Author: DRC

The DRC’s Mediation and Arbitration Rules have been revised to avoid repetition of some articles; updated to a more common wording; addition of definitions to better protect the process and its participants; and, align our rules with the most progressive arbitration centres in the world. DRC Trading Assistance Staff with the help of a recognized arbitration expert in Canada, Professor Anthony Daimsis, have finalized this project.  At the latest Board of Director’s meeting in June, the DRC Board approved the new Mediation and Arbitration Rules and allocated a coming into force date of November 1^st, 2018. Although most are minor changes, here are some of the most significant ones:

• Name change: The new name for our Mediation and Arbitration Rules will be “Dispute Resolution Rules”
• Current Mediation and Arbitration Rules have two separate arbitration procedures: expedited arbitration and formal arbitration procedures. The new Dispute Resolution Rules have one arbitration proceeding with an appendix to cover expedited procedures.
• In the new Dispute Resolution Rules all of the arbitration procedures will be considered international arbitrations in accordance with Ontario’s International Arbitration Act.
• New articles have been added to the Dispute Resolution Rules that provide for multiple contracts, additional parties or cases to be joined in one arbitration proceeding.
• All arbitrator’s draft decisions will be reviewed by DRC without affecting the arbitrator’s liberty of decision prior to submitting their decision and award to the parties. DRC may make observations as to the form of the award and draw attention to points of substance.
• Early dismissal. Cases that have no merit can be expedited.

Please note, all Statements of Claim received prior to the coming into force date of November 01, 2018 will follow the Mediation and Arbitration.  All Statements of Claim submitted after November 01, 2018 will be subject to the new Dispute Resolution Rules.

Professor Anthony Daimsis is a Law Professor and member of the International Law Group at the University of Ottawa.  He is Director of the Faculty of Law’s moot court program, and of the National Program (a bijurial curricular program that leads to a dual JD/L.L.L. degree).  Additionally, he teaches courses in international arbitration and international sales law for Osgoode Hall’s LLM program and he is a lecturer on international arbitration for the Swiss International Law School’s LLM program.  He is author of the forthcoming book International Arbitration: the fundamentals and the indispensables and The Common Law lawyer’s guide to the Convention on the International Sale of Goods.

Effective January 15, 2019 Canadians who buy and sell fresh fruit and vegetables must be members in good standing of the

Dispute Resolution Corporation (DRC)

On June 13, 2018, Canada’s Ministers of Health and Agriculture and Agri-Food announced the publication of the final Safe Food for Canadians Regulations (SFCR) in Canada Gazette, Part II (CGII). The regulations come into force on January 15, 2019.

While the regulations primarily address important food safety and traceability matters, there is a significant trade and commerce element of particular interest to the produce industry. Canadians who buy, sell or negotiate the sale or purchase of fresh fruits and vegetables inter-provincially, and internationally will be required to be a member in good standing of the Fruit and Vegetable Dispute Resolution Corporation, unless excepted from the regulations. The requirements are outlined in Part 6, Division 6 Fresh Fruits or Vegetables, Subdivision C Trade of Fresh Fruits or Vegetables, paragraphs 122(1), (2) and (3). In other words: all Canadian buyers must be members in good standing of the DRC. The SFCR repeals the option of a choice between a CFIA Produce Licence and a DRC membership.

What is the impact of the SFCR?

For existing DRC members, it is business as usual. However, Canadians who are not a DRC member and buy and sell fresh fruit and vegetables must consider whether they are subject to the requirement or exempt.

How do I know if I am exempt from the requirement?

Under the SFCR, it is prohibited to:

(a) sell any fresh fruits or vegetables that are to be exported or sent or conveyed from one province to another;

(b) purchase or negotiate the purchase on another person’s behalf of any fresh fruits or vegetables that are to be imported or to be sent or conveyed from one province to another;

(c) receive any fresh fruits or vegetables that have been

imported or sent or conveyed to from one province to another; or

(d) send or convey from one province to another or import or export any fresh fruits or vegetables.

The SFCR does provide for exceptions, which are listed below:

(a)	any person who is a member in good standing of the Fruit and Vegetable Dispute Resolution Corporation, a corporation incorporated under Part 2 of the Canada not-for-profit Corporations Act, as described in its bylaws;
(b)	any person who only sells fresh fruits or vegetables directly to consumers if that person paid less than $100,000 for the fresh fruits and vegetables that they sold to consumers within the previous 12 months;
(c)	any person who only purchases, sells or negotiates the purchase or sale on another person’s behalf, sends or conveys from one province to another or imports or exports less than one metric ton of fresh fruits and vegetables per day;
(d)	any person who only sells fresh fruits or vegetables that they have grown themselves; or
(e)	a registered charity as defined in subsection 248(1) of the Income Tax Act or a club, society or association described in paragraph 149(1)(1) of that Act.

