MSC’s lawyers file opposition to possible FMC default judgment

MSC’s lawyers have objected to a potential default judgment from the US Federal Maritime Commission (FMC) for allegedly failing to produce documents relating to a shipper’s complaint.

In July 2021, US furniture maker MCS filed complaints with the FMC, alleging that MSC and COSCO Shipping Lines reneged on their contractual obligations to supply shipping slots for exports to Asia. MCS resolved its dispute with COSCO two months later, but its complaint against MSC continues.

On 8 September, FMC judge Erin Wirth said there was no reason why she should not issue a default judgement against MSC when the world’s largest liner operator had not complied with a 29 August deadline to submit documents pertaining to its purported contract with MCS.

On 22 September, MSC’s US lawyer, Matthew J. Reynolds, a partner at Huth Reynolds LLP, submitted a response to object to the prospect of a default judgement.

Reynolds said, “MSC has provided full discovery on what Complainant itself has termed the “heart” of the conduct it is challenging in the case…including providing discovery on matters that are also covered by the motion to compel before it was issued (and the Swiss blocking statute was triggered).”

MSC has claimed that it could be liable to prosecutions under Swiss law if it turned over the documents.

Reynolds continued, “There is no bad faith or willful misconduct. MSC’s inability to provide the additional ordered discovery is based on its good faith belief, upon the advice of Swiss counsel which it has confirmed in preparing this response, that it cannot comply with the motion to compel without violating Swiss law and exposing itself to criminal liability under Swiss law.

“MSC believes that a default judgment cannot issue because alternative channels to avoid an irreconcilable conflict with Swiss law are available and have not been fully exhausted, including Consultation procedures provided under the Shipping Act that Complainant itself has argued are mandatory; because there is no prejudice to Complainant or the tribunal in trying to resolve the issue through use of the proper Swiss procedures.”

In its own press statement sent today (23 September), MSC reiterated its stance that MCS’ accusation is baseless and there is no basis for default judgment to be granted. MCS had amended its complaint in 2021 to remove allegations that MSC colluded with other liner operators, but is pressing its claim for failure to supply adequate shipping space.

MSC noted, “The Judge’s order concerns a discovery dispute and not the merits of the case. The claims that MSC did not meet its contractual obligations are meritless. 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.”

Martina Li
Asia Correspondent