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it may be that the bank will opt toinvest in higher risk assets rather thanundertaking lower risk trade financebusiness.It is difficult to sustain the argumentthat the new Basel rules in general,or the leverage ratio in particular,have caused large international banksto retrench from trade finance. Wellmanaged, trade finance remains ahighly profitable business.For more information, please contactVitaliy Kozachenko, Attorney andCounsellor-at-Law (New York), on+41 (0)22 322 4818 orvitaliy.kozachenko@hfw.com, orRobert Finney, Partner, on +44 (0)207264 8343 or robert.finney@hfw.com,or your usual contact at HFW.Challenging GAFTAjurisdiction: Court clarifiestime limitIn a recent judgment, PEC Limitedv Asia Golden Rice Co Limited (17October 2012), the CommercialCourt has clarified the time limit forchallenging the decision of a first tierGAFTA tribunal that it has jurisdictionto hear a dispute.Asia Golden Rice Co Limited (AGR)agreed a contract for the sale of25,000MT of Thai Rice to PECLimited (PEC). AGR alleged that PECfailed to perform and brought theirclaim before a GAFTA tribunal earlierthis year.In its award, the tribunal found thatthe contract of sale incorporatedthe GAFTA Arbitration Rules(the GAFTA Rules) and so it hadjurisdiction to hear the dispute. Itfound in favour of AGR and orderedPEC to pay damages in the sum ofUS$6,250,000.PEC appealed the tribunal’s findingson the merits to the GAFTA Boardof Appeal. At the same time, PECchallenged the tribunal’s jurisdiction.Under the GAFTA Rules, if a GAFTAtribunal decides it does not havejurisdiction to hear a dispute, a partycan pursue an appeal against thatdecision to the GAFTA Board ofAppeal. Where, as here, a tribunalrules that it does have jurisdiction,no appeal to the GAFTA Board isavailable.However, under section 67 of theEnglish Arbitration Act 1996 (the“Act”), any party to any arbitrationcan apply to the English Court tochallenge a decision of an arbitraltribunal as to its own jurisdiction.The time limit for making such anapplication is 28 days, either from thedate of the decision on jurisdiction,or from the date of exhaustion of “...any available process of appeal orreview”.PEC wanted to make an applicationunder section 67 of the Act. Theissue was whether they needed anextension of time to do so. PECargued that they did not, on thebasis that the 28 day time periodwould only start to run from the dateof the GAFTA award on the appealas to the merits - which was stillunderway. PEC placed emphasison the reference to “any availableprocess of appeal or review” in theAct and submitted that this had awide enough meaning to include theiroutstanding appeal.Although the parties had by thenagreed that the Court should grantPEC an extension of time to maketheir application under section 67 ofthe Act, in a short judgment the Courtgave a reasoned decision againstPEC’s arguments.The Court held that the GAFTA Rulesare clear that a first tier tribunal’saward that it has jurisdiction is“conclusive and binding”. As the onlyroute to challenge such a decisionis by way of section 67 applicationunder the Act, the time limit forbringing such a challenge must be 28days from date of the first tier award.Contrary to PEC’s submissions,under the GAFTA Rules there is noavailable arbitral process of appealor review where the first tier tribunaldetermines it has jurisdiction. PECtherefore required an extension oftime (which they were granted in anyevent).For GAFTA practitionerscontemplating a section 67application against a first tier award,the message is clear: time will startto run from the date of the first tieraward, irrespective of whether thereis an appeal on any other issue to theGAFTA Board of Appeal.For more information, please contactIan Mathew, Associate on +44 (0)207264 8035 or ian.mathew@hfw.com,or John Rollason, Associate, on+44 (0)20 7264 8345 orjohn.rollason@hfw.com, or your usualcontact at HFW.“PEC thereforerequired an extensionof time (which theywere granted in anyevent).”Commodities Bulletin 03