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The Year in Review

International Legal Developments Year in Review: 2021

International Transportation Law - International Legal Developments Year in Review: 2021

James Henry Bergeron, Attilio M Costabel, Andrew M Danas, Gregory Carl Maddaleni, and Rebecca A Fenneman


  • This article updates selected international legal development in 2021 in international transportation law.
  • It provides an update on marine insurance developments.
  • As well as new Canadian guidelines for testing autonomous vehicles.
International Transportation Law - International Legal Developments Year in Review: 2021
Gonzalo Azumendi via Getty Images

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This article updates selected international legal development in 2021 in international transportation law.

I. Maritime Law

A. Marine Insurance Developments

1. “Utmost Good Faith”

In January 2021, in QBE Seguros v. Morales-Vázquez the U.S. Court of Appeals for the First Circuit reviewed a lower court decision regarding a dispute between an insured boat owner and his insurance company, QBE Seguros. The insurance application required the insured to disclose any accidents or losses. This disclosure led to the discovery that he had been involved in an accident some eleven years earlier he failed to mention that in January 2010 he had grounded a forty-foot yacht in Puerto Rico. On October 24, 2014, the yacht sustained appreciable damage from a fire, and “QBE sought a declaratory judgment voiding the policy on the grounds that [the insured] had failed to honor his duty of utmost good faith (known as ‘uberrimae fidei’ . . . ).”

The court held the policy voided under the rule of utmost good faith as originally crafted in England in the eighteenth century. Further, the court held that uberrimae fidei is firmly entrenched in the jurisprudence of the First Circuit over strenuous arguments that subsequent British legal reforms in the United Kingdom Insurance Act 2015 made the rule obsolete, rejecting appellant’s claim that the Insurance Act 2015 had to be followed as a model from England, just as the rule of utmost good faith was adopted by the U.S. courts in the eighteenth century. The court stated, “[i]t follows, we think, that federal courts tasked with hearing admiralty cases should take heed of developments in English law, but they are not obliged to change course merely because Parliament acts to alter a previously entrenched principle.” The court also noted that the omitted facts must be objectively material in order to allow an insurer to void an insurance policy under the doctrine of uberrimae fidei.

2. Crew Warranty

Five months later, in Travelers Property Casualty Company of America v. Ocean Reef Charters, the U.S. Court of Appeals for the Eleventh Circuit decided a demand by an insurer against an insured yacht owner, seeking declaratory judgment that the owner, Ocean Reef Charters, breached captain and crew warranties, and that therefore the policy did not provide any coverage for total loss caused by a hurricane. The policy contained two express warranties. First, “the captain warranty required Ocean Reef to employ a full-time professional captain approved by Travelers . . . Second, the crew warranty required Ocean Reef to have one full-or part-time professional crew member onboard.”

Ocean Reef did not employ a professional captain for the M/Y My Lady or have crew onboard when, in early September of 2017, Hurricane Irma was heading towards Florida. The manager of the insured did his best to secure the yacht, but during the hurricane a failed piling led to the yacht to drift, hit the sea wall, and sink. The damage resulted in a total constructive loss under the Travelers policy.

Travelers argued that federal maritime law required strict compliance with express warranties in marine insurance contracts, and that a breach barred coverage even if it was unrelated to the loss. Ocean Reef countered that Florida’s so-called “anti-technical statute” should instead apply, and that under that statute the breaches did not preclude coverage because they were unrelated to the loss. At the district court level, Travelers’ motion for summary judgement was granted based on the conclusion “that the Eleventh Circuit has fashioned an entrenched rule of admiralty: express warranties in maritime insurance contracts must be strictly construed in the absence of some limiting provision in the contract.”

The Eleventh Circuit reversed. The court reasoned that, under the rule in Wilburn Boat v. Fireman’s Fund Insurance Co., the question was whether there exist entrenched federal maritime rules governing captain or crew warranties. The Eleventh Circuit answered in the negative. While the court found other warranties, like “navigation” or “seaworthiness,” were federally entrenched, the court found “no American cases or authorities recognizing or announcing an entrenched maritime rule” for the “crew warranty.” Thus, the court applied Florida’s so-called “anti-technical statute,” under which the breaches did not preclude coverage because they were unrelated to the loss.”

Again, there was an interesting discussion about the effects that the United Kingdom Insurance Act 2015 should have over American law of marine insurance. The court raised in dictum perplexity on whether Wilburn Boat is still to be followed blindly. In the words of the court, “[i]f there are still ‘special reasons for keeping in harmony with the marine insurance laws of England, the great field of this business,’ . . . it will be interesting to see what effect the Act has on American maritime law (and on how Wilburn Boat is viewed).” In fact, the court expressed the desire that “this case will prove tempting enough for the U.S. Supreme Court to wade in.” Such a decision seemed possible when a petition for certiorari was filed in the QBE case based on this issue. However, the U.S. Supreme Court denied the petition in that case without an opinion.

The Travelers case was remanded, and no subsequent history demonstrates any further development in this case, while QBE is final with the Supreme Court denial of certoriari. Therefore, the rules appear to be established at least for the foreseeable future. “Utmost Good Faith” is entrenched as it was in its beginning, as set forth in First Circuit, and there are no existing, let alone entrenched, “crew warranties” established by the Eleventh Circuit. Practitioners, however, will be well advised to check the status of these rules circuit by circuit, as no solution from the U.S. Supreme Court may be expected.

3. Maritime Liens - Vessels and “Dead Ships”

In Jones Superyacht Miami, Inc. v. M/Y Waku, the plaintiff filed an in rem action against a yacht to establish a maritime lien on the vessel pursuant to 46 U.S.C. § 31342. The owner argued that the yacht was not technically a vessel under federal maritime law due to an Office of Foreign Assets Control (OFAC) action preventing its use as a means of marine transportation for people or things, and also contended that a maritime lien cannot attach to a “dead ship.”

As a preliminary inquiry, the court had to decide if it had admiralty and maritime jurisdiction. If the yacht was a vessel used as a means of marine transportation for people or things, then the court had subject matter jurisdiction. The yacht went through a “massive overhaul,” remaining idle in dock for a long time, during which an OFAC action and order prevented its use in marine navigation in a technical sense. The owner argued that the yacht had lost its status as a vessel, because, among other things, under the test of Lozman v. City of Riviera Beach, the yacht could not even be seen as a vessel. The U.S. District Court for the Southern District of Florida disagreed, treating the Lozman argument as “creative” and posting in the opinion two pictures of the yacht, plainly looking like its name and not like the Lozman’s houseboat, which was graced by French doors and windows, instead of watertight port holes.

The court then disposed of the OFAC issue, holding that while the OFAC action prevented the yacht’s use in marine navigation in a technical sense, in a practical sense the yacht remained a vessel. Despite its temporary dormant state at drydock, no reasonable observer “would not consider it to be designed to any practical degree for carrying people or things on water.” Finally, the court disposed of the “dead ship” argument holding that the U.S. Court of Appeals for the Eleventh Circuit defined “dead ships” as “[s]hips rendered permanently incapable of marine transportation.”

4. Cruise Claims – Wrongful Death – Pecuniary Damages – Choice of Law

In Goodloe v Royal Caribbean Cruises Ltd., a Wisconsin citizen suffered a heart attack on board a cruise ship in Alaska and died while hospitalized in Anchorage. The estate sued the Cruise Line in the U.S. Florida District Court, and the jury found the cruise line liable and awarded pecuniary and substantial non-pecuniary damages. The cruise line appealed the award of non-pecuniary damages.

The U.S. Court of Appeals for the Eleventh Circuit affirmed. Since the death occurred in state waters, the court followed Yamaha Motor Corporation v. Calhoun, which held that while general maritime law does not allow non-pecuniary damages for wrongful death, state law may supplement general maritime law for damages in wrongful death suits for deaths that occur within state territorial waters.

The parties did not disagree on the use of Calhoun, and also agreed that the Lauritzen v. Larsen test should be used to resolve a domestic choice-of-law dispute in a maritime tort case. The court applied the Lauritzen test to determine which states’ law supplements general federal maritime law to allow for recovery of non-pecuniary damages for wrongful death that occurs on state territorial waters. The choice between the law of the plaintiff (Wisconsin) and that of the forum (Florida) was critical because Wisconsin law did not supply the requested remedy for deaths outside the state, while Florida law did.

Based on the Lauritzen factors, the court found that Florida had a slightly stronger connection, being both the forum state and the domicile and base of operations of the defendant corporation, whereas Wisconsin’s sole connection was the domicile of the deceased. Turning to compare the two states’ relative interests in having their laws applied made clear to the court that Florida did govern, especially because its wrongful death law applies to deaths that happen outside of the state.

5. Jones Act – Seaman Status

In Jarvis v. Hines Furlong Line, Inc., a seaman employed as a deckhand aboard the vessel,
“began suffering from a non-occupational illness in February 2018.” In March 2018, the seaman was permitted to continue his employment in the shipyard where the vessel was undergoing repairs. The reassignment to the shipyard allowed the seaman to be closer to home and urgent medical treatment for that illness. During the time the seaman was working in the shipyard on repairs of the vessel, he suffered a back injury.

The owner argued that because the seaman was reassigned to work in the shipyard, he was “a land-based maritime laborer, not a seaman,” and therefore, he could not recover under the Jones Act or general maritime law. The seaman argued that he was a seaman despite his reassignment to work in the shipyard.

The court applied the Chandris Incorporated v. Latsis test with respect to seaman status and found that even if the seaman could demonstrate his duties contributed to the function of the vessel, he could not demonstrate that he had a connection to a vessel in navigation that was substantial in terms of duration and nature. The nature of repairs was extensive, and the repairs occurred over an extended period of time. Further, the owners argued that the vessel was “practically incapable of maritime transport” because it could only be moved by harbor tugs.

The seaman argued that he still had a connection to an identifiable fleet of vessels in navigation as he had spent more than half of his total employment with the owner and its predecessor company as a seaman aboard their vessels. Based on an agreement of between the parties, “if a maritime employee receives a new work assignment in which his essential work duties are changed, he is entitled to have the assessment of the substantiality of his vessel-related work made on the basis of his new position.” However, the seaman argued that he did not actually obtain a new position because his assignment to the vessel was only temporary and because his essential work duties did not change. The owners argued that because Jarvis anticipated working in the shipyard until refurbishment was complete, his assignment there was indefinite, and thus, permanent as a matter of law.

The court found that the seaman had received a new work assignment. The court’s evaluation of whether a seaman had a substantial connection to a vessel in navigation related to the vessel, and not to the totality of vessels he worked on during his tenure with the owner and its predecessor company. The court further found that the vessel was not a vessel in navigation because of the extent of repairs it underwent and the duration that such repairs were ongoing.

6. Carriage Of Goods - Per Package Limitation

Hartford Fire Insurance Co. v. Maersk Line considers a shipment of glass doors and windows that arrived in damaged condition after being transported from Ireland to Connecticut via the Port of Newark. Non-party Interocean, a Dublin-based freight-forwarding company, booked the shipment’s ocean transit. Interocean then retained defendant Maersk to provide ocean carriage, and Maersk issued two bills of lading. One Maersk bill of lading identified “1 Container said to Contain 102 pieces,” and the second identified “1 Container Said to Contain 160 PIECES.” Pursuant to the two bills of lading, Maersk was to provide two empty containers that measured forty-five feet long, but it had no contractual responsibility for loading and securing the containers’ contents.

Maersk sought a ruling from the court that its damages were limited to $1,000, on the basis that the Maersk bills of lading identified only two “packages,” each of which the Carriage of Goods by Sea Act (COGSA) limits to $500 in damages. In Maersk’s view, the parties expressly agreed that the “containers” identified in the bills of lading were packages. In opposition, Hartford urged that the bills of lading identified a total of 262 “pieces” in the shipment, each of which should constituted a “package” under COGSA.

The court held that a container should be treated as a package “when the bill of lading expressly refers to the container as one package, or when the parties fail to specify an alternative measure of the ‘packages’ shipped . . . “ and “[I]f the bill of lading lists the container as a package and fails to describe objects that can reasonably be understood from the description as being packages, the container must be deemed a COGSA package.”

In this case, the bill of lading used the disjunctive “or” to distinguish a container from a package, and it expressly identified “1 container,” with no mention of packages. The bill of lading separately identified the number of “pieces” contained in each container, under the heading “Kind of Packages; Description of goods; Marks and Numbers; Container No./Seal No.” Thus, the bills of lading identified the use of containers, but they did not expressly identify the containers as packages. The number of “pieces” contained in the shipment, by contrast, could “reasonably be understood from the description as being packages.” Further, the definition of “container” in the Terms of Carriage did not appear to encompass a preparation for transportation that was made to facilitate handling, as required for a “package.” The bills of lading therefore did not reflect an express agreement between the parties to treat a “container” as a “package,” and the “pieces” identified in the bills of lading could reasonably be understood from the description as being “packages.”

B. Pre-Emption of Independent Contractor Laws for Motor Carriers in California

The longstanding legal dispute in the United States, over whether a federal statute that pre-empts states from regulating the routes, prices, or services of U.S. motor carriers invalidates the application of state employee classification statutes when applied to such carriers’ drivers and employees, continued without a final resolution in 2021. A split decision by the U.S. Court of Appeals for the Ninth Circuit in California Trucking Association v. Bonta created a conflict with other federal circuits over whether state laws applying the “ABC test” for worker classification in the motor carrier industry are pre-empted by federal law.

The Ninth Circuit’s majority decision held that application of California Assembly Bill 5 (AB-5) to the motor carrier industry is not pre-empted by the Federal Aviation Administration Act of 1994 (F4A). AB-5 codified a 2018 California Supreme Court decision which changed almost thirty years of California law by adopting the “ABC test” for classifying workers as either employees or independent contractors. Under the prior rule, the California courts had evaluated the classification of a worker by examining a variety of indicia of an employer-employee relationship, as opposed to an independent-contractor relationship. Under the revised criteria of the ABC test in AB-5, a person shall be considered an employee unless (A) the person is free from control and direction of the hiring entity in connection with performance of the work, both under the contract and in fact; (B) the person performs work that is outside the usual course of the hiring entity’s business; and (C) the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

AB-5 contained a number of exemptions, but it did not exempt motor carriers and their drivers from the law. The California Trucking Association (CTA) thus filed suit to challenge the law, alleging that most motor carriers would no longer be able to use independent contractors because it would be difficult for them to satisfy part B of the AB-5 test. A California federal district court issued a preliminary injunction against enforcement of AB-5 finding that the CTA would succeed in showing that AB-5 violated provisions of F4A pre-empting any state law “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property.”

In a two-to-one decision, the Ninth Circuit found that application of AB-5 would not run afoul of the F4A’s prohibitions and dissolved the lower court’s injunction. The majority rejected the arguments of both the dissent and the CTA that the application of AB-5 would have such a significant impact that it indirectly affected the carriers’ prices, routes, and services to its customers and thus effectively binds them. Instead, the majority noted that the prior California independent contractor test had not been pre-empted and that precedent indicated that laws of general applicability that affect the relationship between the motor carrier and its customers may have more of an impact on a carrier’s prices, route, or service as opposed to laws of general applicability that affect the carrier’s relationship with its workers.

Relying on the fact that AB-5 was a law of general applicability to many industries, the majority rejected the argument that AB-5 was related to the prices, routes, and services of a motor carrier because the ABC test requires an employer to hire employees rather than independent contractors. In doing so, the majority rejected decisions from the U.S. Court of Appeals for the First Circuit and for the Third Circuit which found that application of prong B to identical ABC tests were pre-empted under the F4A on this ground.

The majority’s decision reached the same conclusion as an earlier California appellate court that as applied to motor carriers AB-5 does not violate the F4A pre-emption provisions. Although on October 4, 2021, the U.S. Supreme Court denied certiorari of an appeal of the California state court case, on November 15, 2021, the U.S. Supreme Court invited the Solicitor General of the United States to file a brief in the CTA appeal expressing the views of the United States on whether the Court should review the issue and circuit split. No deadline was set for the submission of such a brief. As of early December 2021, the petition for certiorari was still pending.

II. New Canadian Guidelines for Testing Autonomous Vehicles

In August 2021, Transport Canada announced new guidelines for testing automated driving systems in Canada. These new guidelines updated prior guidelines that had been released in 2018. The new guidelines are divided into four logical sections: (1) engagement with government agencies, (2) pre-trial considerations, (3) test considerations and (4) post-test considerations. In the first section, the guidelines address meeting all of the regulatory requirements related to testing new autonomous systems, which includes the requirements for importing these vehicles into Canada. It also includes meeting not only federal but provincial and municipality requirements. The guidelines reference the specific laws and regulations at issue.

In 2019, the Strengthening Motor Vehicle Safety for Canadians Act in 2019 was updated to accommodate types of vehicles that had not been contemplated in existing laws. In that same time frame, Transport Canada released Canada’s Safety Framework for Automated and Connected Vehicles. These reforms, along with other Transport Canada guidance, became the reference points from which the new guidelines emerged. Transport Canada also leverages international guidelines, such as various International Standard Organization guidelines, including ISO 22737.

