Effective June 2, the Federal Maritime Commission will permit ocean common carriers to file original service contracts up to 30 days after the contract goes into effect.
The Shipping Act of 1984 permits carriers and shippers to enter into individual, confidential service contracts for the international transportation of cargo and requires that these contracts be filed with the FMC. Under current regulations original contracts must be filed on or before their effective date, while amendments must be filed within 30 days after they go into effect. However, in response to the COVID-19 pandemic and its impact on contract negotiation and filing, in April 2020 the FMC granted a temporary exemption permitting original contracts to also be filed up to 30 days after their effective date.
The FMC has now issued a final rule to make this exemption permanent, stating that doing so can help avoid the commercial harm associated with situations in which cargo is received after the parties have agreed to a contract but before the contract is filed.
There are some changes to the rule from the version proposed in January 2021. The FMC states that while it is adopting the proposed definition of “effective date” without change, it is clarifying its interpretation of that provision to address concerns about the language tying the effective date to the date the parties sign the contract. The Commission is also including a provision to make clear that failure to timely file a service contract or amendment will not affect the applicability of the contract or amendment to shipments received on or after the effective date, even if those shipments were received more than 30 days before the carrier files the contract or amendment.
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