A DRC membership fulfills the CFIA SFCR regulatory requirement that provides authority to buy, sell or negotiate the sale or purchase of fruits and vegetables inter-provincially, intra-provincially and internationally. For additional information, contact the DRC Help Desk (+1 613 234 0982) or visit the dedicated section of the website to complete a self assessment to determine if you are subject to the requirement or exempt: https://fvdrc.com/sfcr/.

 

 

 

 

 

 

 

 

 

 

If you are operating a produce or a transportation business, it is essential to be listed in the Blue Book.  A basic listing, consisting of company name, address, and phone number is free; additional information, noting names of brands, personnel, and contact information may be included at a small charge per line, per year.  The idea is to provide a clear and concise picture of who you are and what you do, such that those seeking information about your business, can find what they need quickly, accurately, and reliably.

A listing, while important in conveying the salient facts about your business, is not enough.  What completes the picture is your Blue Book Rating.  A rating adds credibility to business dealings and assists in establishing your firm as a trusted entity.  Many thousands of dollars, stemming from business decisions, are based on Blue Book Ratings each and every day.

There are two different types of Blue Book ratings:  predictive and historical.

A predictive rating assigns the likelihood that a company will become delinquent or go into default within a twelve- month period.  The rating is expressed in terms of a score, from 500 to 1000—the higher the score, the less likely a business will experience such an event; the lower the score, the greater the risk.

An historical rating consists of three parts:

A financial rating—also known as a credit worth estimate, it is based on an evaluation of an accountant-prepared year-end financial statement or tax return, representing the total amount of credit that should be extended to a business.

Trade practices rating—based on trade feedback and expressed from X to XXXX, it indicates how a company conducts its business operations.  Such factors as trustworthiness, reliability, and honesty are considered by those reporting.

Pay description—based on trade feedback, it notes the average number of days for payment.  Payment is measured from the date of invoice to the date payment is received.  Pay descriptions range from AA (within 14 days) to F (60 days plus).

Establishing a Blue Book rating is easy to do.  The first step is to provide a list of trading partners with whom a business deals and a year end accountant-prepared financial statement (balance sheet and income statement as a minimum) or tax return.  It takes approximately 9 months to earn a complete rating.

If you have questions about a Blue Book listing or rating, contact the Blue Book at [email protected] or call 630-668-3500.

For 117 years, Blue Book has been the standard by which sound business decisions have been made and trust established between trading partners.

DRC has developed and released Exporting to Canada: frequently asked questions from companies outside of Canada. The Q&A document, logo and visual presentation were launched at the recent CPMA convention and trade show in Vancouver, BC.

The information offers an overview of the DRC and its services, its jurisdiction in domestic and international disputes as well as the dispute resolution process and enforcement of arbitration awards. The brochure is available in English, French and Spanish and while the target audience may be those looking to export to Canada, the information is also of interest and value to anyone trading in the fresh produce business who is not familiar with or a member of the DRC.

For Canadians, the anticipated coming into force of the Safe Food for Canadians Regulations is important as it includes a regulatory requirement for those who buy, sell, import or export fresh fruits and vegetables to be a DRC member unless exempt. A key message for those looking to export to Canada is “do not sell to or buy from a person in Canada who is not a DRC member”.

“Packaging the information in this format is timely given the increase in inquiries from companies interested in knowing more about doing business in Canada as well as our targeted outreach to a number of embassies and trade facilitation offices” notes DRC President & CEO, Fred Webber.

The document is available in the following link: https://t8t979.p3cdn2.secureserver.net/wp-content/uploads/2018/08/QAs-Non-Canadian-to-Canada-ENG-FINAL.pdf

In the July edition of Solutions, Jennifer Morris, President of Two Roads Logistics, wrote an informative piece about the ELD mandate in North America [link to article].  This article is a follow-up specifically addressing the “ag-exemption.”

49 CFR section 395.1(k) provides an exemption for Hours of Service (HOS) rules for agricultural commodities (including livestock, bees, horses, and other commodities defined as “agricultural commodity” under section 395.2) during planting and harvesting periods, to be determined by each State.

HOS rules do not apply to the transportation of these commodities moving within a 150 air-mile radius (or 172.5 statute miles) from the source.  Working hours and driving hours are not limited in this situation.  The driver is not required to use an electronic logging device (ELD) or keep paper logs.  The time a driver spends working within the 150-mile radius does not count towards their daily or weekly limits; he/she is considered off-duty.  Outside of the 150 air-mile zone, HOS regulations apply; the driver’s work and drive hours must be within the limitations of the HOS rules.

