Two shipping lines have paid a combined total of $2.65 million in civil penalties to resolve allegations of misconduct brought by the Federal Maritime Commission’s (FMC) Bureau of Enforcement, Investigations, and Compliance.
Ocean Network Express (ONE) entered into a compromise agreement with the FMC in April to resolve allegations it violated 46 U.S.C. § 41102(c) by assessing detention charges when appointments were unavailable during allocated free time to return equipment.
Under the terms of the agreement, ONE agreed to pay a $1.7m civil penalty. The agreement incorporates a significant new compromise provision whereby ONE agreed that in addition to paying civil penalties, it would also furnish restitution to impacted shippers in the form of refunds and waivers. In concluding the compromise, ONE also stated its commitment to comply with the Ocean Shipping Reform Act of 2022, as well as the Interpretative Rule on Detention and Demurrage.
Separately, the Commission reached a settlement agreement with Wan Hai Lines, and Wan Hai Lines (USA) (Wan Hai) to close an Order of Investigation and Hearing issued by the Commission in December 2021. Wan Hai agreed to pay $950 000 in civil penalties to address allegations that it violated 46 U.S.C. § 41102(c) by failing to observe and enforce just and reasonable practices regarding its charges related to empty container returns. In addition to payment of a civil penalty, Wan Hai refunded the impacted shippers all detention charges collected under the invoices at issue and has implemented corrective actions to prevent future violations and ensure compliance with the Commission’s Interpretive Rule on Detention and Demurrage.
“The agreements send a clear message to the international shipping community that ocean carriers must fully comply with the US legal obligations. I commend our Bureau of Enforcement, Investigations, and Compliance for their efforts, which resulted in both meaningful civil penalties, and relief for impacted shippers,” said FMC chairman Daniel B Maffei.
In June 2022, Hapag Lloyd AG paid $2m in civil penalties to resolve allegations it had violated 46 U.S.C. § 41102(c) in how it assessed detention charges.
A compromise agreement, such as the agreement concluded with ONE, is reached prior to the Commission initiating formal enforcement action against a targeted entity. A settlement agreement, such as the one reached with Wan Hai, concludes an ongoing enforcement proceeding. Both ONE and Wan Hai did not admit to any violation of law.
Civil penalties are paid directly to the General Fund of the US Treasury. The FMC does not receive any revenue when assessing civil penalties.
