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8. On the question of non-delivery of the second lot, it was contended that it was clear, in terms of the amendment dated 12.05.1994, that SAIL agreed to supply 20,000 MTs of CRC to the Claimants. SAIL on the other hand, contended that there was no binding agreement with regard to this amendment as the on-going negotiation never concluded into a binding promise. It argued that in FOB sale, the essential terms of the contract must be agreed to before a concluded contract can come into existence. Furthermore, no shipping date was agreed to between the parties nor was the size finalized. SAIL stated that it was merely a conditional contract, and alternatively if there was a concluded contract, Thyssen was in breach as it did not act in consonance with the letter of credit issued. The Arbitrator held that there was a valid and binding agreement between the parties with regard to the 2nd lot and that SAIL was in breach. He awarded damages.

"5......The normal rule in FOB contracts is that the property is intended to pass and does pass on the shipment of the goods. In certain circumstances, e.g., if the seller takes the bill of lading to his own order and parts with it to a third person the property in the goods, it has been held, does not pass to the buyer even on shipment. We are not concerned here with the question whether the passing of property in the goods was postponed even after shipment. The correctness of the proposition that in the absence of special agreement the property in the goods does not pass in the case of a FOB contract until the goods are actually put on board is not disputed before us."

It is submitted that in the present case there was a special agreement, which clearly postponed the transfer of title of the goods after the same had crossed the rails of the ship and therefore the effect of FOB in these special circumstances was totally irrelevant. The Sole Arbitrator correctly considered this. It is argued that in any case, even if the FOB nature was considered to be relevant, SAIL‟s argument that once the goods had been placed on board after inspection, Thyssen could not have rejected the goods at the port of destination i.e. USA is not correct; in this regard reliance is placed on the Arbitrator‟s finding that SGS India was not Thyssen‟s agent:

"The distinction between CIF (Cost Insurance and Freight) and FOB (Free on Board) contracts is well recognized in the commercial world. While in the case of CIF contract the seller in the absence of any special contract is bound to do certain things like making an invoice of the goods sold, shipping the goods at the port of shipment, procuring a contract of insurance under which the goods will be delivered at the destination etc., in the case of FOB contracts the goods are delivered free on board the ship. Once the seller has placed the goods safely on board at his cost and thereby handed over the possession of the goods to the ship in terms of the Bill of Lading or other documents, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete. The goods are from that stage onwards at the risk of the buyer."