A foreign grower or foreign company that buys or sells fresh fruits and vegetables is allowed to file a PACA (Perishable Agricultural Commodities Act) complaint against a U.S. PACA Licensee. One of the requirements is that the product must physically enter into the United States (States and territories) for the PACA to have jurisdiction. An exception to this would be produce that merely transits the United States en-route to another country.
If the foreign produce entity claims a dispute has occurred between them and the PACA licensee, the foreign producer may file an informal PACA complaint, subject to the required $100.00 filing fee. However, if an informal settlement cannot be achieved, and the foreign producer desires to pursue a PACA Formal Complaint, as with any filing of a formal complaint with the PACA, a $500.00 filing fee is mandated, reimbursable by the respondent, (defendant) in the event complainant prevails in its complaint. In addition to the $500 filing fee for the formal complaint, however, the foreign producer must either post a surety bond or deposit cash with the PACA for twice the amount they are seeking in their formal complaint. The funds will be held in escrow until the formal complaint has reached its conclusion and a Decision and Order is rendered. Should the foreign entity prevail in the formal procedure action against the U.S. licensee and no counter claim was awarded, the bond or cash is returned to the foreign entity filing the action. However, if there is a counterclaim filed against the foreign entity, and the PACA licensee (respondent/defendant) prevails in their counterclaim and the foreign entity refuses to pay the PACA licensee, payment to the U.S. licensee will be made by the PACA out of the escrow account, with any residual funds then being returned to the foreign entity.
As both Canadian and Mexican companies are required to post a bond of twice the amount they are seeking when filing a PACA formal complaint, therefore, the same requirement also applies to all other foreign countries.
Just as with any PACA licensee or U.S. grower, a foreign entity can also request the PACA to perform a personal audit of the records of any consignment transaction should an informal complaint be filed within the nine-month statute of limitations for the cost of only $100.00.
I would therefore recommend for U.S. companies representing foreign growers that their contracts contain language on how disputes are to be resolved; this however needs to be discussed with your attorney preparing your grower and marketing contracts.
For those Western Grower members that find themselves in a PACA dispute with a foreign company I encourage you to please contact me with any questions you might have on this blog, please contact me directly at 949-885-2269 or TommyO@wga.com.