The Bottom Line
- Authorization is what you project, not just what’s on paper. A company’s internal authorization limits for employees may not shield it from external liability. If your company’s actions lead a third party, like customs, to reasonably believe an agent is authorized, you will likely be bound by their actions.
- Tariff quota applications are a calculated risk. You cannot invalidate or amend a customs declaration after goods are released simply because a sought-after tariff quota was exhausted, resulting in a large duty payment. This is considered a business risk, not a procedural error.
- Your post-declaration actions can lock you in. The way a company responds to a customs issue is critical. Engaging in legal proceedings to amend a declaration can be seen as an admission that the declaration was yours to begin with, making it very difficult to later claim it was unauthorized.
The Details
The dispute began when an importer, [X BV], used a customs agent to declare a large shipment of Indian steel coils for release into the EU market. The declaration sought to apply a zero-duty tariff quota, a common strategy to reduce import costs. However, by the time the quota was allocated two days after the goods were released, it had been fully exhausted. This automatically triggered a 25% safeguard duty, landing the importer with an unexpected customs bill of nearly €3 million. Facing this significant liability, the company argued that the declaration was invalid because the purchasing manager who granted power of attorney to the customs agent lacked the internal authority to approve a transaction of this magnitude.
The Amsterdam Court of Appeal rejected this argument, focusing on the legal principle of apparent authority. While the court acknowledged the manager’s internal signing authority was limited to €100,000, it found that the importer’s subsequent actions created a reasonable belief for the customs authorities that the agent was, in fact, properly authorized. For months, the importer’s own lawyers had engaged with customs to amend or invalidate the declaration, implicitly treating it as their client’s own. This conduct, combined with the failure to raise the authorization issue for over a year, was decisive. The court ruled that a third party can rely on the appearance of authority created by a company’s actions, even if it contradicts internal policies.
Furthermore, the court upheld the customs authority’s refusal to amend or invalidate the declaration. Under the Union Customs Code (UCC), amending a declaration after the release of goods is permissible only under very narrow circumstances. It cannot be used to retroactively change a strategic customs procedure that simply turned out to be financially disadvantageous. Invalidation is reserved for genuine errors, not for a conscious business decision where a known risk—the exhaustion of a tariff quota—materialized. The court confirmed that the risk of a quota running out lies squarely with the importer who chooses to use it.
Source
Gerechtshof Amsterdam (Amsterdam Court of Appeal)
