OOCL Appeals $45 Million FMC Judgment in High-Stakes Pandemic Shipping Case

By Alexander Whiteman (The Loadstar) – Shippers will be watching with bated breath following OOCL’s decision to challenge the record $45m fine it was handed by the US Federal Maritime Commission (FMC).

The carrier is appealing not only against the amount of the reparation, but the FMC’s jurisdiction to hear the case.

Last month, the regulator hit the carrier with the fine after finding in favour of bankrupt US shipper Bed, Bath and Beyond’s administrator’ Butterfly-1, which claimed OOCL’s service during the pandemic was not in accord “with service contracts or refusal to deal”.

The Chinese box line has responded with a filing to the US District Court, seeking to overturn the FMC’s decision on the basis its in-house adjudication was unconstitutional, because such cases should be determined by juries in federal court.

The filing contends that the FMC’s administrative law judge – who effected the ruling – has no jurisdiction over claims like Butterfly-1’s, rendering the verdict unconstitutional.

Meanwhile, some saw the largest single award of damages in FMC history as an indication of the way the regulator may look at Butterfly-1’s other claims against carriers, including BAL Container Lines for $9.5m, Evergreen ($1.25m), HMM (said to be $16m), MSC and Yang Ming.

All those complaints allege similar practices to those of OOCL, that the carriers were looking to take advantage of the pandemic-induced chaos, acts also reflected in allegations by other shippers.

Showing a willingness to punish carriers punitively for such practices, the FMC ruling against OOCL may also offer an incentive to smaller shippers to submit filings with the maritime regulator that may have a degree of success.

However, the news that OOCL plans to appeal will highlight the cost vs benefit ratio of a legal battle. Sources argue that it has always been the case that clients face “prohibitively expensive” costs to bring a legal claim.

“You’re not going to spend $20,000 on legal fees to get $5,000 back for Covid-era bullshit,” one source said, adding that carriers were being very open that they were “just waiting out the two-year statute of limitations to reduce what they have to pay out”.

Part of the problem, sources told The Loadstar, is that policymakers do not realise just how important small businesses are to the sector, one noting: “SMEs are the majority of the industry.”

Nor will it just be smaller shippers watching the OOCL developments, so too will Cornerstone Brands and QVC, seeking $18.1m from ONE, and discount retailer Dollar General, which has a $14.7m claim in against Yang Ming.

In both cases, the carriers have been accused of similar Covid-era practices to those of OOCL.

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