Carriers brace for more official complaints from emboldened BCOs as MSC fights protracted case

September 14, 2022 GENERAL

Shippers are likely to feel emboldened to doggedly pursue ocean carriers in the courts as the liner party fizzles out and out of pocket clients seek retribution.

In a sign of this new found persistence, Pennsylvania-based home decor MCS Industries shows no sign of letting up in its battle with the world’s largest containerline.

Erin Wirth, chief administrative law judge at the US Federal Maritime Commission (FMC), has issued an order denying shipping line Mediterranean Shipping Co’s (MSC) motion for an extension of time to produce outstanding discovery documents in the complaint filed by MCS Industries. On July 29, an order was issued requiring MSC to produce documents within a month, by August 29.

MSC did not provide the required documents to meet that deadline.

Instead, on August 26, MSC filed a motion seeking an extension of time. On September 2, MCS Industries filed an opposition to that motion.

Then, on September 6, MSC filed a notice of advice of the Swiss Federal Office of Justice. According to the order denying MSC’s motion, MSC “continues to argue despite rulings to the contrary in this proceeding and in the Republic and Canton of Geneva Court of First Instance, that due to Swiss legal requirements it cannot produce the discovery ordered in the December 8, 2021, motion to compel and the July 29, 2022, order requiring production of discovery, and that the Swiss court’s decision that their intervention is not necessary was in error.”

Judge Wirth writes in the order that “it is clear that this ‘advice’ from the Federal Office of Justice in Switzerland merely identifies the process for resubmitting a request and the factors that may be taken into account, without any discussion of the merits of this proceeding.

“The question of whether Swiss assistance with discovery is required has been answered by the undersigned Administrative Law Judge and by the Court of First Instance in Geneva.”

In multiple filings, MSC indicated that it will not produce the discovery that it has been repeatedly ordered to produce. MCS Industries has asserted in response that MSC “cannot accept the benefits of shipping cargo to and from U.S. ports while shirking its legal and regulatory obligations before the Commission.” MCS Industries thus requested a decision on default, and the judge has ordered MSC to show cause why default judgment should not be entered against it.

MSC is now ordered, by September 22, to either provide the required discovery or show cause why default judgment should not be entered against it.

Other shippers have been lodging complaints against global carriers of late with experts suggesting more will follow suit.

“The softened market – and space situation – may well cause a flurry of suits and FMC complaints to be filed, and clearly, some who have already filed, like MCS Industries, are emboldened to hold on,” commented Bjorn Vang Jensen, a vice president at liner consultancy Sea-Intelligence, in a post today on LinkedIn.

“The collective, pent-up anger and PTSD in the BCO community at large now wants out, and rate reductions won’t cut it for some,” said Jensen, a man whose career has seen him work for the likes of Maersk and Electrolux in the past.



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