To use an example, if a driver was delivering a load of fresh vegetables from the source to a location five hours away (assuming the 150 air miles accounted for 3 hours of driving time), the first three hours of the five-hour trip would not count towards their HOS.  If the driver unloaded and returned empty to the source, once the driver re-entered the 150-air mile zone, they would once again be considered off duty.  As a result, in this scenario, a driver could be on the road for ten hours, and only four of those ten hours would count towards their hours of service.  Similarly, a driver could never leave the 150-air mile zone travelling back and forth from source to location multiple times a day and not be subject to HOS rules at all.

Another ELD exemption of note (applicable to all commercial motor vehicles, not exclusively to those hauling agricultural commodities) pertains to the year of the engine.  If a driver is using a vehicle manufactured before the model year 2000, they are exempt from having to install ELDs, provided they maintain paper logs.

For more detailed information please visit: https://www.fmcsa.dot.gov/hours-service/elds/agricultural-commodity

About the Author:

Jennifer has 15 years experience in the produce and transportation industries.  Two Roads Logistics specializes in produce, food and helping unique start-ups with their transportation needs. Jennifer is also a member of the Education Committee for the CPMA and a columnist for the Grower. 

We have fielded some questions lately regarding a broker’s confirmation of sale and the Canadian confirmation of sale form required to import. Are they the same? What are the differences? How do you know when to use which one? This article intends to answer those questions and more.

It is important not to confuse a broker’s Confirmation of Sale, as defined in Section 11 of the DRC Trading Standards https://fvdrc.com/by-laws-and-operating-rules with a Canadian Food Inspection Agency (CFIA) Confirmation of Sale Form (COS Form) required to accompany imports into Canada. Since January 11, 2016, importers had an option to either manually submit a COS Form at time of entry or submit the same information electronically, in advance, through eManifest, the Pre-arrival Review System (PARS) or EDI.  When the new Safe Food for Canadian Regulations come into force on January 15, 2019, the CFIA COS Form will no longer be an option by CFIA.

Conversely, a produce broker, which is not the same as a customs broker, is a person or firm which negotiates transactions between buyer and seller, but is not otherwise a party to the transaction. A true broker is required to issue written or electronic confirmations showing all the contract terms that the buyer and seller have agreed to, as well as the identity of both seller and buyer. This document is often referred to as a “Broker’s Confirmation of Sale”.  These are the main functions a broker must perform:

• Help two or more parties form binding contracts through good faith negotiations;
• Communicate all terms to the parties;
• Create a confirmation of sale, including all essential details of the agreement; and,
• Deliver the confirmation of sale to all parties promptly.

Unless otherwise agreed and confirmed, the broker will be entitled to payment of brokerage fees from the party who hired the broker.

A broker’s confirmation of sale will continue to be a requirement by DRC from members who act as true produce brokers.

You spoke, we listened! Starting this month, we will list the new and terminated members as part of our Solutions blog. Additionally, our active members list updated weekly online will now include inactive members.

If you are selling produce in North America, we encourage you to visit our website on a regular basis to verify your trading partner is an active member in good standing.  In fact, we would recommend taking it a step further and calling our office to find out more.

Welcoming new members *

Canada

2 RAMIREZ IMPORTS LTD, Coquitlam, BC, Canada
2109350 ALBERTA LTD., Edmonton, AB, Canada
BARRIERE RIVER FARMS, Barriere, BC, Canada
BASICX CANADA INC., Etobicoke, ON, Canada
CANAMEX-CARBRA TRANSPORTATION SERVICES INC., Mississauga, ON, Canada
LES SERRES BIOLOGICO INC. (Faisait également affaire sous Sa, Ste-Sophie, QC, Canada
LES SERRES SAGAMI INC., Ste-Sophie, QC, Canada
MARINA EXPORT & IMPORT INC., Markham, ON, Canada
MASTR VEGGIES INC., Leamington, ON, Canada
ME GUSTA IMPORTS INC., London, ON, Canada
RIGHT PRICE PRODUCE LTD., Leduc, AB, Canada
ROCK SALT CANADA INC., Toronto, ON, Canada
ROKAN DISTRIBUTION LTD., Markham, ON, Canada
RT INTERNATIONAL (A d/b/a of 7804334 Canada Inc.), Hamilton, ON, Canada
T. E. PRODUCE IMPORT AND EXPORT LTD., Langley, BC, Canada
VORTEX PRODUCE / VX PRODUCE (A d/b/a of Fernando Ortiz), Toronto, ON, Canada

United States

CSS FARMS, LLC., Pasco, WA, United States
DON HEYL COMPANY, LLC., Sioux Falls, SD, United States
FRUITS TRESS INC., Hidalgo, TX, United States
SALIX FRUITS LLC, Tallahasse, FL, United States
TEX-MEX SALES, LLC., Weslaco, TX, United States

No longer active members*

SAVORY FOODS INC., North York, ON, Canada

*June 1st, 2018 to June 30th, 2018

On June 22, DRC participated in the CPMA SFCR Webinar Series.

