Sequel to the Yang Ming decision. (California Shipping Line - Yang Ming case)

A little-noticed service contract dispute between a Houston-based shipper and the PRC-owned China Ocean Shipping Company (COSCO) is on its way to becoming a bellwether case before the Federal Maritime Commission. It involves shipper-carrier relations under the service contract provisions of the 1984 Shipping Act.

Two years ago in the California Shipping Line-Yang Ming case, the commission ruled that ocena carriers have the exclusive right to determine if a shipper is "similarly situated," and entitled to a "me-too" service contract.

This time around, the FMC will be faced with another tough decision--whether it has jurisdiction when a shipper alleges breach of contract.

The issue quietly hit the FMC's docket ledger back in October 1991 when Vinmer, Inc., a Houtston-based petrochemicals and plastics exporter, failed to win a service contract.

What makes the case unique is the fact that COSCO actually offered the contract, which was promptly signed by Vinmar. However, what threw the case to a possible breach of contract status was COSCO's decision not to sign or file the contract with the commission after it was offered to and accepted by the shipper.

COSCO's Version Of What Happened. COSCO North America's vice president John Knapp indicated that Vinmar is not similarly situated to the shipper whose name is on the contract at issue.

Knapp indicated that the reason COSCO did not sign the contract offered to Vinmar was that during the course of a company investigation it found that Vinmar tendered only 40 percent of the 5,000 tons which it committed to COSCO in a 1988 service contract, and took eight months to pay COSCO the default penalties.

He also indicated that Vinmar's latest attempt to me-too the contract now at issue was just a ploy to win a better rate from COSCO.

Discussions with Vinmar over the latest …