Ocean carriers Ocean Network Express Ptd. Ltd. (ONE) and Wan Hai Lines, Ltd. recently settled allegations of misconduct brought by the Federal Maritime Commission's Bureau of Enforcement, Investigations, and Compliance, resulting in a combined total of $2.65 million in civil penalties.
ONE, in an agreement reached with the FMC in April, resolved allegations of violating 46 U.S.C. § 41102(c) by imposing detention charges when appointments were unavailable during allocated free time for equipment return. As part of the agreement, ONE agreed to pay a $1.7 million civil penalty. Notably, the agreement also introduced a significant new provision requiring ONE to provide restitution to affected shippers in the form of refunds and waivers. ONE also expressed its commitment to comply with the Ocean Shipping Reform Act of 2022 and the Interpretative Rule on Detention and Demurrage.
Similarly, the Commission settled with Wan Hai Lines, Ltd. and Wan Hai Lines (USA) Ltd. to close an Order of Investigation and Hearing issued in December 2021. Wan Hai agreed to pay $950,000 in civil penalties for allegations of violating 46 U.S.C. § 41102(c) by failing to observe and enforce just and reasonable practices regarding charges related to empty container returns. Additionally, Wan Hai refunded all detention charges collected under the invoices in question and implemented corrective actions to prevent future violations and ensure compliance with the Commission's Interpretive Rule on Detention and Demurrage.
Federal Maritime Commission Chairman Daniel B. Maffei commended the Bureau of Enforcement, Investigations, and Compliance for their efforts, emphasizing that the agreements send a clear message to the international shipping community that ocean carriers must fully comply with U.S. legal obligations. The penalties imposed on ONE and Wan Hai serve as both a deterrent and relief for affected shippers.
It is worth noting that in June 2022, Hapag Lloyd AG paid $2 million in civil penalties to address allegations of violating 46 U.S.C. § 41102(c) in their assessment of detention charges.
It is important to differentiate between a compromise agreement, as seen with ONE, which is reached before the Commission initiates formal enforcement action, and a settlement agreement, as seen with Wan Hai, which concludes an ongoing enforcement proceeding. Neither ONE nor Wan Hai admitted to any violation of the law.
The civil penalties paid by the ocean carriers go directly to the General Fund of the U.S. Treasury, with no revenue being received by the Federal Maritime Commission in the process of assessing these penalties.