The Safe Food for Canadians Regulations will come into effect on January 15, 2019 and while the regulations primarily address important food safety and traceability matters, there is a significant trade and commerce element of particular interest to the produce industry. Canadians who buy, sell or negotiate the sale or purchase of fresh fruits and vegetables inter-provincially, and internationally will be required to be a member in good standing of the Fruit and Vegetable Dispute Resolution Corporation, unless excepted from the regulations. The SFCR repeals the option of a choice between a CFIA Produce Licence and a DRC membership.

The presentation includes details on the requirements and the exceptions as well as information on the DRC initiative to Modernize the Canadian Grade Compendium for Fresh Fruit or Vegetables.

To access the recording click here:

https://www.youtube.com/watch?v=xCNQcZACSoM&feature=youtu.be

 

Imagine the following scenario: “You have been buying one load a week from shipper “X” for the past couple of months. Payment terms with the shipper are 10 days. The last load you received is in deteriorated condition. After claiming damages and salvaging the product your losses are beyond the invoiced price. You decide to deduct your losses from a previous shipment that arrived without issues. The shipper is not happy with that situation and demands payment in full for the uncontested load. What should you do?

It is not an uncommon practice in our industry that a buyer who has received product in deteriorated condition holds payment on previous or future invoices if there is reason to believe the loss is going to be above and beyond the invoiced price. It is a convenient method of settling claims for buyers and sellers. However, the parties are not always in agreement with settling the claim in that manner.

Technically speaking, when a situation like this arises, unless you have an agreement with the shipper or the transportation company, offsets are not allowed. Each transaction is its own contract and each contract must be addressed separately, especially when there is a dispute.

If your losses are beyond the invoice price and the other party refuses to pay, you can initiate a claim through DRC provided that the other party (shipper, transportation company, etc.) is a DRC member.

In this article Jennifer Morris, President of Two Roads Logistics writes about the Electronic Logging Devices requirement that came in effect on December 18, 2017.

What is an ELD?

Electronic Logging Devices (ELDs) synchronize with a vehicle engine to automatically record drive-time, for easier and more accurate Hours of Service recording/reporting. It also helps to streamline sharing and tracking of Hours of Services.

What is the ELD US Mandate?

In 2012, US Congress enacted MAP-21 Bill.  This Bill, which outlines the criteria for highway funding, included a provision requiring FMCSA (Federal Motor Carrier Safety Administration) to develop a rule mandating the use of electronic logging devices (ELDs).  In its simplest form, an ELD is used to electronically record a driver’s Record of Duty Status (RODS), which replaces the paper logbook where some drivers currently report their compliance with Hour of Service requirements. In effect Dec 18, 2017.

What does this look like in Canada?

Transport Canada is committed to balancing the best interests of Canadians and aligning with vehicle regulations in the United States.  By continuing to coordinate the Canadian and US logging device regulations, Canadian companies will be able to use the same logging devices in both countries and this will further support economic growth, trade and shipping between the countries.  Possible implementation has been suggested for late 2019.

Who does/will the rule apply to?

The ELD rule applies to most drivers who are currently required to maintain records of duty (per. part395,49CFR 395.8(a)).  It applies to commercial buses and trucks including Canadian and Mexican drivers in the USA. When Canada implements their mandate, it will be similar to the US standards.

Why is this being done?

The benefits are threefold: (i) ELD creates a safer work environment for drivers; (ii) it provides for more efficient communication between drivers and carrier staff; and, (iii) it facilitates information sharing with the Department of Transportation (US).

Will this affect capacity?

It is likely there will be a learning curve with adapting to the mandate.  This could cause some drivers to move less loads per week/month. This will put stress on capacity.

Will transit times change?

Hours of Service rules have not changed and are not going to change; however, ELDs will track all on-duty statuses.  Including; yard moves, safety checks, traffic issues and wait-times. Transit times will be longer than the currently perceived transit times.

Will rates change?

There is an investment in software and equipment as well as training and additional admin costs.  Also, with drivers closely managing their times at shippers and receivers, wait-time will have costs and consequences.

Author: Jennifer Morris, President, Two Roads Logistics

Stay tuned, in part 2 we will review the Agricultural exemption which addresses the hours of service at shipping point.