OOCL has filed a lawsuit against the U.S. Federal Maritime Commission (FMC), arguing that the regulatory agency’s internal adjudication process is unconstitutional, after the FMC ordered OOCL to pay approximately $45 million (about RMB 300 million) in compensation.
On May 5, OOCL filed a complaint in a Texas federal court, requesting the court to suspend the ongoing FMC administrative proceedings and vacate the preliminary ruling requiring the company to pay $45 million.
OOCL argues that the FMC’s internal adjudication system violates constitutional guarantees, as the regulatory body allows administrative law judges appointed by it to hear cases, whereas OOCL contends such cases should be transferred to federal courts and tried by a jury.
At the heart of the dispute are the FMC’s enforcement authority and its expanding power to regulate detention and demurrage billing periods under the U.S. Shipping Act, an area that has been contentious since supply chain disruptions during the pandemic.
Days before OOCL filed its lawsuit against the FMC, FMC Chief Administrative Law Judge Erin Wirth ruled that OOCL must pay $45.6 million (about RMB 310 million) in compensation to the bankruptcy estate of retailer Bed Bath & Beyond, marking the largest compensation judgment in FMC history.
In a 203-page ruling, Erin Wirth found that OOCL failed to fulfill contractual space commitments during the pandemic freight surge and retaliated against shippers who filed complaints, determining that the conduct violated multiple provisions of the U.S. Shipping Act.
OOCL’s appeal reflects a broader legal offensive against the authority of U.S. federal agencies, particularly targeting the model where regulatory bodies establish internal courts and employ administrative judges to adjudicate and rule on their own cases. Recent rulings by the U.S. Supreme Court have emboldened companies to challenge whether regulatory agencies can impose penalties through internal procedures rather than the traditional judicial system.
Reports indicate that the FMC’s initial ruling against OOCL stemmed from allegations regarding its carrier conduct and financial penalties imposed under the commission’s oversight. By seeking to overturn the ruling entirely, OOCL is escalating the case into a lawsuit that could become a landmark test of the FMC’s enforcement framework.
This case is likely to draw close attention from the global liner shipping industry, whose carriers face increasingly stringent regulatory scrutiny in the U.S. over pricing, congestion surcharges, detention and demurrage practices, and competition issues.
If OOCL prevails, it could significantly weaken the FMC’s ability to take enforcement actions through existing administrative procedures, potentially leading to more disputes being transferred to federal courts and delaying future regulatory actions.
This legal challenge comes at a sensitive time for U.S. maritime policy agendas, as the U.S. pushes to strengthen oversight of foreign shipping companies and increase federal intervention in supply chain resilience and maritime competition.
