What is the meaning of Unreasonable Refusal to Deal (URD)?



One of the requirements of the recently issued Ocean Shipping Reform Act (OSRA) was to try to define the meaning of Unreasonable Refusal to Deal, or negotiate to vessel space accommodations. The FMC has issued a Notice of Proposed Rulemaking (NPRM) that seeks your comments on this important issue.

The OSRA requires that an ocean common carrier shall not unreasonably refuse to deal or negotiate with respect to vessel space accommodation. The NPRM outlines the elements which would be necessary to establish a violation and the criteria the Commission would consider in assessing reasonableness.

It is important to note that the FMC will shift the burden of the refusal from shippers to the ocean carrier. The FMC seeks to understand this definition for both import and export cargo.

Interested parties will have 30 days to submit comments to the Commission once the NPRM is published in the Federal Register. Because the law requires the Commission to publish a Final Rule within six months of OSRA’s enactment, comments should be submitted by the deadline.

In the NPRM, the Commission proposes that complainants alleging an unreasonable refusal to deal with respect to vessel space accommodation would be required to meet three elements:

  1. That the respondent is an ocean common carrier;
  2. That the respondent refuses to deal or negotiate with respect to vessel space; and
  3. That the refusal is unreasonable.

The Commission proposes a non-exhaustive list of factors it will consider when deciding whether a refusal to deal was unreasonable.  Some factors the NPRM proposes the Commission consider include whether the ocean common carrier followed a documented export strategy, engaged in good faith negotiations, and articulated legitimate transportation factors.

As the phrase “vessel space accommodations” has never been defined in legislation, or interpreted by the Commission, the NPRM proposes to define this term.

As the circumstances of each shipment are unique, the Commission acknowledges it is impossible to regulate for every possible scenario, and accordingly, cases alleging a violation will be factually driven and considered on a case-by-case basis.

The Commission consulted with the U.S. Coast Guard on this NPRM as required by the law.


If you have any further questions on how to present your comments, please do not hesitate to contact me.