MSC wins FMC case as no OSRA violation found

FMC votes in favour of MSC

The Federal Maritime Commission (FMC) has dismissed the latest Charge Complaint against the world’s largest container line, Mediterranean Shipping Co (MSC) and discontinued the Order to Show Cause (OSC) proceeding.

The decision made by FMC has been seen by those within the industry as one that could potentially set a precedent for other shipping liners.

The Commission received a complaint from SOFi Paper Products, a party assessed for a congestion surcharge of $1000 by MSC. MSC has held that the surcharge was assessed in accordance with its published tariff rule.

SOFi requested MSC for an explanation for the charge which MSC had not provided. SOFi felt that MSC’s failure to show the reasonableness or provide a justification of the surcharge demonstrates unreasonable practice, in breach of 46 U.S.C. §§ 41102(c) and 41104(a)(14).

The commission subsequently issued the OSC on 3 Feburary 2023, thereby directing the ship liner to show reasonable grounds as to why the FMC should not waive the charge, order a refund, or impose a civil penalty.      

“Given the possibility that the surcharge may have been levied upon more of MSC’s customers in addition to SOFi since the enactment of the Ocean Shipping Reform Act of 2022,” said FMC’s Office of Enforcement.

“Such an undertaking would arguably be to the benefit of all members of the shipping public who may have been billed by MSC for this ambiguous surcharge subsequent to the enactment of Ocean Shipping Reform Act (OSRA 2022).”

READ: FMC mandates new criteria for carriers’ refunds

MSC, however, argued that “there is no issue of clarity here – the charge applies on all cargo subject to the tariff in question, and there is nothing ambiguous or unclear in the application of the charge.”

MSC further emphasised that “the commission lacks the legal authority to challenge the amount of the charge.

“MSC is under no legal obligation to justify the congestion surcharge any more that it is required to justify other surcharges, such as fuel surcharges, bill of lading surcharges, hazardous goods charges, overweight cargo surcharges, or other charges.”

The FMC, in a four to one decision among its commissioners, ruled in favour of MSC, having deemed the $1,000 detention and demurrage charge as reasonable. The FMC determined the record lacked sufficient evidence to establish an OSRA violation, a decision of significant industry interest.

In April 2023, a newly introduced bipartisan bill granted the FMC the power to block anticompetitive agreements among ocean carriers and marine terminal operators.

More recently, the FMC launched an investigation into the detention and demurrage (D&D) charges levied by shipping giant Mediterranean Shipping Company (MSC) and its billing procedures.

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