Adv. Gill Nadel, Moran Shmilovich
In many cases sides do not arrange the relationship between them in an organized, written contract. Situations of this sort raise complex questions before the courts, which are required to rule on the question of what, precisely, the sides intended. A recent decision given in a disagreement between a customs agency firm and an importer illustrates the manner in which the court analyzes cases of this kind.
That case involved a customs representation firm that provided customs representation services to another company that owned a hotel in Eilat. These services were provided by the help of a secondary contractor who brokered between the two and took care of transferring invoices, import entries, and payments. In the framework of these services, the customs representation firm released containers of furniture from customs and brought them to the hotel in Eilat. In exchange for these services, payments were made to the account, but a debt balance of 23, 920 NIS remained.
A dispute arose between the sides regarding the balance. The hotel claimed lack of legal opponency between it and the customs representation firm, since, it claimed, the legal connection was between the secondary contractor and the customs representation firm, without it (the hotel) being a side of this connection. The customs representation firm claimed, in opposition, that the operational relationship may have been formed with the secondary contractor, for reasons of convenience, but from a financial and legal perspective, the connection was made with the hotel.
The court rejected the stance of the hotel and ruled in favor of the customs representation firm for the following reasons:
The court accepted the claim of the customs representation firm that from a financial and legal perspective, the connection was made with the hotel. The court relied on the fact that the invoices were issued in the name of the hotel and it was responsible for their payment. The court also found that the customs representation firm kept a separate accounting index in the name of the hotel with no connection to the secondary contractor.
The court noted the difference between the operational relationship between the sides and the legal relationship. The court assumed that the secondary contractor served as a middle link between the customs representation firm and the hotel for the purposes of telephone coordination, sending import entries and invoices and transferring payments, but this does not change the fact that the contractual relationship was made between the customs representation firm and the hotel, as the merchandise was released from customs in the name of the hotel and the furniture was transported by the customs representation firm to the hotel. The court also noted that the hotel did not present the court with the agreement that it claimed existed between it and the secondary contractor.
The court noted that the hotel wanted to take advantage of the fact that the secondary contractor was in the process of bankruptcy in order to avoid paying the debt balance to the customs representation firm. Accordingly, the court accepted the stance of the customs representation firm and ordered the hotel to pay the debt.
(Civil case 2153/07 Mantfield 1983 Ltd. v. Inn on the Park Eilat Ltd. For the customs agency- Adv. Yaari, for the hotel- Adv. Gindes).
As mentioned above, in the case before us, the court accepted the stance of the plaintiff- the customs representation firm, even though no written agreement, arranging the relationship between the sides, was presented. In other decisions, as well, that have been issued on subjects of international trade, the court has been required to enter into the great complexity that arises when there is no clear agreement between the sides. Thus, for example, in one case an interest arrangement was recognized even without a detailed contract between the sides. In another case, it was ruled that the customs agent company had not met the burden of proof that the importer owes it money, while the importer did not meet the burden of proof that the customs agent took merchandise unlawfully. Below, we will summarize these cases briefly.
A. An interest arrangement was recognized even without a detailed agreement between the parties
An international forwarder provided international forwarding and customs representation services to an importer, which committed to paying the forwarder interest for the credit extended to it. A shareholder of the importer signed a guarantee for this debt, and when the importer ceased paying for the services provided to it, the forwarder sued the shareholder. The disagreement between the sides boiled down to the following questions: a) was an interest agreement reached between the forwarder and the importer and if so- what was the interest rate; b) did the accounting books reflect the interest that the sides agreed upon; and c) if the answer to a and b is in the negative, does the forwarder have the right to interest at another rate?
Even though there was no detailed and organized interest agreement between the forwarder and the importer and the shareholder, the court accepted the stance of the forwarder. The court relied upon the accounting card index of the forwarder and the card for interest owed. In addition, the court relied upon the pricing suggestion in which the issue of interest was included, and also upon the fact that the promissory note itself set the interest rate and that the importer paid the cost of the credit properly until the date that it entered into financial difficulties and was unable to pay its debts.
There is no doubt that had there been a detailed interest agreement, the litigation could have been spared, and it is clear that it is preferable for any body extending credit to arrange this issue in a detail agreement. For the benefit of customs agents and international forwarders- an example of such an agreement is available at our offices.
(Civil case 70493/04 Global Shipping International Ltd. v. Karmon Yosef, decision given 25.11.08)
B. A customs agent did not meet the burden of proof that the importer owed him money and, on the other side, the importer did not meet the burden of proof that the customs agent had seized goods unlawfully.
The importer, the 1 Dollar Chain Ltd. Company, was sued at one time by a customs agent (Kislev Customs Services Ltd) for payment of a sum of 331,000 NIS for customs representation services and various sums paid by it for the importer. In the first proceeding (which was ruled on in 2000), the court ruled that the card index of the customs agent could not be relied upon as a basis for obligation the importer, since sufficient explanations were not given for various charges that appeared in the card index, and also because debits for sums that the customs agent admits to have receiving- do not appear in it. The court ruled that the customs agent did not meet the burden resting upon it and did not prove that the importer owed it the sum listed in the card index.
The court further ruled, in the first proceeding, that the agreements made between the importer and the customs agent , regarding merchandise transferred to the ownership of the customs agent reflect an agreement between the sides, both on the sum of the debt and on the manner of payment- via transfer of ownership to the customs agent of merchandise that the sides appraised as equal in value to the sum of the debt, but that the customs agent did not succeed in proving the updated value of the debt after sale of the merchandise and did not explain why the price of the merchandise did not reflect the sum of the debt. Accordingly, the court, in the first proceeding, dismissed the action of the customs agent for payment of the debt.
After the importer had succeeded in deflecting the action of the customs agent, the importer opened its own action against the customs agent and the bonded warehouse (Ashdod Bonded) for payment for financial compensation for taking merchandise unlawfully and transfer of the merchandise to sale as unclaimed merchandise without justification.
The court dismissed the importer's action for several reasons:
Regarding the action against the customs agent, the court ruled that while the customs agent in the first proceeding did not succeed in proving the sum that the importer owed him, it was clearly proven that there was an agreement between the importer and the customs agent under which merchandise was transferred to the customs agent for payment of the debt. The court ruled that the transfer of the merchandise to the possession of the customs agent was done in accordance with express agreements between the customs agent and the importer, and therefore the importer's attempt to charge the customs agent with return of the merchandise or payment of its value was completely without base- certainly without any base in the cause of unlawfully seizure.
Regarding the action against the bonded warehouse- first, the court found that the bonded warehouse turned to the importer and informed it ahead of time of the its intention to transfer the merchandise to sale as unclaimed cargo, as required under law. Secondly, the court analyzed the correspondence exchanged between the importer and the bonded warehouse and found that not only is there no hint of the fact that the importer is interested in the release of the goods, but it can be derived that the importer had deserted the merchandise. "To come years later and demand the return of these goods or their value under the claim that the defendants 'seized' the merchandise from the plaintiff, even though it did not react to the reference of defendant 2 prior to the transfer of the goods to cargo terminal- is an illogical and unjustified request and there is no reason to accede to it," ruled the court. (Civil case 44897/03, decision given 18.8.08)
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