‘Arbitrary and capricious’: Liner group wins appeals court victory over US rule on demurrage fees
October 2, 2025
TradeWinds
Types : In the News
Conflicting agency justification sinks rule barring carriers from levying fees against truckers
A US federal appeals court has handed a victory to the container liner sector over the fees carriers charge for detention and demurrage.
In a case that is testing the limits of the power of US government agencies, the three-judge panel in Washington DC struck down a Federal Maritime Commission (FMC) rule that blocked container liner operators from levying the fees on trucking companies.
Robert O’Connor, a maritime lawyer at Montgomery McCracken Walker & Rhoads, said the DC Circuit’s decision was notable because it “underscores the limits” that agencies like the FMC have in making new rules.
Contractual privity
“The court held that part of the FMC’s rule on demurrage and detention charges was arbitrary and capricious because it allowed billing shippers in contractual privity with ocean carriers while categorically excluding motor carriers in similar contractual relationships with ocean carriers — contradicting the FMC’s own rationale,” O’Connor wrote on LinkedIn.
“The court set aside that portion of the rule and also questioned whether consignees, who may lack contractual privity with ocean carriers, can be properly billed under the same logic.”