Friday, January 23, 2015

Ruling of the Week 2015.3: NAFTA CO by Power of Attorney

First, let me acknowledge what might be very obvious to you: the Court of International Trade has been pushing out customs opinions at an impressive rate this year. I am behind on cases, which prevents me from being behind on work. I will catch up.

This week's ruling (HQ H256731) answers a question that comes up all the time. The question is whether employees of an American parent company can issue NAFTA certificates of origin on behalf of a wholly-owned Canadian subsidiary. Presumably, the same answer would apply to a Mexican subsidiary.

The facts here are simple and familiar. The company involved is S.C. Johnson & Sons. SCJ has a wholly-owned subsidiary in Canada that manufactures goods for export to the U.S. SCJ Canada, through its officers, acting pursuant to authority granted by the Board of Directors, has granted two employees of the Wisconsin-based parent company Powers of Attorney authorizing them to execute NAFTA Certificates of Origin on behalf of the Canadian sub. The resulting CO would show SCJ Canada as the producer and exporter. The signature block would show the title of the person signing the CO as "SCJ Global Trade Compliance as Agent for SCJ Canada," which seems like a lawyerly mouthful.

After a brief review of corporations law, Customs' ruling notes that there is no specific requirement that an agent authorized to sign a NAFTA CO to hold a formal power of attorney. In cases where the party signing the CO is an employee or officer of the exporter, his or her status as an agent of the exporter is clear. An exporter is also permitted to establish an agency relationship with someone who is not an employee or officer but who is to complete NAFTA CO's. The primary requirement is that the person executing the CO have knowledge of the relevant facts. The way to formalize and memorialize that agency relationship is with a Power of Attorney.

Consequently, SCJ employees who hold a Power of Attorney from SCJ Canada are agents for SCJ Canada and can complete NAFTA CO's on its behalf provided they have knowledge of the facts.

That's your best practice. If you are in a similar situation, make sure there is a POA in place.

But, there is still a lingering question. What if there were no POA? Would the CO be invalid? Personally, I don't think so. I think any evidence of authorization would be sufficient to show an agency relationship. In fact, there is the legal concept of "apparent authority," under which someone can be held to be an agent simply because they appeared to be acting as an agent. If someone from SCJ in Wisconsin who holds the Title "Global Trade Compliance Lead" signs a NAFTA CO on behalf of a wholly-owned SCJ sub, that sure looks a lot like an agency relationship.

I am certainly not advising that companies skip the formal POA. It is the right way to go. But, I wonder whether it truly is necessary.

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