MSC meets court deadline; produces robust rebuttal to shipping charges

European-based shipping line MSC has met a deadline set by the FMC’s administrative judge who has been hearing a complaint that the carrier had violated the US Ocean Shipping Act.

The company strongly denied that it had not supplied information and could therefore be the victim of a default judgment. MSC continued to claim that the problems the claimant, a Pennsylvania-based furniture company, somewhat confusingly named MCS Industries, were the result of errors and poor communication, and involved no wrongdoing by MSC.

Judge Erin Wirth earlier this month threatened MSC with a default judgment after detailing in her order what she described as a failure by MSC to supply discovery materials. Judge Wirth claimed that MSC had instead “stalled”.

The judge gave MSC until September 22nd to reply and supply the materials before she would rule. MSC said in its 32-page legal response that a default judgment was a drastic sanction “that undercuts the desired goal of deciding cases on their merits,” MSC’s lawyers rote in a 32-page response to the judge laid out in detail it legal position, throwing for good measure another 30-pages of expert opinions. The response called the actions “unwarranted and inappropriate,” based on the current circumstances.

A complaint was initially filed in July 2021 by MCS Industries that accused MSC and China-based co-defendant COSCO Shipping Lines of collusion to manipulate the freight market. MCS Industries contended that the carriers had denied it transportation of its containers under long-term freight contracts, and that this had forced the Pennsylvania-based furniture company into the far pricier spot market. MCS has argued that the actions of the carriers inflated the spot market and costs for shippers.

MCS later settled with COSCO. It refiled the complaint against MSC, but dropped the charges of collusion. The continuing elements of the complaint focused on the denial of contracted service. MCS Industries’ lawyers and the judge have said that MSC had repeatedly failed to provide detailed information during the discovery relating to issues such as communications from the carrier about cancelled sailings, capacity, and space availability on ships on specific sailings.

In its response the carrier said that “MSC has provided full discovery on what the complainant itself has termed the ‘heart’ of the conduct it is challenging in this case”. MSC argues that the remaining discovery had been rendered moot by the revision of the complaint or concerns “matters tangential” to the claims.

MSC said that some of the information requests were “overbroad, vague and duplicative.”

However, MSC did confirm one of the judge’s accusations. The Geneva-based company continued to argue that issues of Swiss law showed that the company has not acted in bad faith or wilful misconduct. MSC attested to having supplied discovery materials before triggering Swiss blocking statues. Furthermore, they argue that MSC “cannot comply with the motion to comply without violating Swiss law and exposing itself to criminal liability under Swiss law”.

MSC said that the judgment cannot be issued because alternative channels to avoid an irreconcilable conflict with Swiss law are available and have not been fully exhausted. MSC does not see this as stalling, while Judge Wirth did.

MSC emphasized that the judge’s current order only concerned the information for the discovery and was not a ruling based on the merits of the case. MSC continued to call this “baseless.”

“MSC has investigated the matter and has concluded that MCS Industries’ difficulties with its cargo bookings arose from errors and communication issues between MCS Industries and third-party intermediaries, and not from any wrongdoing by MSC. Accordingly, MSC will continue to defend this case vigorously”, the Swiss carrier said.

MSC stated it was a contractual dispute and that MCS Industries had long-since abandoned its collusion claims.

“The claims that MSC did not meet its contractual obligations are likewise meritless,”

Several similar cases are pending before the FMC over allegations that shippers did not honour freight contracts when their value soared, with US companies alleging that carriers supplied only a small fraction of the container transportation in their contracts.