PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________________

No. 16-4195

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LIBERTY WOODS INTERNATIONAL, INC.,

 Appellant

v.

THE MOTOR VESSEL OCEAN QUARTZ, 

Her engines, tackle, appurtenances, etc., in rem; 

DALIA SHIP HOLDINGS SA, in personam

________________

On Appeal from the United States District Court

for the District of New Jersey

(D. C. Civil Action No. 1-15-cv-08843)

District Judge: Honorable Noel L. Hillman

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Argued on July 11, 2017

Before: MCKEE, AMBRO and ROTH, Circuit Judges

(Opinion filed: May 4, 2018)
2

Craig S. English, Esq. (ARGUED)

Kennedy, Lillis, Schmidt & English

75 Maiden Lane

Suite 402

New York, NY 10038

Counsel for Appellant

Richard Q. Whelan, Esq. (ARGUED)

Palmer, Biezup & Henderson

190 North Independence Mall West

Suite 401

Philadelphia, PA 19106

Counsel for Appellees

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OPINION

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ROTH, Circuit Judge

Liberty Woods International (LWI) brought suit for 

cargo damage sustained during a trip to Camden, New Jersey,

on the Ocean Quartz (Vessel). Liability for the damage is 

governed by the carrier’s bill of lading, which contains a 

forum selection clause requiring suit to be brought in South 

Korea. LWI instead sought to bring an in rem suit against the 

Vessel in the District of New Jersey, arguing that the foreign 

forum selection clause violates the Carriage of Goods by Sea 

Act (COGSA) because South Korea does not allow in rem
3

suits. The District Court dismissed the case, and for the 

following reasons, we will affirm.

I.

LWI purchased plywood veneer sheets, which it 

shipped to Camden, New Jersey, on the Vessel. Dalia Ship 

Holding owns the Vessel; however, in a chain of chartering, 

Dalia bareboat chartered1the Vessel to Star Bulk, which in 

turn time chartered it to Daiichi, which in turn time chartered 

it to SK Shipping. SK Shipping issued a bill of lading which 

specified that “[a]ny claim, dispute, suit or action concerning 

goods carried under this Bill of Lading, whether based upon 

breach of contract, tort, or otherwise shall be brought before 

the Seoul District Court in Korea.” Both parties agree that 

LWI’s cargo is covered by this bill of lading. 

In February 2013, the Vessel arrived in Camden, and 

LWI discovered that its cargo was damaged. Believing the 

damage was caused by improper stowage, LWI threatened to 

arrest the Vessel. In lieu of an arrest, the Japan Ship Owners’ 

Mutual Protection & Indemnity Association (JSO) issued to 

LWI and its insurers a letter of undertaking (LOU) on behalf 

of the Vessel, which could be used to satisfy any judgment 

against the Vessel in rem up to and including $2.75 million. 

On December 23, 2015, LWI filed suit in the District 

of New Jersey against the Vessel in rem and Dalia in 

personam. Dalia answered on behalf of the in rem defendant. 

 

1 Bareboat chartering transfers complete control and operation 

of the vessel from the owner to the bareboat charterer without 

imposing liability for the acts of the charterer. 
4

LWI later learned that it could not recover in personam

against Dalia because of the bareboat charter. While LWI 

could have filed an in personam suit against S.K. Shipping in 

South Korea, it chose not to. At argument, counsel admitted 

that this was a strategic move on its part, because LWI felt

that its suit would not be successful in South Korea. 

The Vessel moved to dismiss the New Jersey suit 

based on the forum selection clause in the bill of lading. LWI 

argued that enforcing the forum selection clause would 

violate section 3(8) of COGSA. In relevant part, this section

states:

Any clause, covenant, or agreement in a 

contract of carriage relieving the carrier or the 

ship from liability for loss or damage to or in 

connection with the goods, arising from 

negligence, fault, or failure in the duties and 

obligations provided in this section, or lessening 

such liability otherwise than as provided in this 

Act, shall be null and void and of no effect. A 

benefit of insurance in favor of the carrier, or 

similar clause, shall be deemed to be a clause 

relieving the carrier from liability.2

LWI argued that this provision invalidates the foreign forum 

selection clause because South Korea does not recognize in 

rem suits. On November 9, 2016, the District Court granted 

the motion to dismiss under Rule 12(b)(3). LWI appealed. 

