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Additionally, unlike arbitration, the PACA reparation process is only available to certain types of litigants—namely, produce buyers, sellers, and brokers—and only when the party claimed against is operating subject to a PACA license (i.e., the party must be located in the United States and the purchaser of wholesale quantities [as defined under PACA] of produce for interstate or foreign commerce).

What’s more, the dispute must involve a subject transaction (a sale involving a wholesale quantity of produce) and the claim must be filed with PACA within nine months of the date the cause of action arose (e.g., nine months and ten days after the product was accepted assuming “PACA prompt” terms).

Notably absent from the PACA reparation scheme are: (i) claims against firms located in Canada; (ii) claims that do not involve interstate or foreign commerce (e.g., product grown, sold, and consumed in Florida); and (iii) disputes by or against transportation providers (e.g., carrier claims). Arbitration through the DRC and Blue Book helps fill these voids, and keeps produce firms out of the courtroom.

Arbitration
Fundamentally, it’s important to recognize that although arbitration represents an alternative to the courts, this doesn’t mean the courts don’t play a role. Ultimately, arbitrations get their force and effect from a long history of the courts enforcing arbitration agreements and decisions.

For example, a seller that files a lawsuit against a buyer despite a valid arbitration clause in the sales agreement will likely find its case dismissed in favor of arbitration. And should the losing party in the arbitration fail to pay, the courts are needed to enforce the arbitration decision.

Surprisingly, however, even though the courts may be needed to enforce an arbitration decision, in two important respects a favorable arbitration decision may be more advantageous than an award from a court. First, arbitration decisions may be appealed only in very rare circumstances, such as serious misconduct or fraud by the arbitrator. Unlike an award from a court (or administrative law judge), arbitration decisions may not be appealed based solely on flawed legal reasoning. This limited right to appeal is consistent with the nature and goals of arbitration as a streamlined and cost effective method of resolving disputes.

Second, in those cases where the parties are domiciled in different countries, an arbitration award issued in country A against a firm domiciled in country B may be easier to enforce in country B than a court award issued in country A. This is because courts are not necessarily obligated to honor an award from a foreign court.

But if country B has ratified the New York Convention, as more than 150 countries including the United States, Canada, Mexico, Chile, Costa Rica, and China have, then by international treaty the foreign court is generally obligated to enforce arbitration awards, even those issued in other countries.

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