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The DRC’s Board of Directors and Annual General Meeting (AGM) was held in Boston, USA, from June 1-3, 2022. There was also the option to attend the AGM virtually. DRC staff reported to the Board on the audited financial statements and key DRC activities including: Membership, Marketing, Compliance, and Trading Assistance. The Board also received updates from the USDA, AMS.

The DRC Board of Directors had approved resolutions on December 2, 2021 to amend the DRC’s Trading Standards and Dispute Resolution Rules to provide clarity and updates to certain terms or concepts. These resolutions were approved by the membership during the AGM.

During the AGM the members elected as Directors Patrice Marchand of Metro Richelieu Inc., and incumbents Gonzalo Aguilar Guizar of Grupo Empaque Roquin S.A. DE C.V., Bret Erickson of J&D Produce Inc., and Mike Stuart representing the Florida Fruit & Vegetable Association.

We welcome Patrice as a new board member and look forward to his participation.

The DRC welcomes members to participate in the 2023 Annual General Meeting likely to be held in early June 2023.

DRC’s Trading Assistance Staff recently handled a consultation from a receiver regarding an FOB transaction where a government inspection was requested on the same day the load arrived. The load arrived on a Friday afternoon, and the inspector arrived on Monday morning to perform the inspection. The inspection results indicated the product failed to meet DRC Good Arrival Guidelines by 1%. The receiver sent a copy of the inspection to the shipper and advised that they will be claiming damages.  

The shipper replied to the receiver indicating that they would not accept a claim given that the inspection was performed 3 days after the product arrived.

We advised the receiver that by calling the federal inspection the same day the load arrived, they have followed DRC Trading Standards which requires that receivers request an inspection within 8 hours after the product arrives by land. However, the shipper was right by claiming that the inspection was not performed in a timely manner. An inspection performed two or more days after the product arrives may no longer provide an accurate picture of the quality or condition of the product upon arrival.

In the consultation that we received, the product failed DRC Good Arrival by only1%. It is likely that if the product had been inspected on Saturday rather than on Monday, the product would have met DRC Good Arrival Guidelines.

We understand the receiver’s frustration on the delayed federal inspection; however, the shipper cannot be held responsible for this situation either. On an FOB sale, the receiver is responsible for everything that happens to the product after the truck leaves the shipper’s dock, including getting things done in a timely manner even if these things are not under the receiver’s control.

So, what to do in a situation where a receiver becomes aware that an inspection is not going to be performed in a timely manner?

1. Verify if it is possible to have a government inspector work overtime to arrive within 24 hours. While this may result in additional fees, or they may not be available, it is worth trying.
2. Contact the shipper. Let them know what is happening and suggest getting a private inspection performed. Even if the shipper refuses to agree to a private inspection, we recommend that you call for that private inspection to protect yourself. Don’t cancel the government inspection. If the private inspection is similar to the results of the Federal Inspection taken later, you will have more evidence in your favor when you talk with your supplier to amicably resolve this matter.
3. It is important to remember that all parties have a responsibility to minimize losses. If you must sell a portion of the load prior to getting it inspected, talk to the shipper about it. It is not in anyone’s best interest to leave the entire load unsold for an extended period awaiting a Federal Inspection.

Good communication between a receiver and a shipper can help avoid a dispute scenario like the one we were consulted on.  

Whether you are the claimant or the respondent, no one likes to lose.  But when a DRC member loses a case simply because they didn’t properly explain and document their position it can be a frustrating experience.

