondent referred to itself as the consignee at the Hearing (Tr. p. 19). Although I have already found that Respondent had a general duty to pay these charges under the Contract, Respondent also assumed responsibility for demurrage charges through presentation of the B/L in order to take possession of the Goods.'