Chinese United Lines (CULines) has filed a $96.4 million complaint against Amazon, alleging the retailer breached a two-year contract by terminating it early and failing to pay $31.5 million owed at the time of termination.
The complaint, lodged with the Federal Maritime Commission (FMC) on January 9, accuses Amazon of changing the reason for the contract’s termination to a “for cause” basis, allowing the company to avoid penalties and payments owed under the original agreement.
“After the contract was validly terminated by Amazon for convenience, effective as of May 30, 2023 per Amazon’s written notice, and was no longer in effect, Amazon attempted to revise the termination to ‘for cause’ as a pretext to avoid paying the contractual liquidated damages,” CULines alleged in its filing.
CULines initially asserts that Amazon had agreed to cover the balance for cargo services rendered and to compensate for failing to meet its minimum quantity commitment (MQC). However, the FMC filing claims Amazon later sought to alter the contract’s termination terms to avoid these payments.
In seeking redress, CULines is requesting compensation for services rendered, the difference between the agreed rates and market rates, and additional damages and costs. The complaint argues that Amazon’s actions were intended to obtain transportation services below the agreed-upon rates by changing the reason for contract termination; and thus, avoiding liquidated damages.
According to the FMC filing, “The Complainant alleges these violations arose from Respondents’ attempt to obtain ocean transportation at less than the applicable rates or charges by attempting to revise the reason for their termination of their service contract with Complainant to avoid paying liquidated damages, and other acts or omissions by Respondents.”
Further, CULines claims Amazon violated the contract’s non-disclosure agreement by releasing confidential pricing and shipment details on WeChat.
The contract, negotiated in early 2022, included a break clause allowing for renegotiations in 2023. However, when spot rates fell below the agreed terms, Amazon allegedly chose to terminate the agreement. Under the contract’s termination-for-convenience clause, Amazon was required to pay CULines $31.5 million for unused shipping capacity.
Amazon has 25 days to respond to the complaint, and the FMC is expected to issue an initial ruling within one year.