 

2 Note to 46 U.S.C. § 30701, Title I, Section 8 (emphasis 

added). 
5

II.3

A.

In granting the motion to dismiss, the District Court 

erred in interpreting COGSA by confusing it with the Harter 

Act, a precursor to COGSA. COGSA was modeled after the 

Brussels Convention for the Unification of Certain Rules 

Relating to Bills of Lading (Hague Rules).4 In 2006, COGSA 

was relocated from 46 U.S.C. §§ 1300 et seq., to a note after 

46 U.S.C. § 30701.5 During this same period, the Harter Act 

was also moved from 46 U.S.C. §§ 190-196 to 46 U.S.C. 

§§ 30701-30707. As a result, COGSA was amended, not 

merely relocated. The relocated Harter Act provisions were

the “amended” COGSA provisions. Upon analyzing 46 

U.S.C. §§ 30704 and 30705, the District Court held that 

Congress modified COGSA’s language so that it no longer 

 

3 The District Court exercised jurisdiction under 28 U.S.C. §§ 

1332(a)(2) and1333(1), and we have jurisdiction under 28 

U.S.C. § 1291. We exercise plenary review over the District 

Court’s construction of COGSA, see e.g., United States v. 

Cooper, 396 F.3d 308, 310 (3d Cir. 2005) (citation omitted), 

and review the District Court’s decision to dismiss a 

complaint on the basis of forum non conveniens for abuse of 

discretion, Windt v. Qwest Comms Int’l, Inc., 529 F.3d 183, 

189 (3d Cir. 2008) (“This Court reviews a district court’s 

dismissal of a complaint on forum non conveniens grounds 

for abuse of discretion.” (citations omitted)).

4 Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 

U.S. 528, 536 (1995).

5 200 A.L.R. Fed. 249 (2005) (noting the original locations 

for COGSA and the Harter Act).
6

prohibited limiting a ship’s liability.6 That, however, was a

misinterpretation of COGSA.

B.

Nevertheless, we will affirm the judgment because the 

foreign forum selection clause here does not violate COGSA. 

While foreign forum selection clauses were originally 

disfavored under COGSA, the Supreme Court later adopted a 

policy that better reflected the need to respect the competence 

of foreign forums to resolve disputes. In the seminal case of 

Indussa Corp. v. S.S. Ranborg, the Second Circuit held a 

foreign forum selection clause to be invalid because it “put[] 

‘a high hurdle’ in the way of enforcing liability, and thus 

[was] an effective means for carriers to secure settlements 

lower than if cargo [owners] could sue in a convenient 

forum.”7 After Indussa, courts of appeal uniformly adopted 

this reasoning to invalidate foreign forum selection clauses8

until the Supreme Court overruled Indussa in Vimar Seguros 

y Reaseguros, S.A. v. M/V Sky Reefer. 

 

6 App. 14 (“Therefore, it is evident from the plain language of 

COGSA that ‘the carrier’ may not limit its liability through 

provisions inserted into a bill of lading. 46 U.S.C.A. 

§§ 30704, 30705. Congress did not make the same 

requirement of ‘the ship.’”). 

7 377 F.2d 200, 203 (2d Cir. 1967) (internal citation omitted).

8 Sky Reefer, 515 U.S. at 533 (collecting cases). 
7

Sky Reefer held that a foreign arbitration9clause would 

not lessen carrier liability in violation of COGSA solely 

because litigating abroad would be more costly.

10

 While 

acknowledging that a choice of forum and choice of law 

clause would be invalid as against public policy if they 

operated as a “prospective waiver of a party’s right to pursue 

statutory remedies,”11 the Court noted that “the historical 

judicial resistance to foreign forum selection clauses has little 

place in an era when . . . businesses . . . now operate in world 

markets.”

12

 Moreover, the Court stated that it would be “out 

of keeping with the objects of the [Hague Rules] for the 

courts of this country to interpret COGSA to disparage the 

authority or competence of international forums for dispute 

resolution.”13 Accordingly, the Court held that while 

COGSA prohibited lessening the “liability for loss or damage 

. . . arising from negligence, fault, or failure in the duties and 

obligations provided in this section,”

14 COGSA did not 

address the “means and costs of enforcing that liability.”15 

“The relevant question . . . is whether the substantive law to 

 

9 While Sky Reefer involved a foreign arbitration clause, the 

Supreme Court noted that “foreign arbitration clauses are but 

a subset of foreign forum selection clauses in general[.]” Id. 

at 534 (citation omitted). 

