Orient Overseas Container Line Ltd. and OOCL (Europe) Limited (“OOCL”) have filed a lawsuit against the U.S. Federal Maritime Commission (FMC), arguing that the regulator’s internal adjudication process was unconstitutional after the FMC ordered Orient Overseas to pay approximately $45 million in damages.
On May 5, OOCL filed a lawsuit in the U.S. District Court for the Eastern District of Texas, asking the court to halt the ongoing administrative proceedings by FMC and to overturn the preliminary ruling requiring the company to pay $45 million.
OOCL argues that the FMC’s internal adjudication system violates the constitutional guarantee that the regulatory agency allows cases to be heard by administrative law judges appointed by the agency, while OOCL believes such cases should be transferred to federal courts for trial by a jury.
At the heart of this dispute lies the scope of the FMC’s enforcement authority, particularly its expanding powers under the U.S. Shipping Act to regulate the billing periods for demurrage and detention charges. Disputes in this area have persisted since supply chain disruptions began during the pandemic.
A few days before OOCL filed a lawsuit against the FMC, FMC Chief Administrative Law Judge Erin Wirth ruled that OOCL must pay $45.6 million in damages to the bankruptcy estate of the bankrupt retailer Bed Bath & Beyond, marking the largest damages award in FMC history.
OOCL’s appeal reflects a broader legal offensive against the authority of U.S. federal agencies, particularly against the model of regulatory agencies establishing internal courts and appointing administrative judges to conduct self-trials and adjudications. Recent rulings by the U.S. Supreme Court have given companies more confidence to question whether regulatory agencies can impose penalties through internal procedures rather than the traditional judicial system.
The report states that the FMC’s initial ruling against OOCL stemmed from allegations of its carrier conduct and financial penalties imposed under the Commission’s supervision. By seeking to completely overturn that ruling, OOCL is escalating the case into a litigation 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 in the United States are facing increasingly stringent regulatory scrutiny regarding pricing, congestion surcharges, demurrage and detention fees, and competition issues.
If OOCL wins the case, it will significantly weaken the FMC’s ability to take enforcement action through existing administrative procedures, potentially leading to more disputes being transferred to federal court and delaying future regulatory actions.
This legal challenge comes at a sensitive time in the U.S. maritime policy agenda, as the U.S. pushes for stronger regulation of foreign shipping companies and increased federal government intervention in supply chain resilience and maritime competition.