Can’t Agree?

Agree to arbitrate to fairly and quickly resolve disputes

Trading Assistance

The North American produce industry offers a number of specialized dispute resolution options to resolve routine disputes without resorting to traditional litigation in the courts. In addition to the reparation process under the Perishable Agricultural Commodities Act (PACA), both the Fruit and Vegetable Dispute Resolution Corporation (DRC) and Blue Book Services, Inc. (Blue Book) offer arbitration processes tailored to meet the needs of the produce industry.

Arbitration is a form of alternative dispute resolution designed to be faster and more cost effective than litigation. When parties agree to arbitrate, they agree to let a private person or entity decide how the dispute in question will be resolved. Arbitration should not be confused with mediation, which is a process where a neutral third party attempts to help the parties reach a mutually agreed-upon settlement of the dispute in question.

Unlike arbitrators, mediators do not have the authority to issue binding decisions, though settlement agreements reached between the parties through mediation are, of course, binding on the parties. Mediation (both informal and formal) offered by PACA, DRC, and Blue Book helps resolve hundreds of claims each year. Still, even with the help of a mediator, there are times when agreement between the parties is not possible.

In this article, we look at how arbitration is used to resolve produce disputes. We’ll start by comparing arbitration to PACA’s reparation process, and then discuss the arbitration services offered by DRC and Blue Book.

Comparing and Contrasting
The reparation process set forth in PACA (7 USC 499(f)) is, like arbitration generally, designed to be more streamlined and cost effective than traditional litigation. Claims that cannot be resolved through PACA’s informal mediation process (usually consisting of telephone calls and correspondence exchanged with PACA staff) may proceed to a formal decision that is, in many ways, more like a typical arbitration than a traditional lawsuit.

The vast majority of formal PACA reparation decisions are conducted without an oral hearing, discovery (e.g., depositions, document production, interrogatories), service of process, a jury, or ever actually going to the courthouse. Instead, the proceeding is conducted with written pleadings, affidavits, documentary evidence, and briefs (written arguments) submitted by the parties.

And while making your case without discovery, oral argument, and “having your day in court” may seem limiting, especially in a case that hinges on the credibility of witnesses, the streamlined nature of the process is well suited for most produce claims, especially those for relatively small amounts where the cost of traditional legal mechanisms, such as depositions, cannot be justified.

Despite the similarities, however, the PACA reparation process is fundamentally different from arbitration in a number of ways, including: (i) the decision is issued by an administrative law judge, not an arbitrator selected by the parties; (ii) the PACA reparation process is not dependent on a private agreement between the parties; and (iii) the resulting decision may be overturned on appeal (in federal district court) more readily than an arbitration decision, which is not susceptible to appeal, except in very limited circumstances.

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