Pre-delivery losses

WFP has a duty, from both a claims and insurance point of view, to mitigate damages. Any losses arising out of the failure to mitigate cargo losses may not be recoverable, neither from the third parties responsible for the initial damage, nor from the Captive.

Mitigation may include repacking, fumigation and cleaning of the commodities, as well as their sale or destruction.

All expenses of mitigating loss are included in the claim against both the Captive and the third party responsible for the loss: they must therefore be carefully documented and sent to Legal Maritime (LEGM).

LEGM is the focal point for the mitigation of damage and fumigation, and can provide advice on all its aspects. In cases of major loss or damage, LEGM will provide specific guidance to the CO.

Where necessary, LEGM can assist with the provision of new packaging.

The CO is responsible for taking immediate action to preserve damaged cargo and prevent deterioration and then, under the guidance of LEGM, takes suitable steps to mitigate the loss in the most cost effective manner.

The WFP Superintendents have a major role to play in any mitigation exercise and can assist the CO in many ways.

LEGM has established a system for the external analysis of commodities.

The Country Director may authorize expenses of up to US$ 10,000 (ten thousand dollars) per consignment to mitigate damages. The definition of "consignment" should be carefully noted. Expenses greater than $ 10,000 must be authorized through LEGM.

Commodities can only be sold or destroyed, in accordance with the following guidelines, when it is not feasible or cost effective to make them fit for human consumption.

LEGM is the focal point for the sale and destruction of commodities and should be consulted prior to such sale or destruction: except that a Country Director may authorise sale or destruction of damaged cargo where its sound value does not exceed USD 10,000 (ten thousand) per consignment. Above this value, authorisation should be requested through LEGM.

As the sale might involve re-exportation, it is important that the commodities do not leave the customs-bonded area, and that the recipient authorities do not take delivery.

A condemnation certificate stating the quantity of the cargo involved and the reasons why the goods cannot be used for the purpose intended must be obtained from the local health and/or sanitary authorities, and forwarded to LEGM. In cases of doubt, or where the fitness of the commodity cannot be ascertained locally, please consult with LEGM.

If reconditioning of the damaged commodities is not feasible, either for economical or technical reasons, but they still have a commercial value as animal feed, fertiliser or other industrial product, then they must be sold at the highest obtainable price. WFP Superintendent/Agent and the local authorities, including the customs authority, should be consulted prior to the sale.

Sale should be by competitive tender where possible. The buyers should be responsible for all taxes incurred, including import duty. The buyer should also, in writing, hold WFP harmless and agree to indemnify WFP against any liabilities arising from the use of the commodities after the sale. This prevents the buyer from subsequently holding WFP responsible for any problems, which may arise, and will oblige the buyer to pay any claims against WFP.

The buyer must accept the obliteration of WFP/Donor markings, or agree to return the marked bags or containers. These markings must be obliterated before delivery; or the bags or containers should be retained/recovered and/or destroyed under the supervision of WFP, and certified by the CO.

As the net sale proceeds will reduce any claim against third parties, they should be credited to LEGM using GL code 129100 (Insurance Claim Recoveries to be identified), and properly referenced with the Shipping Instruction / Delivery Number quoting “Sales Proceeds. The full supporting documents, and certified details of any expenses incurred in conducting the sale, must be sent to LEGM.

Only when commodities do not have any commercial value, for which there must be written evidence, may they be donated free of charge. The evidence will form part of any claim and should be sent to LEGM. The clearance of the health and/or sanitary authorities must be obtained before the commodities are handed over. The beneficiaries must accept, in writing, all liability, holding the Programme harmless against any consequence of such donation. Again, any WFP/Donor marking must be obliterated or bags recovered and destroyed under the supervision of WFP, and certified by the CO.

If neither reconditioning nor sale nor free donation is feasible, the commodities should be destroyed. This must be substantiated in writing by local authorities, preferably in the form of a condemnation certificate. Destruction must be carried out under close supervision of WFP in the presence of the local authorities. A destruction certificate, stating the quantity destroyed and the method of destruction, must be obtained from the authorities that witnessed the operation. The documents referred to in this paragraph will form part of the evidence for any claim and should be sent to LEGM.

The expenses incurred in the destruction will form part of any claim and they should, therefore, be fully documented, certified and sent to LEGM. These expenses will be reimbursed to the CO from the Captive