Dispute regarding elevated pulp temperatures upon arrival
The Fruit and Vegetable Dispute Resolution Corporation (DRC) has developed a series of articles summarizing past arbitration decisions. These articles will help members understand how the DRC Dispute Rules and Standards (R&S) apply in a dispute.
The DRC Dispute R&S states that all DRC arbitrations are private and confidential. As such, the names of all parties, including arbitrators and companies, are not included. A reminder that the DRC’s sole role is to administer the arbitration process; the DRC does not participate in any hearings. Therefore, this summary is based solely on the arbitrator’s written decision and may not reflect important information shared with the arbitrator through written briefs or verbal testimony.
ABSTRACT
The arbitration decision addresses a dispute between parties from Canada. The dispute arose when the Respondent failed to pay five (5) freight invoices within the agreed payment terms. The Respondent claimed that one shipment was received at high temperatures, which led to the withholding of payment on four (4) other invoices.
The arbitrator determined that the Respondent failed to provide sufficient evidence that the load in question arrived with high pulp temperatures due to exposure to undesirable transport temperatures.
This summary provides an essential overview of the arbitration decision and its implications for international commercial disputes.
CASE: DRC File #19418 – Parties Domiciled – Canada
SUMMARY OF FACTS (SOF):
The Claimant is demanding payment for five (5) freight invoices that involved the carriage of the Respondent’s produce to the Respondent. These transactions took place between January 23, 2015 and March 11, 2015.
Respondent is claiming that there was damage to one of the shipments.
Claimant has offered, in an email, a final settlement in the amount of a $4,000.00 adjustment to their invoices to resolve the matter with immediate payment to be issued accordingly.
Claimant is seeking a total of USD$30,700.00, which includes USD$2,200.00 Arbitration Filing Fees.
Respondent has not stated their losses in any manner. Respondent has simply stated, “We are attaching all the documents and also the emails which they were trying to negotiate with us, and they are trying to offer us a small amount of money that was for settlement in this case. We are defending according to the CFIA Report.”
STATEMENT OF CLAIM
Claimant has supplied copies of signed bills of lading (BoL’s) on all five (5) shipments with the exception of the BoL for invoice #17294, dated January 28, 2015, that had a “Hi” temperature notation on arrival. There were no other notations on the signed delivery receipts for the other four (4) shipments.
STATEMENT OF DEFENCE TO STATEMENT OF CLAIM
Respondent’s total Statement of Defence in this matter was quoted above in the Summary of Fact, and the arbitrator will repeat it again here.
“We are attaching all documents and also emails which they were trying to negotiate with us and they were trying to offer us a small amount of money that was settlement this case. We are defending according to CFIA Report.”
Respondent has not accounted for any losses by virtue of an account of sale, dump or donation certificates and/or any other form of defined notice of loss.
SUMMARY OF ARBITRATOR’S ANALYSIS AND REASONING
The supporting documentation the Respondent has submitted clearly references BoL#17771, which was signed completely clean and free of protest on arrival.
The BoLs do not specify a desired temperature while in transit, but the Claimant’s invoices state that 35°F is to be maintained.
The BoL with the “Hi” temperature notation was on a shipment in February 2015, BoL# 17294.
Therefore, it appears that Respondent is claiming losses on a properly delivered shipment (BoL# 17771) and not on the shipment that arrived with high temperatures. (BoL# 17294)
Invoice# 17294 had 15 different items on the load. That being said, there are four (4) CFIA Inspection certificates submitted by the Respondent for only four of those items. Two certificates show normal pulp temperatures (Gai Lan: 34.5°F; Baby Bok Choy: 34-35°F). One certificate for Yu Choy Sum shows 37.2°F. Recommended temperatures for this product must be assumed to be as stated on Claimant’s invoices, as 35°F. Given that it is only warmer by 2°F, one would not expect the damage to be too severe, if any. The other certificate for Yu Choy Mieu shows 37.2-39.5°F, which might be considered a little on the warmer side.
Three of the certificates show large percentages of “limp and pliable,” and the 4th certificate shows “bruising and wilting”. There are four (4) varieties of vegetables highlighted as the damaged goods in question on the invoice from the Respondent’s supplier in Texas. The other 11 varieties have not been highlighted nor inspected as per the submitted documents.
The extent of the damages cited by CFIA on these 4 items could possibly be attributed to poor shipping condition at the time of shipment. In addition, the temperatures during shipment did not affect 11 items or 73% or the load.
Respondent is claiming on a load that was received without objections. Respondent did not claim on the load that was protested for “Hi” temperatures. Included in the Respondent’s documents is a temperature recording tape; however, a temperature recording device with a serial number or tape number is not documented or identified to verify which shipment this tape belongs to. Further to that, the tape submitted reflects the in-transit temperature of 32-33°F.
There is, however, an email that the Respondent submitted where it appears there had to be some discussions about temperature and losses.
Claimant submitted an email dated June 10, 2015, suggesting splitting a $22,136.00 loss three ways. There is no indication whether this loss was USD$ or CAD$.
Furthermore, Claimant offered only a credit of $3,000.00 (no mention of currency) and then finally raised the offer to $4,000.00 with immediate payment of the balance due.
In my opinion, this email does not present itself as an admission by the Claimant to causing any damage; more so, it represents a token of trying to resolve a problem and move forward.
Regardless of any of the commentary provided herein, Respondent is claiming on a shipment that was signed free and clear on arrival.
Respondent has not submitted any claim or documentation to substantiate the claim, on the only shipment that had a notation as to “Hi” temperatures. Therefore, the arbitrator concluded there were no objections or consequences from that shipment arriving with “Hi” temperatures.
ARBITRATOR’S SUMMARY DECISION
The Arbitrator ruled in favor of the Claimant. Respondent must remit to Claimant the amount of USD$30,700.00 within 30 days of the date of this decision.
DRC COMMENTS
It’s essential to understand your responsibilities as the receiver to ensure you have the necessary documentation and make accurate annotations. This will help you support your claim in case any issues arise with the received product.
As a receiver, your responsibilities include the following:
- Taking Pulp Temperatures: Measure the temperature of the product upon arrival, before and during unloading the truck. If you notice any undesirable temperatures, collect the temperature recorders, document their location, and load the product back
- Request a temperature and condition inspection as soon as possible.
- Documenting on the Bill of Lading (BoL): If you receive the product under protest, clearly indicate the reasons for this on the BoL. Additionally, request a download from the reefer unit.
- Addressing Missing Temperature Recorders: If the shipper includes one or more temperature recording devices with the load, but none are found upon arrival, you must document the missing recorders and address this issue with the carrier.
- Notify the carrier and the shipper of a potential claim.
By following these steps, you can ensure proper notice is provided to the shipper and the carrier.
Another important aspect of this decision is that, when there are multiple transactions between the parties and an invoice is in dispute, payments on invoices that are not in dispute should not be withheld until the dispute is resolved unless there is an agreement between the parties.
According to the DRC Trading Standards, all members are required to meet their financial obligations by paying invoices within the agreed payment terms. If no specific payment terms have been established, payments should adhere to the DRC Trading Standards. Undisputed invoices cannot be withheld unless there is an offsetting agreement between the parties, including the transportation company.
ADDITIONAL RESOURCES
To access the full redacted arbitration decision, click here.
Solutions Newsletter Articles
• Importance of Documenting Temperatures
• Withholding payment of an undisputed amount: Tips for Better Business Practices
• Arbitration: Top 3 Reasons Parties Fail to Prevail