In an effort to help DRC members prepare for mediation or arbitration, we have compiled the following list of things that companies frequently overlook or simply do not think are important. We have seen cases that could have gone in a different direction if the parties would have paid more attention and taken the time to explain and document their case better to the arbitrator. Here is our list of top ten mistakes to avoid when preparing or defending your case:

• Not including what you’ve learned during the informal mediation process (informal claim) prior to the Arbitration process. Important points are often uncovered during the informal exchange of information.  The arbitrator does not have access to the arguments or submissions from the informal mediation. It is your job to explain every detail of the transaction so that the arbitrator does not have to fill any gaps. 
• Not including a statement or submission from the buyer or salesperson involved in the transaction regarding the events that transpired. If you do not have firsthand information, your comments may be taken as hearsay and not as   firsthand knowledge. 
• Not clarifying or denying the other party’s comments or statements.  You must deny and/or rebut any position you disagree with.  If you are in doubt as to the weight of your evidence (fax, email, etc.) as a response to the other party’s presentation, provide a sworn statement along with it. 
• Not submitting the evidence which supports your allegations. When parties disagree, it is the evidence the arbitrator must look at to reach a decision.
• Not providing legible documents and not labeling exhibits consecutively for easy reference by the arbitrator.  
• Not providing evidence that a document or an agreement was faxed or emailed, such as a fax confirmation, email confirmation, or the reply to it by the other party.
• Not providing an account of sales when product was handled for someone’s account.  We have seen cases where the respondent clearly provided evidence of the breach of contract but failed to provide any basis upon which the remittance was made. 
• Not providing an itemized account of sales. An account of sales must include the date, amount, and price sold for each lot (referencing the invoice or receipt of the sale is a bonus). Failing to provide the bills for the expenses such as freight bill, inspection invoice, warehousing invoice, customs fees, and any other expense agreed upon.
• Not requesting a hearing when you believe you should be heard by an arbitrator.  If you do not believe you can present your case adequately in writing, you have the right to request a hearing on claims over US$15,000.
• Not being willing to pay the undisputed amount before the file goes to arbitration.  This will result in increased filing fees, interest if awarded, and in some cases may influence the arbitrator’s apportionment of fees and interest if he views the amount being withheld as abusive. 

Prior to initiating the arbitration process, DRC staff can help with what you need to present or defend your case. Once in arbitration, DRC staff can only provide guidance on procedural questions. On the other hand, in an expedited arbitration (claims less than US$50,000), the arbitrator generally will base his/her decision on the parties’ submissions and rarely will contact the parties for clarification or additional information. However, in Formal Arbitration or when a hearing has been requested, the Arbitrator will give you every opportunity to make a clear and concise case.  If you do not feel you can present or defend your case properly, we highly recommend that you seek legal assistance, or settle the case before it goes to arbitration. 

The Automated Import Reference System (AIRS) is a reference tool that shows the import requirements for Canadian Food Inspection Agency (CFIA) regulated commodities.

If you are planning on importing fresh fruits and vegetables into Canada or are an exporter intending to export fresh fruits and vegetables to Canada, AIRS will provide you with the requirements that a Canadian company must comply with in order for that product or commodity to be able to enter Canada. A few of these requirements are:

• Dispute Resolution Corporation Membership number or exemption
• Safe Food for Canadians License
• Electronic Date Interchange (EDI) – Integrated Import Declaration (IID) or Confirmation of Sale (COS) – Government form
• Labeling
• Phytosanitary if applicable

If you want to learn how to use AIRS, click on the following link and follow the instructions:

Automated Import Reference System

If this would be your first-time using AIRS, we recommend using the following tutorial link:

AIRS Tutorial

If you have any questions about this tool, do not hesitate to contact us at DRC’s Help Desk.

We often receive questions from DRC members asking about how to properly read a CFIA inspection. In this three part series, we will look at the importance of reviewing the information on the inspection certificate. To begin, let’s focus on the elements in the first section as well as the product description section.

The first section of the certificate contains the “requested and performed date and time” for the inspection. This information is important because it helps to establish if the inspection was requested and performed in a timely manner. For example, truck shipments require the inspection to be requested within 8 working hours after the receiver is given notice of arrival and the produce is made accessible for inspection. Boat and rail shipments however allow the inspection to be requested within 24 working hours after the receiver is given notice of arrival and the product has been placed in a location where the produce is made accessible for inspection.

The field “where inspected” indicates the area the inspection took place such as the applicant’s warehouse, the consignee’s warehouse, or any other location. If the product was still loaded when the inspector arrived on site, that information should be noted under the “remarks” section.