10 Id. 

11 Id. at 540 (internal quotation marks and citation omitted).

12 Id. at 537-38 (first omission in original) (internal quotation 

marks and citation omitted).

13 Id. at 537.

14 Id. at 534 (omission in original).

15 Id.
8

be applied will reduce the carrier’s obligations to the cargo 

owner below what COGSA guarantees.”16 

LWI argues, however, that the forum selection clause 

here violates COGSA because in rem suits are themselves a 

substantive right guaranteed by the statute. In the alternative, 

LWI seems to argue that mandating a South Korean forum 

will effectively limit the Vessel’s liability. We consider each 

argument in turn.

1.

LWI claims that COGSA designates in rem suits as

substantive rights, which are violated by the instant forum 

selection clause. We disagree. As LWI concedes, when the 

plain language of a statute is clear, the text should govern.17 

An examination of the plain language of section 3(8) shows 

that the clause clearly protects both carrier and ship liability; 

any clause completely eliminating or lessening ship liability 

runs afoul of COGSA.18 This does not mean, however, that 

section 3(8) guarantees the right to an in rem suit. Rather, 

COGSA protects ship liability, not any particular vehicle for 

imposing it. The text does not mention in rem suits, nor 

require any specific remedy for enforcing ship liability. 

Indeed, such an interpretation would run counter to Sky 

Reefer’s holding that COGSA does not protect procedural 

 

16 Id. at 539 (citation omitted).

17 Cooper, 396 F.3d at 310 (citation omitted).

18 Note to 46 U.S.C. § 30701, Title I, Section 3(8)

(prohibiting “[a]ny clause, covenant, or agreement in a 

contract of carriage relieving the carrier or the ship from 

liability[.]”).
9

means for enforcing liability. Insofar as prohibiting in rem

suits makes enforcing ship liability more costly or less

convenient, Sky Reefer explicitly held that liability is not 

improperly lessened by procedural costs.

19

 

While LWI acknowledges that section 3(8) protects 

against lessening of ship liability, it cites this language as 

establishing a substantive right to in rem suits without 

adequately explaining this analytic leap. LWI argues in its 

brief that in rem suits are well established and important 

features of maritime law in the United States. It maintains 

that nothing in section 3 excludes in rem rights or limits in 

rem rights against the ship to a procedural device for the 

enforcement of an in personam defendant’s liability. This 

argument turns the necessary discussion on its head; arguing 

that absence of express limitations grants a substantive right, 

especially in light of Sky Reefer’s limitations, is woefully 

inadequate. 

In addition to the textual reasons for concluding that 

COGSA does not grant the substantive right to in rem suits, 

there are strong policy considerations that caution against 

such an interpretation. Requiring in rem suits would 

essentially invalidate numerous foreign forum selection 

clauses, as many countries do not acknowledge in rem suits.

20

 

 

19 Sky Reefer, 515 U.S. at 534 (noting the difference “between 

applicable liability principles and the forum in which they are 

to be vindicated”).

20 See, e.g., Thyssenkrupp Materials NA, Inc. v. M/V KACEY, 

236 F. Supp. 3d 835, 840 (S.D.N.Y. 2017) (acknowledging 

that Greek law does not recognize in rem actions); Uniwire 

Trading LLC v. M/V Wladyslaw Orkan, 622 F. Supp. 2d 15, 
10

Indeed, the United States is one of the few countries that do 

recognize in rem suits. Imposing this idiosyncratic 

procedural requirement on other countries would be 

needlessly parochial. For these reasons, we conclude that 

COGSA section 3(8)’s substantive protections21 encompass 

ship liability, not in rem suits specifically as the instrument to

seek that recovery.

22

 

21 (S.D.N.Y. 2008) (acknowledging that Polish law does not 

recognize in rem suits); Matter of Topgallant Lines, Inc., 154 

B.R. 368, 380 (S.D. Ga. 1993), aff’d sub nom. McAllister 

Towing v. Ambassador, 20 F.3d 1175 (11th Cir. 1994) 

(acknowledging that German law does not recognize in rem

suits). 

