A US administrative law judge has ordered Orient Overseas Container Line (OOCL) to pay a record $45.6m in reparations to the bankruptcy estate of collapsed retailer Bed Bath & Beyond, in a ruling that could reshape how ocean carriers honour service contracts during periods of extreme market disruption.

Chief administrative law judge Erin Wirth issued the 203-page decision on April 24, finding that OOCL, the Hong Kong subsidiary of China’s COSCO, violated multiple provisions of the US Shipping Act by failing to meet contracted space commitments during the covid pandemic freight boom, retaliating against the shipper when it raised complaints, and refusing to deal. The ruling is the largest reparations award in Federal Maritime Commission (FMC) history.

The case centres on allegations that OOCL, like many carriers during the pandemic supply chain crisis, effectively sidelined long-term contract obligations in favour of soaring spot market rates. Bed Bath & Beyond alleged OOCL provided just 70% of contracted capacity in 2020, falling to approximately 53% during part of 2021-22, forcing the retailer into the expensive spot market as it struggled financially ahead of its 2023 bankruptcy filing and liquidation.

Judge Wirth found the evidence showed OOCL “did not make a good faith effort to make available to BBBY the space which it had promised,” and further concluded the violations were “willfully and knowingly committed.” A carrier letter from October 2022 was cited as evidence of retaliation, with the judge finding it was intended to be threatening and influenced subsequent cargo allocation decisions.

The $45.6m award fell well short of the $165m ultimately claimed, with the judge rejecting reparations related to detention and demurrage charges and certain other categories. OOCL had argued the dispute was a straightforward contract matter outside FMC jurisdiction – a view Wirth firmly rejected.

The ruling carries significant implications beyond this single case. Samsung Electronics, QVC, Dollar General and numerous other shippers filed similar pandemic-era complaints against multiple carriers including MSC, Evergreen, CMA CGM and HMM.

Either party has 22 days to file an exception, and the decision remains subject to full commission review.