When a Lot Disappoints: Claims and Arbitration

Coffee is an agricultural product shipped across the world in a steel box. Sometimes what arrives is not what was approved.

The question is not whether that ever happens — it does, to everyone — but whether the relationship has a mechanism for dealing with it. This is that mechanism.

Prevention, which is most of it

Approve a pre-shipment sample. The PSS is drawn from the actual bags about to ship. Approving it converts a vague expectation into a contractual reference point, and it is the single control that prevents most disputes. See type, offer and pre-shipment samples.

Contract the numbers. Grade, screen range, moisture at shipment, defect count and standard, packing. "As per offer list" is not a specification.

Specify how quality is determined on arrival — whose sample, drawn how, cupped to what protocol, by whom.

A contract with those three elements rarely produces a dispute, because both sides know in advance what the test is.

On arrival

Draw a representative sample promptly. Not from one bag by the door — a proper sample across the lot. If the value warrants it, have an independent surveyor draw it.

Check the physical first. Moisture, water activity if you can, screen distribution, defect count against contract. These are objective and quick, and they identify most real problems. See defect counting.

Then cup against the retained PSS. You did retain it, sealed and stored properly. If you did not, you have no reference and the conversation becomes opinion against opinion.

Do it quickly. Claims have time limits.

Time limits

Contracts and trade rules impose deadlines for notifying a claim, and they are short — commonly measured in days from arrival or from availability for sampling, not weeks.

A claim raised three months later, after most of the coffee has been roasted and sold, is very difficult to sustain. The coffee has changed, the evidence is gone, and the counterparty will reasonably ask why it took so long.

Notify immediately in writing, even if you are still investigating. A prompt holding notice preserves your position; a delayed detailed one may not.

Evidence that stands up

• The retained pre-shipment sample, sealed.
• The arrival sample, ideally drawn by an independent surveyor.
• Physical measurements with the method stated.
• Cupping notes from more than one cupper, ideally including someone independent.
• Photographs of packing, liners, container condition, and the bags themselves.
• Container condition on opening — this matters if the problem is moisture, since a failed liner or condensation damage is a different fault from bad drying.

Photographs at the moment of unloading cost nothing and are repeatedly the thing that settles a moisture dispute.

Arbitration

Contracts in the coffee trade commonly incorporate the rules of a trade association — the European Contract for Coffee under the European Coffee Federation, or the Green Coffee Association's rules in North America. These provide arbitration procedures for quality and other disputes.

Arbitration is faster and cheaper than litigation and is decided by people who understand coffee. It is still slow and expensive relative to the value of most single lots, which is why the overwhelming majority of disputes are settled commercially.

Check which rules your contract incorporates before you sign, not when you need them.

Commercial settlement

In practice most quality problems resolve as an allowance — a price reduction reflecting the shortfall — or a replacement in the next shipment.

That is usually the right outcome for both sides. A supplier who offers a fair allowance without a fight is demonstrating something more valuable than the allowance itself, and a buyer who accepts a reasonable one keeps a relationship worth more than the difference.

What to ask before contracting

How do you handle it if arrival quality does not match the approved pre-shipment sample? What trade rules does your contract incorporate? Do you retain a sealed PSS on your side for reference?

An exporter with a straight answer to all three has thought about it. One who is evasive is telling you what will happen.

Hoysala grows, cures and grades its own coffee, so if a lot disappoints there is one party to talk to rather than a chain of them.