FMC Denies Chinese Forwarder's Request to Dismiss Allegations of Delayed Containers, Shipping Violations

The Federal Maritime Commission denied a Chinese freight forwarder’s motion to dismiss a complaint that said the forwarder delayed 20 container shipments in order to submit higher detention and demurrage invoices (see 2210250021). The FMC’s chief administrative law judge Jan. 4 ordered China-based Shenzhen Unifelix to submit a response to the complaint by Jan. 20, requiring the company to also answer charges levied by U.S.-based Way Interglobal Network that Unifelix tried to change the terms of a signed service contract.

Unifelix argued that the FMC should have dismissed the complaint because the commission lacks jurisdiction, saying the allegations surrounded demurrage incurred in a Chicago rail yard (see 2212080017). The Chinese company also said Way Interglobal’s accusations were “actually an alleged failure to fulfill service obligations under a service contract” and didn’t qualify as alleged violations of U.S. shipping regulations.

The FMC disagreed, saying the containers moved by ocean transportation from China to the U.S., falling under FMC jurisdiction. But the FMC also said “bills of lading for the containers have not yet been provided,” adding that Way Interglobal “will need to establish that the containers moved by ocean carrier to a port in the United States by through transportation, for example if the shipments were door-to-door or port-to-door, so that the rail portion is within the through bill of lading.” The commission said Way Interglobal “plausibly alleges that the Commission has jurisdiction over these shipments.”

The commission also said Way Interglobal alleged that Unifelix violated U.S. shipping regulations in addition to its breach of service contract claims. But even if it didn’t, the FMC said its 2019 interpretive rule on reasonable detention and demurrage practices (see 1909130026) “explicitly applies to service contracts.”

The FMC also disagreed with Unifelix’s claim that Way Interglobal’s complaint failed to specifically state the specific shipping statute or regulation that was violated. “Although the complaint is concise, it does specify the factual basis for the complaint, including specific information, such as the container number, ETD, and rail dates, about each of the twenty shipments at issue,” the FMC said. “Therefore, the complaint is sufficiently detailed to raise a plausible violation of the Shipping Act, which is sufficient at this stage of the proceeding.”