On the afternoon of Friday, May 29, 2016, the United States Bankruptcy Court for the Southern District of New York issued its decision on the motions filed by TCC and the shipper defendants in late 2014.
While finding in TCC’s favor on several issues, the court ultimately denied TCC’s motion and granted defendants’ motion in respect of compensation for cargo shortfalls.
The centerpiece of the court’s decision was its finding that the shippers were excused from fulfilling their MQC commitments as a result of TCC terminating its trans-Pacific service on April 7, 2011, even though only twenty-three days remained under the service contracts and even though TCC attempted to credit the shippers for MQCs that could have been shipped during this timeframe.
The Court reasoned that this was a sound result because the shippers could have tendered all of their MQCs on the last four voyages to fulfill their MQCs.
TCC AS in Norway and the attorneys for TCC A/S in Denmark are of the opinion that the court’s ruling is erroneous under the facts of the case and law to be applied. The Court misconstrued key provisions of the TCC service contract, and in particular the shippers’ obligation to ship their containers evenly «as far as possible.»
Furthermore, the court’s conclusion was based on the untenable assumption that the defendants could have shipped all of their MQCs in the 23 remaining days of the trans-Pacific service – notwithstanding there were only a handful of bookings and no complaints from the shippers about how much they intended to ship when the suspension announcement was sent.
At the same time, the Court’s opinion reaches a commercially nonsensical result: it permits the Shippers (defendants) to enjoy some 49 weeks of TCC’s favorable service contracts rates, cause TCC to suffer a serious cash flow problem by failing to ship anywhere near their MQC, and then rely on the consequences of that cash flow problem (which the shippers were responsible for) to excuse them from any liability for the problem they created.
The U.S. attorneys for TCC A/S in Denmark will file an appeal of the Court’s ruling.