An important area to review is the “remarks” section at the bottom of the inspection certificate which will include notes the inspector has made about the location of the load, if it was still loaded on the truck or if it was unloaded. This could help determine if the buyer/receiver still has the right to reject the product. For information on “Acts of Acceptance” please review Section 19.1 of the DRC Trading Standards

Information about the applicant, shipper and consignee

The information in this section identifies the parties involved in the transaction. If there is a name under any of these fields with which you are not familiar, you will want to address this with your customer.

Product description

This section should include detailed information about the load such as product, variety, size, maturity, grade and colour, packages (number of cartons or bags available for inspection), type of count and weight.

This information needs to match your invoice and/or purchase order. For example, if you receive a load of different size mangoes at a different price per unit, a discussion for a request for an inspection by size needs to occur.

Another major issue that we often see is the number of cartons inspected. The entire load should be available for inspection. If not, the buyer/receiver needs to have a valid reason as to why the full load was not available.

As a general rule more than 75% of the load must be available for sampling to be considered representative of the full load.

In part 2 of our series on how to properly read an inspection certificate, we will review temperatures and defects.

The proposed Safe Food for Canadians Regulations (SFCR) are expected to come into force late spring or early summer. Once implemented, a DRC membership is mandatory for Canadians to buy, sell, import or export fresh fruits and vegetables. Under the existing Canada Agricultural Products Act (CAP Act), the current requirement is to secure either a CFIA Produce Licence or a DRC membership to be in regulatory compliance. Under the new regulations, there will only be one option: a DRC membership. This change will require some modifications to the way DRC currently conducts business.

We will be proposing housekeeping changes to the DRC By-laws and related in-house administrative procedures at our next Annual General Meeting (AGM) of Members in June 2018. These changes relate primarily to increasing the transparency of our membership application and membership maintenance processes. As we get closer to the AGM and in keeping with current By-laws, we will provide members with the proposed changes along with explanatory notes to help members understand the new By-law changes and how they will work on a day-to-day basis.

Hopefully you have been able to take part in some of our recent outreach activities. If you haven’t but are interested in learning more about the proposed SFCR, please contact our office we will be happy to help walk you through the draft regulations.

For additional information please contact:

DRC Help Desk | 613-234-0982 | [email protected]

Implementation of the Safe Food for Canadians Regulations (SFCR) is quickly approaching and with it, the regulatory requirement for a DRC membership for Canadians.

SFCR is expected to come into force late spring or early summer. Once implemented, a DRC membership is mandatory for Canadians who buy, sell, import or export fresh fruits and vegetables with few exceptions (see below for link to determine if you are exempt).

Under the existing Canada Agricultural Products Act (CAP Act), the current requirement is to secure either a CFIA Produce Licence or a DRC membership to be in regulatory compliance. Under the new regulations, there will only be one option: a DRC membership.

When it comes to SFCR, there are important distinctions: the regulations address food safety and traceability (Canadian Food Inspection Agency (CFIA) licence) as well as trade and commerce (a DRC membership is required to engage in the trade of fresh fruits and vegetables). All references to licence in the SFCR pertain to food safety and traceability; reference to a DRC membership pertains to trade and commerce. DRC’s role and responsibility within SFCR relate only to trade and commerce.

What do Canadians need to do?

1. Be aware of, and understand, the SFCR regulatory requirement for a DRC membership to buy, sell, import or export fresh fruits and vegetables.
2. Visit the DRC website and refer to the self-assessment tools to determine whether you are subject to the regulatory requirement or are exempt. https://fvdrc.com/sfcr/

If you are exporting to Canada, ensure that you sell to or buy from a DRC member.

For additional information or to schedule a presentation from a DRC team member, please contact:

DRC Help Desk | 613-234-0982 | [email protected]

Most disputes between members are solved with the help of DRC Staff during the informal consultation process. Some disputes however end up in the formal process where an arbitrator is appointed with the cooperation of the claimant and the respondent. That arbitrator must make a decision based on what is presented to them by the parties. We have seen some arbitration cases where if the claimant or the respondent had made a better presentation to the arbitrator, the arbitrator might have reconsidered their decision.

