The DRC is a private, non-profit organization of produce and transportation companies, established under NAFTA in 1999, which decides cases between its members.
Any produce company in Canada, the U.S. or Mexico, and their trading partners, can join the DRC and have their disputes resolved over produce grown in, received in or otherwise physically present in North America.
A DRC complaint must be filed within nine (9) months of when the dispute arose.
The DRC handles cases in two (2) stages: an informal settlement phase, and a binding arbitration phase. (The DRC also offers formal mediation.) The arbitration can be based on documents submitted by the parties if the amount in controversy is less than $15,000. If the claim is between $15,000 and $50,000, there will be a hearing only if a party or the arbitrator requests one. If the claim exceeds $50,000 U.S., there is an oral hearing unless the parties and arbitrator agree not to have a hearing.
The DRC has a list of qualified arbitrators and mediators from the produce industry. The parties select the mediator or arbitrator who will decide the case.
Generally, a formal documentary arbitration is decided in three (3) to four (4) months, and an oral hearing case in four (4) to six (6) months. The arbitrator issues a written decision, which is also based on PACA law and the Uniform Commercial Code.
There are reasonable administrative fees depending on the size of the claim. In addition, the parties pay a reasonable fee for the services of the arbitrator or mediator. The prevailing party in an arbitration proceeding can obtain an award of costs for the arbitrator’s fees.
Since the DRC proceeding is a binding arbitration, generally there are no appeals, and the case is fully and finally resolved once the decision is issued.
If the losing party does not pay, it is expelled from the DRC, and the expulsion is published in the trade press. The winning party can register the arbitration award in the courts and obtain a court judgment against the losing party without a trial or further proceedings. The winning party can then execute on the losing party’s property.