Federal Maritime Commission Publishes Final Rule on Unreasonable Refusal to Deal
The United States' Federal Maritime Commission on Monday published its final rule concerning “Definition of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel Space Accommodations”.
The rule establishes the necessary elements for the Commission to apply 46 U.S.C. 41104(a)(3) with respect to refusals of cargo space accommodations when available, and 46 U.S.C. 41104(a)(10) with respect to refusals of vessel space accommodations.
Where an alleged refusal by an ocean common carrier takes place during the “negotiation” phase of a transaction, 46 U.S.C. 41104(a)(10) would apply. If an alleged refusal takes place after the negotiation phase, during the “execution” stage, 46 U.S.C. 41104(a)(3) would apply.
Claims brought before the Commission under either sections 41104(a)(3) or 41104(a)(10) will be reviewed and decided on a case-by-case basis, based on their specific facts and circumstances.
Requirements established by the rule apply to vessel-operating common carriers (VOCC) and containerized cargo.
Not all refusals by a VOCC will constitute a violation. If an ocean common carrier can prove there was a reasonable basis for refusing to negotiate or carry cargo, their conduct will not be found in violation of the law. The rule establishes non-binding and non-exhaustive examples and considerations of unreasonable behavior the Commission may use in evaluating allegations that an ocean common carrier violated the law.
The rule will require VOCCs to file a confidential documented export policy annually with the Commission. The documented export policy shall contain information on pricing strategies, services offered, strategies for equipment provision, and descriptions of markets served.
The rule will take effect 60 days from publication in the Federal Register. However, requirements for ocean common carriers to file a documented export policy with the Commission are delayed pending approval of the Collection of Information by the Office of Management and Budget. The Commission will notify the public of the effective date of those requirements upon approval.