1. The informal file handled by DRC staff is closed and the arbitrator does not see it.
   During the informal process many documents and issues are exchanged and explored.  The informality of this process allows the parties to go back and forth several times, review information, and make offers or counter offers. Firms may also discover an error or a new issue during this exchange. For the above reasons the informal file is sealed to avoid misleading the arbitrator. Do not assume that the arbitrator will have access to the information submitted during the informal consultation process. You have to make sure you resubmit all the information favouring your claim or defence.

2. A party refers to a contract or other document but fails to provide it.
   Parties often reference agreements, contracts, emails, market reports, etc. in presenting their case.  A statement without supporting documentation is of limited evidentiary value, especially when the other party has presented documentation in support of their position. If you are referencing a document, ensure it makes it to your exhibits when presenting your case.

3. A party assumes the arbitrator has specific knowledge of a particular issue.
   The arbitrators that are selected for DRC cases are familiar with the industry and DRC rules.   They cannot however be expected to know everything about every commodity or unique steps in the supply chain.  An arbitrator is no different than a judge in court; they are not going to investigate or make your case for you. You are responsible to make and defend your own case.

Obviously, no one likes to lose a case. Unfortunately, we do see cases where a party fails to prevail in their case not because of what they presented, but because of what they failed to present. It is unfortunate when a case is lost not on its merits, but rather because essential material was not provided to the arbitrator. Be prepared and avoid these top three pitfalls.

The vast majority of problems brought to us by our members are resolved with a bit of sound advice or an exchange of information in our informal process. Some issues however, do proceed to the formal process where an arbitrator is required to issue a final decision.

The Formal Mediation and Arbitration Rules have remained largely unchanged for 17 years and we believe a review and update is timely. Members and our roster of independent arbitrators have indicated to us that the rules are a bit cumbersome and repetitive. We have therefore retained a leading Arbitration Law and process expert to revise those rules.

Currently there are three categories of arbitration in our rules:

Those less than $15,000

Those from $15000 to $50,000

Those over $50,000

The proposed revisions to the rules will remove repetitive language in the current version and highlight differences within the categories. Examples of highlights would include whether or not a hearing is required and timelines for responses. Several areas will also be clarified to make them easier to understand and follow.

Please note that the current rules remain in full force and no changes will be implemented until they have been presented and approved by the Board of Directors later this year. Should the revisions be approved, we will provide the membership with the changes, answer any questions, and share the date the changes will be implemented.

For now, there are no changes to the Formal Mediation and Arbitration Rules, and this note is merely advance notice that a review is underway and changes may be forthcoming.

DRC Help Desk | 613-234-0982 | [email protected]

Are you subject to the proposed CFIA regulatory requirement for a DRC membership? Is DRC membership right for you? Are you taking full advantage of all of your DRC member benefits? These are just a few of the questions you should be asking your DRC support team and we’re making it easy to do so.

DRC will be exhibiting at many regional meetings and will be available at trade shows.

This month look for us at the Ontario Fruit and Vegetable Convention, February 21-22, at the Scotiabank Convention Centre in Niagara Falls, Ontario.

Visit DRC at Booth #428 to learn about proposed regulatory requirements expected to come into force in 2018. DRC membership will be required to buy, sell, import or export fresh fruits and vegetables unless otherwise exempted as per the proposed regulations. This will result in a requirement for a mandatory membership in the DRC for some who were not previously subject to the requirements of the CFIA Licensing and Arbitration Regulations.

DRC team members will be on hand to discuss the full range of member benefits including: harmonized standards, procedures and services necessary to avoid and resolve commercial disputes in a timely and cost-effective manner. Make sure you’re taking full advantage of all the services and benefits DRC membership has to offer.

Contact the DRC Help Desk today to schedule an appointment during the convention or simply stop by Booth #428 to meet with a DRC team member:

DRC Help Desk | (+1) 613-234-0982 | [email protected]

Additional details about the convention can be found at: http://www.ofvc.ca/