Shippers could be sued for up to $300m by Hanjin Shipping

Shippers could be sued for up to $300m by Hanjin Shipping

Extrapolating statistics from the bankruptcy of budget boxline The Containership Company (TCC) back in 2011, SeaIntel has warned in its weekly report that Hanjin Shipping’s creditors could seek damages from shippers on the transpacific trades for up to $300m.

“While plenty of shippers probably feel that they have suffered enough from the Hanjin situation, it would appear that Hanjin’s lawyers acting on behalf of Hanjin’s creditors might have an opportunity to seek liquidated damages from Hanjin’s shippers for a total sum ranging from $40m to $300m,” the Copenhagen-based container analysts said in a report out today.

Given than a bankruptcy court has clearly ruled that the service contracts, inclusive of the liquidated damages, are valid and enforceable, lawyers for the Korean line could argue that Hanjin’s shippers have not delivered as per the MQC.

The report’s author, Lars Jensen, a regular contributor on this site, worked for TCC two years prior to its bankruptcy.

Jensen noted Hanjin is approximately 10 times larger than TCC on the transpacific. This would in turn imply that if Hanjin’s customer case, and the behaviour in relation to the MQC, is comparable to TCC’s customer base, Hanjin could be looking to seek compensation of $75m for a pro-rated 2016/17 contract and $225m for the 2015/16 contract.

“This indicates a possible claim of $300m in liquidated damages,” Jensen wrote in what is shaping up to be a lawyer’s paradise in the coming months and years as clients fight Hanjin in the court rooms.

Jensen noted: “The sheer magnitude of such a potential claim also indicates a fundamental dysfunctionality in the industry, whereby contracts are agreed to, but both parties tacitly ignore the actual agreement and upholds a different set of ‘rules’. Notwithstanding the Hanjin issue, the liner shipping industry – carriers and shippers alike – do appear to be in need of a mentality shift in relation to enforceable contracts.”

By selecting to sue, Hanjin would, of course, also being tacitly admitting that it was exiting the transpacific trades for good. In a live Q&A session for Splash Chat last week Jensen posited that if Hanjin does survive it will only serve the intra-Asia trades.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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1 Comment

  1. Avatar
    Brian R. McCaughrin
    September 12, 2016 at 7:55 pm

    GOD DOES WORK IN MYSTERIOUS WAYS! “Excellent News” In the Hanjin Pending Transpacific Trade Lawsuit on TCC, The fact that those Doing business with Hanjin Shipping, Did Not Act in Professional Manner Nor, Lived up to its Contact Agreement, and During the Filing of Hanjin Shipping on August 31, 2016, Bankruptcy, and You All Just Screwed Yourself in the Process, &.Doing Nothing for Close to Two, (2) Weeks, & Holding Hanjin Shipping Hostage, Can Now Be Sue Each of its Shipper, Freight Forwarders, Ect, Ect, Ect for The Tune of $300M Each, Plus, (+) Any Interest, Court Course, Law Fees, and Help The Creditors Out, In Keeping Either Hanjin Shipping In Business, For the Foreseeable Future “Or” McCaughrin’s, Will Present to Korea Bankruptcy, Our Intent of Purchase Acquisition, Putting McCaughrin Maritime Global – Korea in #7 Spot.. “If” It works out that way. We don’t care how long its takes!