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MCS Industries wins default judgment of nearly US$1 million against MSC

Mediterranean Shipping Company must pay US furniture maker MCS Industries reparations of almost US$1 million after the US Federal Maritime Commission (FMC) awarded default judgment to MCS in its breach-of-contract complaint against MSC.

FMC judge Erin Wirth cited MSC’s “willful and deliberate failure to provide discovery” as the Swiss-Italian liner giant had repeatedly failed to comply with the FMC’s order to turn over certain documents relating to its contract with MCS.

In July 2021, 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. At the time, spot container freight rates were at all-time highs and MCS alleged it had to pay much higher rates as MSC and COSCO had failed to provide sufficient slots as per the contracts.

Wirth granted MCS’ request for total reparations of US$944,655 from MSC, which the furniture maker claimed was what it had to pay in excess of contractual rates in the 2020-2021 shipping year and for the first three months of the 2021-2022 shipping year.

In her judgment, handed down on 13 January, Wirth noted that on 18 October 2022, following various arguments and applications, MSC filed documents from the Swiss Federal Office of Justice that Procedures of the Hague Evidence Convention apply to the FMC case and must be used. MCS, however, filed an objection 10 days later.

MSC asserted that further consultation with the Swiss authorities, not a default judgment, is the proper course for addressing its belief that discovery compliance would risk criminal sanctions. MCS argued that MSC had violated multiple discovery orders, including in its response to the order to show cause as to why default judgment should not be issued.

MSC had, according to the judgment, based its defence against MCS’ complaint that sailings from the Chinese ports of Tianjin and Qingdao could not be undertaken due to port congestion or other factors outside MSC’s control.

However, MCS’ lawyers requested MSC hand over any information it had regarding force majeure, as part of the discovery process; this was not done.

Judge Wirth wrote, “It appears that MSC Mediterranean Shipping has provided information regarding what sailings were voided or cancelled but hasn’t produced the documents and communications that would show why sailings were voided or cancelled. There are many factors impacting the current disruptions and it’s relevant for MCS Industries to discover which factors impacted MSC Mediterranean Shipping.”

MSC had not responded to Container News’ request for comment at the time of publication.

Martina Li
Asia Correspondent

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