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ARBITRATION DECISION BRIEF: Whether the Respondent failed to provide in a timely manner a copy of the inspection certificate to the Claimant.

This is the third in a series of articles summarizing past DRC arbitration decisions. We believe this will help members to better understand how the DRC Dispute Rules (R&R) and Regulations apply in the event of a dispute. DRC Dispute R&R state 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 DRC’s sole role is as administrator of the arbitration process; 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.

 Case: DRC File #10954 – Parties Domiciled – USA and Canada

Facts

  • The Claimant shipped to the Respondent 4032 boxes of size 12 Kent variety mangoes on August 7, 2001. According to the invoice, the product was sold at $2.60/box F.O.B. The Respondent received the shipment in Canada either late on August 11, 2001 or in the early hours of August 12, 2001.
  • A CFIA inspection was requested on Monday, August 13, 2001 and was performed the following morning on August 14, 2001. Respondent alleges that the mangoes failed to make good arrival and sold the mangos for the Claimant’s account which returned approximately $.40 per box to the Claimant.
  • On August 14, 2001, Claimant sent a letter to Respondent’s broker advising that they would not allow the mangoes to be sold for their account. Thereafter, Respondent wrote to the broker asking for instructions on how to handle the load.
  • Claimant made numerous requests to the Respondent to be provided with the CFIA inspection. This inspection was not provided to the Claimant until February 12, 2002.
  • Claimant agreed to allow a $1.00 per box adjustment due to quality problems, and now seeks payment of $4,838.40.

Issue

Whether the Respondent failed to provide in a timely manner a copy of the inspection certificate to the Claimant.

Arbitrator’s Analysis/Reasoning

The arbitrator found that Respondent failed to provide, in a timely manner, a copy of the inspection certificate to Claimant herein in violation of Section 10 (2)(b)(ii) of the Trading Standards which require a copy of the inspection certificate to be provided to the shipper within twenty-four (24) hours of receipt by the Respondent. Therefore, the arbitrator found that Respondent violated its duties under the DRC Trading Standards.

Additionally, Respondent raised as an issue as to whether the Notice of Dispute herein was properly filed because a representative of the DRC requested such notice be filed by November 13, 2001 and it was not filed until November 30, 2001. The Arbitrator found that, pursuant to Rule 4 of the DRC Dispute Resolution Rules, the Claimant filed the Notice of Dispute within the nine (9) month limitation period.

Arbitrator’s Decision

The Respondent failed to provide in a timely manner a copy of the inspection certificate to Claimant, therefore, Claimant is owed the invoice price of $10,506.70 less payment in the amount of $1,636.30, less a credit in the amount of $4,032.00, for a total invoice price owed of $4,838.30 plus commencement fees of $525.00 plus interest of 9.5% (U.S. prime rate plus 1%) from the ten (10) days following receipt of the goods by Respondent herein or August 22, 2001, through the date of this decision, or $273.48 for a total of $5,636.88 funds to be paid by the Respondent to Claimant no later than thirty days from the date of this decision.

DRC Comments

As a receiver/buyer, failing to provide the supporting documents of a claim in a timely manner, can result an unsuccessful claim. In this case, the respondent appears to have given timely notice of a problem upon arrival, requested a CFIA inspection in a timely manner, and informed the shipper they would handle the product for the shipper’s account. The only responsibility the receiver failed to meet was not providing the CFIA inspection in a timely manner. However, this is a very important step in the process of making a claim. The results of the CFIA inspection allow the shipper to determine if the product met or failed contract terms or DRC Good Arrival Guidelines. A shipper who does not receive a copy of an inspection report in a timely manner has not been provided with sufficient evidence that the product arrived in deteriorated condition. This often compromises the shipper’s ability to pass any claim on to his supplier, insurance, freight provider or others who may have contributed to a claim. 

DRC members have 9 months from the date the dispute arose or when the claimant ought reasonably to have known of its existence to file their Notice of Dispute. We are not sure why the respondent was under the impression that the Notice of Dispute should have been submitted on or before November 13, 2001 but if the product was received on August 12, 2001, and we start counting from this date, the claimant would have had until May 12, 2002 to file their notice of dispute.

For more information regarding the sections of DRC Trading Standards applied to this dispute, refer to the following sections:

 DRC Trading Standards: