FMC Threatens COSCO with Large Civil Penalty for Delayed Payment
The Federal Maritime Commission filed a Show Cause order at the end of last week against the Chinese-flagged carrier COSCO, which threatens the potential for "substantial" civil penalties for delaying for more than seven months the payment of a small award. The Commission notes that the action of the carrier “raises questions about whether these potential violations of statutes were knowing and willful,” while hinting at a concern that a failure to act undermines the authority of the Commission.
The action stems from what appears to be a minor dispute related to demurrage and detention invoices sent in 2025 to a company called Agribusiness Holdings. While the award was for a relatively small amount, $24,328.80 in reparations plus interest, the FMC states COSCO did not make payment despite repeated contacts from the complainant and eventually from the FMC itself.
Notice of the award was served requiring payment by January 20, 2026, after the FMC found that COSCO had failed to properly issue invoices to the complainant for the D&D fees. The carrier failed to make payment for a total of 223 days.
The FMC highlights that, under the regulations, a common carrier such as COSCO may not retaliate or resort to any other unfair action because a shipper took action, including filing a complaint. The FMC is also empowered to impose civil penalties for violating its order.
At issue, and highlighted in the Show Cause notice, are broader issues about the authority and powers of the FMC. It notes that a U.S. Court of Appeals recently recognized in another matter that the FMC has a strong interest in preserving the integrity of its procedures. The court recognized that a “respondent’s disregard of binding FMC orders can undermine its authority.”
Under the statutes, the FMC is currently empowered to impose inflation-adjusted penalties of $14,988 with each day considered a separate violation. If the violation is found to be “willful and knowing,” the penalty jumps to $74,943, and again each day is a separate violation. COSCO’s violation could, under those rules, result in civil penalties of between $3.345 million and $16.725 million.
that matters most
Get the latest maritime news delivered to your inbox daily.
The order explains that the Commission considers the nature and gravity of the violation, the respondent’s culpability, history of prior offenses, ability to pay, and other matters. It says, in addition, one key goal in assessing civil penalties for knowing and willful violations is deterrence, and it could be appropriate to impose a higher penalty, within statutory limits, based on the need to be sure the amount was sufficient to have that deterrent impact.
The FMC has ordered COSCO to file a brief by December 1 to show cause why it should not be assessed civil penalties for violations and its failure to comply in a timely way with the initial decision dated September 29, 2025. It is also ordered to provide all written communications with the complainant concerning the payment of the reparations award. A final decision by the Commission is due by April 30, 2027, but it could be extended by order of the Commission.
