Orient Overseas Container Line (OOCL) is to appeal a USD 45 M fine levied against the carrier by the US Federal Maritime Commission (FMC) for COVID era violations in what could be a landmark case for the industry.
In doing so, the carrier is set to challenge the constitutionality of the FMC? right to launch legal proceedings against liner companies. US retailer Bed Bath & Beyond (BBBY), now liquidated, had accused OOCL of selling off contracted vessel space to higher-paying customers during the pandemic, violating the US Shipping Act.
An initial decision on April 24 by the Administrative Law Judge awarded BBBY USD 45.6 M in damages, saying the carrier had not made ? good faith effort to make available to BBBY the space which it had promised.?However, in a suit filed in the US District Court last week, OOCL said it would seek to overturn the ruling on the grounds that the FMC? inhouse adjudication process was unconstitutional, and violated provisions that such cases should be heard before juries in federal court. The outcome of the case could have far reaching effects, both on the other outstanding claims against carriers for pandemic business practices, and on the FMC? processes, where claims between shippers, truckers, and carriers are investigated and resolved through inhouse proceedings. The case is also viewed as a landmark test of the Ocean Shipping Reform Act of 2022, which strengthened the FMCs ability to hold carriers accoun for unreasonable practices.
OOCL argues that the BBBY complaint is a simple ?reach of contract?that should be heard in the Courts not under FMC proceedings, which does not possess market jurisdiction over breach of contract claims. The carrier is required to file an opposition brief by September 25th of this year. In the commissions internal legal process, all five Senate-confirmed FMC Commissioners could also review the initial decision made by the Administrative Law Judge.
