A Connecticut tool company and major shipper has filed a complaint with the Federal Maritime Commission (FMC) in the United States claiming that Danish NVOCC DSV overcharged for its services and had attempted to substantially change service agreements.
Hubbell Incorporated, based in Shelton CT, alleges inappropriate surcharges applied by DSV, along with detention & demurrage charges and billing using FAK and spot rates rather than applicable agreed rates in total amounting to more than US$900,000 in excess charges.
This dispute began with the acquisition of Panalpina in 2019. Hubbell had a Master Service Agreement with Panalpina which was transferred to DSV following the acquisition. That was followed in April 2022 with two NVOCC service agreements (NSA), operating between Houston, Texas and Shanghai, and Savannah, Georgia, Charleston, South Carolina and Yantian.
The NSAs were price and freight capacity agreements and were materially similar to each other.
Having agreed on the NSAs and the MSA, DSV then sent documents to Hubbell to sign off on the agreements. Which Hubbell duly complied with.
However, Hubbell then alleges that DSV wanted to make changes to the NSAs and the MSA and Hubbell claimed that the changes to the agreements were to comply with FMC regulations.
On receiving the changes Hubbell believed these changes to much more than merely complying with FMC language, but that the alterations made substantive changes to the original agreements.
Hubbell alleges that the changes sought to delete the incorporation of the MSA into the NSA deals, and included changes to the charging tariff rules, and changes to the minimum quantity commitment (MQC) that would change the amount of penalties for a shortfall in the volumes.
Most alarming to Hubbell was the proposed changes to the termination policy by creating “conflicts and ambiguity with the termination provisions,” by adding “This Agreement is valid until the stated expiration date or until the stated quantity has been received by DSV, whichever occurs first.”
After a series of changes to the NSAs in May, June and July all of which Hubbell refused to sign DSV’s business development manager, global sales, North America, Trevor Shuman, with what the FMC documents describe as, “A dramatically new position on the 2022 NSAs”.
Shuman wrote on 15 September 2022, “Just to let you know we worked out the filing situation with the FMC. Attached please find a copy of the rates that have been submitted to the FMC. We will not [sic] longer need an amended signature to the contract. We are all set now [sic].”
Attached to the 15 September email, according to the FMC document, were two Excel spreadsheets that Shuman allegedly said supplanted the original agreements.
Elevated concern at Hubbell led the company to issue a notice of termination of the agreements with DSV, explaining the company’s concern that no Hubbell executive had signed the NSAs and explaining that there was confusion as to why the original agreements did not meet FMC regulatory requirements.
Hubbell still felt that the amendments went way beyond the “technical updates” explained by DSV and the company had become concerned about the charges now being levied by the Danish forwarder, and issued the notice of contract termination on 6 December 2022.
A series of letters ensued with DSV attempting to persuade Hubbell to rescind its notice to terminate, even after the 6 March 2023, 90 day, deadline. Hubbell refused and DSV then launched its own legal proceedings at the Delaware District Court on 30 June this year.
DSV alleges that Hubbell owes in excess of US$1.66 million in damages and that the MSA is a separate agreement from the NSAs which do not have the same terms and conditions as the MSA.
Effectively, DSV alleges that the NSAs do not contain a termination agreement within them, if the Delaware court decides that the MSA is not incorporated within the NSAs, then Hubbell could be liable for the US$1.66 million in damages.
Mary Ann Evans
Correspondent at Large