The second part of the guidelines addresses pre-trial considerations. This section is where the thought process is developed in creating the overall test plan. This part includes looking at the results of other tests made on the same type of vehicle in other geographies. Transport Canada has come up with a safety assessment tool which highlights thirteen safety outcomes, a starting point for designing the testing plan. Route selection can evolve as the plan progresses. Testing may start in a closed environment, then a restricted access environment, graduating to segregated lanes and ultimately testing in a mixed traffic environment. All of these tests are governed by a proper safety management, including safety procedures for trial personnel as well as vehicle maintenance. Even as the test is meant to evaluate automation, the safety driver is there to intervene when results are not as anticipated. Local first responders and law enforcement need to be notified and debriefed in advance. One particular pre-trial consideration is the area of cyber security, addressed in Canada’s Vehicle Cyber Security Guidance.

The third section deals with running the test itself. During the actual testing phase, the safety management plan may need to be modified as ongoing results are observed. Also, as part of the test, incident and emergency response plans are evaluated, as well as the functionality of the safety driver. If the test ultimately includes testing with actual passengers, this step will only happen after extensive pre-passenger testing.

The final section deals with post-test considerations, including evaluating and sharing the results. Another post-test consideration is what to do with the vehicle or vehicles once the test is over. Normally these vehicles have been imported solely for testing purposes and need to be exported or destroyed under government supervision. One alternative is to donate the vehicle to a museum in a disabled condition. The Canada Minister of Transport considers these new guidelines as the “2.0” version on how to test autonomous vehicles, and in that way, act as a catalyst towards reaping the benefits of this emerging technology.

Some key differences with U.S. regulation should be noted. In Canada, approval to fly over people requires the advanced operations certificate. In the U.S. a waiver is required, yet only small fraction of these waivers have been administered. There are proposed rule changes to adjust this waiver requirement, but passage of these rules is not foreseen anytime soon. Secondly, there is no distinction between recreational and commercial usage (as is the case in the U.S.), but rather basic versus advanced operations. And finally, commercial usage in the U.S., which in effect is the more advanced usage, requires only aeronautical knowledge, not demonstration of actual flight proficiency as in Canada.

A. Federal Maritime Commission Initiates Shipping Act Enforcement Action

The Federal Maritime Commission (FMC) is an independent U.S. administrative agency, that is empowered to prescribe regulations, as well as make adjudicatory findings of violations of the Shipping Act. Under its procedural rules, the FMC usually assigns adjudications to an administrative law judge for initial decision.

1. Demurrage and Detention: The FMC’s 2020 Interpretive Rule

On May 18, 2020, the FMC adopted an interpretive rule, advising the shipping public and regulated entities on its interpretation of 46 U.S.C. § 41102(C) with respect to the application and collection of demurrage and detention. Although not defined by the interpretive rule, demurrage is generally defined as charges for occupying space (after “free time”); “detention” are charges assessed for retaining equipment (usually ocean-going containers) beyond the allotted “free time.” The FMC had earlier issued an interpretive rule laying out how it would analyze the provisions of 46 U.S.C. § 41102(C) generally. The interpretive rule laid out what the FMC identified as its “north star”—the “incentive principle.” That is, to what extent do the charges serve as incentives to “promote freight fluidity.” Particularly, the FMC considers in its reasonableness analysis “the extent to which demurrage practices and regulations relate demurrage or free time to cargo availability for retrieval[;]” and that it generally finds charging detention when empty containers cannot be returned likely unreasonable (absent “extenuating circumstances”). The FMC also indicated that it may consider “whether and how regulated entities provide notice to cargo interests that cargo is available for retrieval.” Presumably, poor notice practices may make assessing demurrage and detention unreasonable. Finally, the FMC stated “in the context of government inspections, the Commission may consider the extent to which demurrage and detention are serving their intended purposes and may also consider any extenuating circumstances.”

The Interpretive Rule also advises regulated entities that it would consider the “existence, accessibility, content, and clarity” of demurrage and detention policies, including dispute resolution policies; and the extent to which they contain information about points of contact, timeframes, and corroboration requirements. The guidance warns that the FMC may consider the “extent to which regulated entities have clearly defined the terms used in demurrage and detention practices and regulations, the accessibility of definitions, and the extent to which the definitions differ from how the terms are used in other contexts.” Finally, the Interpretive Rule states that the FMC would not be precluded from “considering factors, arguments, and evidence in addition to those specifically listed in [the interpretive rule].”

2. Presidential Action

Although U.S. consumers’ demand for goods fell precipitously in March 2020 with closures relating to the outbreak of COVID-19, it rebounded with unmatched fervor in the following months. Coupled with labor supply uncertainties and reductions following the outbreak of the virus until a vaccine was distributed widely in 2021, the results of this “bullwhip” included unprecedented delays in servicing containerships arriving at the ports, and congestion in the transportation of goods generally.

