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Tue 14 Jul 2009 10:16 PM

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Russia's RIAS enters arbitration in Egypt wheat row

UPDATE 2: Russian grain company starts  cases against private Egyptian grain importer.

Russian grain company Rosinteragroservis (RIAS) said on Tuesday it had started two arbitration cases at the London-based Grain and Feed Trade Association (GAFTA) against a private Egyptian grain importer.

A RIAS official told Reuters that grain importer Egyptian Traders had failed to pay RIAS Trading SA, a Swiss-based subsidiary of RIAS, for two Russian wheat shipments.

Egyptian Traders Co said the RIAS allegations were misleading and "strongly disputed."

Egypt, the world's top wheat importer, has been in a dispute with Egyptian Traders since mid-May over the quality of wheat cargoes brought to the country and over the authenticity of an import document that the firm has said was valid.

"When we presented documents for payment to Egyptian Traders ... they didn't pay, so they went into default as per the GAFTA," RIAS Trading Commercial Director Chris Vanhonacker said. "We have started this arbitration to recuperate our losses."

Egyptian Traders Co Chairman Ashraf El Attal told Reuters in an e-mail responding to RIAS: "The allegations of Rias are misleading and strongly disputed."

"Arbitrations are strictly confidential and we are not going to breach our contractual duties in this regard," Attal added.

The government has announced measures aimed at improving inspection and quality control of imported wheat, including doubling the financial sureties deposited by cargo inspection firms.

The chairman of Egyptian Traders is also the president of GAFTA. RIAS's Vanhonacker said this "will not affect the case".

One of the vessels in the dispute, the Seabird, is being held at the Egyptian Red Sea port of Safaga despite a decision, announced by Egypt's trade ministry, to re-export the shipment.

A second shipment had been re-sold, according to Vanhonacker, but RIAS was seeking monetary compensation for losses incurred in shipping the wheat to Egypt before having to re-sell it.

"When we saw the problems at Safaga with the Seabird, we prevented the other vessel from going through the Suez Canal and kept it off the coast of Port Said and then re-sold it," he said.

RIAS has said Egypt's main state wheat buyer, the General Authority for Supply Commodities (GASC), ordered customs officials in Safaga to detain the Seabird despite the re-export decision. GASC has not commented on the matter.

RIAS previously filed a complaint on June 29 with Egyptian prosecutors against GASC and Egyptian Traders for delaying the release of the vessel. (Reuters)

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