MESSAGE FROM OUR PARTNER IN CHILE and PERU

Written by: Sebastián Osman

From: Araya & Co. Attorneys.

Legal Safeguards for Fruit Exporters in the Face of the Pandemic

From the point of view of fruit exporters, COVID-19 has created several internal

logistics problems: fields working at half-speed, decrease in the available

workforce, implementation of complicated sanitary protocols, setbacks within the

supply chain, the need to incur in higher expenses in order to implement changes

in day to day operations, and others.

Despite the aforementioned, the positive side of the story is that people consider

fresh fruit as a healthy food that strengthens the immune system against COVID-

19. Therefore, the demand for fruit in the destination markets has remained stable

and export volumes are currently within the expected range.

However, the last thing that the exporters need is to add, to the set of local

circumstances that exist today within their countries, international logistic

problems for marketing their products.

In this regard, below you’ll find two pieces of advice that all exporters should take

into account in order to avoid mishaps once their products leave the borders

heading to international destinations.

Tip 1:

Main legal safeguards from a general point of view – Relationship

with the carrier and the importers.

For exporters, who already have their fruit in route to the destination market or

those that will be shipping their products in the near future, it is essential to take

preventive measures that can protect them from possible risks that may appear in

the process of transporting or marketing their merchandise. These preventive

measures could be:

1) Hire a credit insurance policy that protects against policies that may be

implemented by the countries of destination. The risk of appearance of these kind

of policies is called political risk;

2) Hire a transport insurance policy, and carry out a survey on the fruit in case of

delays of more than three days by the carrier;

3) Carry out quality controls over all the merchandise at the port of destination;

4) Submit claims to shipping companies in case of delays;

5) Keep written communication with the importers regarding the reception of the

merchandise and market prices; and,

6) Execute contracts with importers with clear and transparent trading conditions.

Tip 2:

The specific case of delay in the international transport of

merchandise.

The potential delay of international carriers, especially of shipping companies, is a

situation that is nowadays causing a lot of concern to fruit exporters. This concern

is not unfounded, just remember the long lines of ships trying to enter Chinese

ports during the first months of the pandemic and the subsequent endless weeks

that the containers stayed in the ports once they were unloaded from the ships.

Faced with this situation, the strategy to mitigate the consequences of a potential

delay in transport will depend on whether the exporter hired a transport insurance

policy or not. In case he hasn’t, the exporter could only submit a claim to the

carrier; on the other hand, if he has hired an transport insurance policy, he could

submit a claim to the carrier and, additionally, go to the insurance company in

order to be compensated for the damages generated.

The claims are aimed to create a precedent with which it would be easier to prove

the responsibility of the carrier if the merchandise is damaged upon arrival at the

port of destination. The foregoing not only serves to demand a compensation from

the carrier for the damages generated, but it also facilitates the execution of the

insurance policy, in case one has been hired.

Here are some elements that we must have in mind:

1) Usually carriers or insurance companies do not respond for delays of less than

three days;

2) Exporters should always perform quality control over the merchandise upon

arrival at the port of destination, this procedure helps to keep a record of the

quality and condition of the commodity; and,

(3) Insurance companies usually requires a survey to be executed – which is like a

quality control but more specialized- in order to determine the damages and

whether or not compensation is appropriate.

Undoubtedly, COVID-19 has brought an innumerable set of consequences for

exporters, some foreseeable and some not. As a law firm, Araya & Co. Attorneys

recommends that preventive measures be analyzed and taken before problems

become a reality, otherwise when they appear it may be too late to be solved.

To conclude, I would like to directly tell all the exporters that if they take into

consideration the two tips presented in this article, they’ll be able to sleep easy

knowing that their merchandise – their investment – will be better protected

against the inconveniences that may occur in the intricate field of the international

trade.