From early in his administration, the President took several actions to address supply chain disruptions, congestion, and bottlenecks. On February 24, 2021, the President issued an Executive Order on America’s Supply Chains and established a task force to make recommendations on action the administration should take. On June 8, 2021, the White House Task Force issued a one-hundred day report. The Task Force recommended that the Administration should establish (1) a Supply Chain Disruptions Task Force led by the Secretaries of the Departments of Commerce, Transportation, and Agriculture to provide an all-of-government response to address near-term supply chain challenges to the economic recovery; (2) a datahub led by the Department of Commerce to bring together data from across the federal government to improve the federal government’s ability to track supply and demand disruptions and improve information sharing between federal agencies and the private sector.

On July 9, 2021, the President issued an Executive Order on Promoting Competition in the American Economy. This Executive Order established a White House Competition Council to “coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy.” Stating its agreement with the FMC’s Interpretive Rule, the Executive Order encouraged the FMC to work to “vigorously enforce the prohibition of unjust and unreasonable practices in the context of detention and demurrage pursuant to the Shipping Act.” On October 13, 2021, the President spoke and issued several statements and briefings, including a readout of a meeting held to focus on the congestion in Southern California ports. On October 25, 2021, the Ports of Los Angeles and Long Beach announced that they would impose an “excessive dwell fee” to begin on November 1, on any inbound container staying on a terminal for more than eight days. Citing velocity improvements, the ports later delayed the imposition of these fees; and as of the date of this writing it had been postponed until November 29, 2021.

3. Initiation of Docket No. 21-09: The Alleged Violations

On November 11, 2021, the FMC issued FMC Docket No. 21-09, an Order of Investigation and Hearing entitled Hapag-Lloyd, A.G. and Hapag-Lloyd (America) LLC Possible Violations of 46 U.S.C. § 41102(C) (Order). Although the Order is the initiation, rather than the conclusion, of an administrative investigation, it is notable as the FMC in the Order asserts several novel substantive and procedural positions. It is also the first such order the FMC has issued since 2015, and the first issued since the adoption of a procedural rule requiring pre-enforcement notification by the Bureau of Enforcement.

In its Order, the Commission alleged that in the Spring and Summer of 2021, on at least eleven occasions, Hapag-Lloyd refused to waive the collection of detention for containers that could not be returned because it had either offered no return locations, or no appointments at the marine terminal were available, during multiple free days or multiple days in detention (i.e., after free time had expired). The FMC alleged that these actions constituted a failure to establish and observe a reasonable practice in violation of 46 U.S.C. 41102(c).

Hapag-Lloyd is an ocean common carrier (vessel-operating common carrier), regulated by the FMC under the provisions of the Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998. As the fifth largest containership operators in the world, it is estimated to control four percent of U.S. transpacific trade, twenty percent of U.S. transatlantic trade, and approximately 7.1 percent of global market share. Hapag-Lloyd’s fleet at the end of September 2021 comprised of 257 containerships. It owns or rents 1.79 million containers with a capacity of 2,971.1 TTEU. There is no disputing that 2021 was a record profit-making year for Hapag-Lloyd, as well as all other large containership operators.

The Order named the FMC’s Bureau of Enforcement (BOE) as a party to the adjudication, as it typically has done. In prior enforcement activity, BOE will typically prepare a recommendation to the Commission, which then votes and by a majority vote can initiate an investigatory adjudication. In 2018, the FMC adopted a new process whereby prior to making such a recommendation BOE would be required to notify a potential respondent and provide it with an opportunity to respond to the allegations. These arguments would be included in the recommendation to the Commission. The Order, however, includes a waiver of the requirements of 46 C.F.R. § 502.63(d), the Commission asserting it was “necessary to help alleviate the unprecedented stress being placed on the supply chain, including the significant role that unreasonable detention plays in congestion and freight fluidity.” The Order sets a relatively accelerated schedule for decision, making it possible that judicial review of the Commission’s interpretation and application of the provisions of the Shipping Act, at least with respect to carrier detention practices, may come even as the supply chain disruptions continue.

Section authors: James Henry Bergeron and Attilio M. Costabel (Marine Insurance); Andrew M. Danas (Preemption of Independent Contractor Laws for Motor Carriers in California); Gregory C. Maddaleni (New Canadian Guidelines for Testing Autonomous Vehicles); and Rebecca Fenneman (Federal Maritime Commission Initiates Shipping Act Enforcement Action).