Mediterranean Shipping Co (MSC) is in hot water in a legal dispute before the US Federal Maritime Commission.
FMC administrative law judge Erin Wirth ordered the Swiss container shipping giant to explain why he should not issue a default decision against the company after it opted to request an extension rather than turn over documents by a 29 August deadline.
MSC had argued it could be subject to criminal prosecution in Switzerland if it turns over the documents in accordance with Wirth’s July order.
“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,” Wirth wrote in her 8 September order.
“[MSC's] position did not prevail, and now it must produce discovery or face procedural consequences. Relitigation of the same issue will not be permitted and has only delayed this proceeding.”
Pennsylvania-based furniture manufacturer MCS Industries filed a complaint with the FMC in July 2021, alleging MSC refused to honour its carriage contract and forced the company into the spot market to find space for its cargoes, costing it $600,000.
Discovery in the case has been held up by Swiss laws prohibiting the production of evidence in another jurisdiction without authorisation.
MSC sought clarification from the Swiss courts as to which documents are legal to turn over. But in the 29 August request for an extension, it said the initial ruling from the Court of First Instance could still leave it open to prosecution.
The company wanted to seek further advice from the Federal Office of Justice, which it said in August would be available “in the near future”.
“MSC regrets that it is required to ask for further delay, but respectfully submits that the current situation places MSC in an impossible position,” the line operator said.
Wirth rejected MSC’s argument.
In its amended complaint filed in February, MCS Industries requested that the FMC begin an investigation and that it find MSC in violation of the Shipping Act. The shipper also sought a cease and desist order against the liner operator, in addition to unspecified reparations.
Wirth said she could not initiate an investigation, but that the other requests were under consideration and that MCS Industries should identify how much money they are seeking in reparations.
She said MSC can file a reply.
“The merits of the proceeding and remedy are not at issue and should not be addressed in these filings—the question is only whether a default decision or other procedural consequence is appropriate for [MSC’s] failure to produce discovery,” she wrote.
MSC did not immediately return a request for comment.
MCS Industries was the first company to file a complaint with the FMC after President Joe Biden issued an executive order last summer prompting the government to take a closer look at competition in the container shipping industry. US exporters, especially those selling agricultural goods, had complained they were being shut out of foreign markets.
Since then, many other US shippers have argued liner operators have entered into contracts that were not honoured when rates for the sector picked up amid rising consumer demand.
