Tricon Dry Chemicals (TDC) v. Plastico Bahrain – SMA No. 4470, 26 January 2024 

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Tricon Dry Chemicals initiated arbitration against Plastico Bahrain over a breach of their commodity sales contract for 300 metric tons of polyvinyl chloride (PVC). TDC is based in Houston, Texas, and is a subsidiary of Tricon Energy Ltd. Plastico is headquartered in Bahrain and specializes in plastics manufacturing. The contract included an arbitration clause for New York arbitration under SMA Rules and New York law. TDC initiated arbitration when Plastico failed to appoint arbitrators within the timeline established. Plastico did not participate in the process.

The panel closed evidence collection in October 2023, with the proceedings based only on TDC’s submissions. TDC sought damages, interest, and attorneys’ fees totaling $156,000 and $20,700.02, respectively. Plastico’s breach stemmed from not making the 20% prepayment by the contract deadline. Despite Tricon’s flexibility offers, including partial payments or market loss compensation upon cancellation, Plastico canceled the order, citing financial constraints. Tricon, relying on Plastico’s commitment, rejected the cancellation and sought compensation for potential market losses. Despite multiple warnings and payment requests, Plastico did not comply. 

The lack of compliance led Tricon to initiate arbitration seeking damages for breach of contract. Plastico’s breach was clear: failing to fulfill prepayment obligations and unilaterally canceling the contract without compensation. Both parties are experienced commodity traders familiar with industry practices and risks. The contract was valid, confirmed by Plastico’s issuance of a Purchase Order without reservations. Plastico’s failure to meet prepayment terms directly breached the contract. Tricon’s attempts to accommodate were disregarded, leading to the contract’s unilateral cancellation without compensation and violating contractual obligations. Had Plastico made the 20% prepayment, Tricon would have fulfilled its obligations, including placing the goods with the carrier in China by the agreed shipment date of July 31, 2022. The risk of loss would have transferred to Plastico upon this action. However, Plastico’s failure to make the initial payment nullified the transaction.

Award

The arbitrators directed Plastico Bahrain W.L.L to pay Tricon Dry Chemicals, LLC a total of $212,900.39. This amount included TDC’s total damages, interest on damages at 9.00% per annum from July 31, 2022, to January 26, 2024, and TDC’s attorney’s fees and costs. If payment was not made within 30 days from the date of the Final Award, interest would resume accruing at a rate of 9% per annum until the Award is satisfied or reduced to judgment.