Author: DRC

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/

A friendly reminder that a few of you have DRC membership fees that are past due. Failure to pay your annual membership dues may result in termination of your membership in accordance with the By-laws of the Corporation.

In order to stay in good standing, if you have yet to pay your yearly membership fees, please contact us asap at:

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

Some of our members have experienced going through the arbitration process and a very few of those have been faced with an unfulfilled award. 90% of the arbitration cases administered by DRC are satisfied as decided by the arbitrator. Rarely there are cases of an unpaid arbitration award, the cause is usually due to the losing party declaring bankruptcy, filling for protection under the court, or debtors disappearing and leaving no assets behind.

When you receive an arbitration decision in your favour and the losing party does not want to pay it, there are steps you should take. Contact DRC immediately, as we may take disciplinary actions against the defaulting party which could include termination of membership. A second step would be for you to register and enforce the arbitration award with the courts.

The courts of the countries signatory to the New York Convention of 1958 and subsequent conventions regarding the recognition and enforcement of arbitration awards in court (168 signatory countries) are obligated to recognize and enforce these awards. DRC does not accept members from countries who are not signatory to the New York Convention of 1958 or other international treaties regarding recognition and enforcement of arbitral awards.

While it requires a lawyer to register and enforce the award by thecourt, this process is not complicated. DRC will provide most of the documents to enforce the award in court to your lawyer of choice. These documents usually include the arbitration agreement, the arbitration decision and award, and sometimes, the arbitration rules of the administering body (DRC). This process can last a couple of months and will result in a decision from the court.

Please remember we are here to support and assist our members. Contact the DRC Help Desk with any questions or concerns at:

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

Q. I am a DRC member, what happens when I have a dispute with a company that is not a DRC member?

A: DRC members are expected to abide by certain rules and responsibilities and when a dispute occurs between members, we are here to help. Unless your trading partner is a DRC member, we may be limited in the assistance we can provide. Should a dispute occur between a DRC member and a non-member, we may be able to assist if the non-member signs a voluntary arbitration agreement that will bind them to a final decision by an arbitrator if necessary.

If the non-member signs the voluntary agreement, one of two steps needs to occur. The non-member needs to join DRC or, alternatively, pay a set fee. Once one of the two steps is completed, it is treated as if both parties are DRC members and the dispute process should move forward as normal.

In the absence of a signed voluntary arbitration agreement, because one party is not a DRC member, the option of litigation is a strong possibility. We would like to remind all DRC members to encourage trading partners to join DRC.

For more information please call or email the DRC Help Desk at:

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

We were contacted recently by one of our members asking about DRC’s point of view regarding differences between a temperature recorder and a real time temperature recorder.  Real time temperature recorders are those which are GPS enabled and can be monitored remotely.  This technology has been available in our industry for a few years now and in our experience, a real time temperature recorder brings additional advantages over a regular temperature recorder. To mentioned a few:

• If a temperature recorder is lost, no data is available. For a real time temperature recorder, data is always available even when real time recorder is lost.
• Location of the load in transit.
• Alert system to indicate temperatures during transit have passed the set temperature range.
• Can avoid temperature impact on product while in transit.
• Anyone can have access to the data as long as certain information such as the serial number is provided.

Simultaneously, a real time temperature recorder also brings additional responsibilities to those who have access to the real time data. The real time data from these devices is considered evidence of the temperatures in transit, just like a tape or digital readout from a traditional temperature recorder. The main difference is, if you become aware of a temperature problem in transit and nothing is done about it, all those who had access could  take on liability for not taking steps to limit or stop  potential deterioration to the product.

For more information please call or email the DRC Help Desk at:

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

In the produce industry, providing an account of sales is the most common method to claim damages resulting from a breach of contract or product received in deteriorated condition. When a buyer chooses to claim damages and decides to submit an account of sales, it is best to be prepared to submit an itemized account of sales. This means including the date, amount and price for each sale made on the load in question less expenses such as freight, inspection(s), brokerage fee(s) and any additional expenses agreed to by the parties. An itemized account of sales not only shows net returns but helps to demonstrate if the product was moved promptly.

For clarification purposes, an itemized account of sales is only required in connection with consignment transactions. DRC strongly suggests that every buyer/receiver should be prepared to submit an itemized account of sales when claiming damages or when a problem arises.

If an account of sales is not available, be aware that there are other methods to determine fair value of the product. Sometimes this means reducing the invoice value by the percentage of defects on the federal inspection which may or may not be representative of actual losses.

DRC Trading Standards under section 6 indicate that “Sales Tickets/Invoices” shall be filed or stored for a period of two years. In the event that your client challenges the account of sales in an arbitration process, you may be required by the arbitrator to produce the “Sales Tickets”. The sales tickets and expenses should match the information in the itemized account of sales.

The best way to lay out the information is on a spread sheet and should include:

1. Date of receipt and date of each sale,
2. The quantities sold at each price, or other disposition of the produce and,
3. The expenses properly incurred.

For your reference, HERE is a sample template of an Itemized Account of Sales. For any question or clarification about account of sales, please contact the DRC Help Desk:

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

Luc Mougeot, DRC Vice-President, attended the 20th meeting of the CODEX Committee on Fresh Fruits and Vegetables held in Kampala, Uganda this past October.

DRC participates on the CODEX Committee on Fresh Fruits and Vegetables in order to ensure that standards being proposed or revised are written in a manner that is as consistent as possible with Canadian and U.S. standards. Ensuring consistency helps to minimize the impact on producers when they ship overseas.

“CODEX sets the high level international standards that we are supposed to work towards and look towards implementing when we make domestic revisions,” said Mr. Mougeot.

CODEX Alimentarius Commission is an international standard setting body for everything from health and safety to grade and commodity standards. CODEX standards are utilized by many countries that may not have their own domestic standards. While Canada and the U.S. have national domestic standards, CODEX standards can set the tone for future revisions to Canadian and U.S. standards. The other area they can impact is for shippers sending out of Canada to a country that doesn’t have national standards and that has adopted CODEX standards.

Most CODEX member countries that apply CODEX standards will use those grade standards on import controls. They may use them for domestic control and they may use them for export control for countries such as Canada. Other standard setting bodies include the Organization for Economic Co-operation and Development (OECD) and the United Nations Economic Commission for Europe (UNECE).

Sometimes DRC sees references to Cat 1, Class 1 on contracts without any reference to a standard body such as CODEX, OECD and UNECE. In the absence of recognized grade or reference to grade, we tend to fall back to domestic standards when applying inspections. If both parties have agreed to class and properly referenced appropriate standards, it is important to note that individuals using these categories may face challenges when it comes to an inspection and proving non-domestic standards apply.

“DRC has obtained official observer status with respect to CODEX and, as we move towards potentially taking over grade standards from CFIA, our participation will continue to enrich discussions and standard setting within CODEX,” concluded Mr. Mougeot. CFIA is the head of the official delegation and CFIA’s Kevin Smith is the representative and currently also serves as an ex-officio government representative on the DRC Board of Directors. The next meeting will occur in 2018 (date and location still TBD) and prior to the meeting, Mr. Smith will reach out Canadian industry sectors to establish industry positions on draft standards.

CODEX questions? Please contact the DRC Help Desk:

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