21 For this reason, and because LWI has not argued that any 

other statute creates a substantive right to in rem suits, we 

reject LWI’s argument that the forum selection clause 

functions as a prospective waiver of a statutory remedy, as 

prohibited by Sky Reefer. 

22 We join the Ninth Circuit in so holding. The Ninth Circuit 

upheld a forum selection clause specifying that Korean law 

would govern in Fireman’s Fund Insurance Co. v. M.V. DSR 

Atlantic, holding that an in rem proceeding was merely a 

“means . . . of enforcing [COGSA] liability.” 131 F.3d 1336, 

1339-40 (9th Cir. 1997), as amended (Mar. 10, 1998)

(internal quotation marks and citation omitted) (omission in 

original). The Ninth Circuit found no COGSA violation 

because the vessel presented uncontroverted evidence that 

Korean law was at least as favorable to the plaintiff as 

COGSA. Id. at 1340. The Ninth Circuit summarily 

confirmed this holding in Kukje Hwajae Ins. Co., Ltd. v. M/V/ 

Hyundai Liberty, 408 F.3d 1250, 1255 (9th Cir. 2005).
11

2.

LWI argues that even if in rem suits are not a 

substantive right, the forum selection clause here effectively

relieves or lessens ship liability by not recognizing in rem

actions, in violation of COGSA. Once again, we disagree.

While in rem suits might appear to be an obvious way 

to impose ship liability, courts have recognized other avenues 

for imposing liability in situations where in rem suits are 

prohibited. Courts have recognized plaintiffs’ ability to 

obtain LOUs in lieu of bringing an in rem suit when they are 

precluded from doing so by arbitration clauses, which 

functionally prohibit in rem suits.23 For example, in Thyssen 

Inc. v. Calypso Shipping Corporation, S.A., the Second 

Circuit held that an arbitration clause did not violate COGSA 

because the plaintiff accepted an LOU as full security of its 

claims and could have recovered against the ship pursuant to 

the LOU. The Second Circuit reasoned that “[a] letter of 

undertaking replaces the vessel as the res and moots the 

question of the need for separate in rem claim.”24 This 

Circuit similarly held that “[g]enerally, once a[n] LOU is 

issued, the letter becomes a complete substitute for the res

and the maritime lien transfers from the vessel to the LOU.”25 

 

23 Petroleos Mexicanos Refinacion v. M/T KING A, 554 F.3d 

99, 108 (3d Cir. 2009) (“An in rem action is cognizable only 

in federal court; therefore the vessel could not have been a 

party to the in personam arbitration.” (citing Madruga v. 

Superior Court, 346 U.S. 556, 560 (1954))).

24 Thyssen, Inc. v. Calypso Shipping Corp., S.A., 310 F.3d 

102, 107 (2d Cir. 2002) (citations omitted).

25 Petroleos, 554 F.3d at 104 (citations omitted).
12

As the Vessel argues, LWI could have obtained an 

LOU that would provide security for an in personam suit in 

South Korea. Moreover, the Vessel produced an 

unchallenged affidavit by Korean lawyer Byung-Suk Chung, 

claiming that South Korean law allows a party to “obtain[] 

security from vessel interests by arresting a vessel or 

attaching other assets in a foreign jurisdiction . . . to act as 

security for an in personam judgment to be obtained in the 

Seoul District Court.”26 Because LWI would then be able to 

collect from the Vessel using the LOU, the forum selection 

clause would not lessen or relieve the ship’s liability in 

violation of COGSA. 

In response, LWI raises a narrow argument: LWI 

concedes that obtaining an LOU is an accepted practice that is 

functionally equivalent to arresting a ship in an in rem suit.27 

Further, LWI does not argue that the forum selection clause 

prevented LWI from arresting the Vessel and obtaining a 

bond or an LOU. Instead, LWI argues that the forum 

selection clause eliminated ship liability in this case, because 

LWI received an LOU that secured only an in rem judgment

against the Vessel. LWI does not allege that it could not have 

obtained an LOU unencumbered by this restriction. Indeed, 

 

26 App. 119. 

27 LWI’s counsel admitted that the LOU is limited to the 

amount “you could get if you actually arrested the vessel. So

what you get in a letter of undertaking is exactly the same 

thing that you get when you arrest the vessel . . ..” Audio 

Recording of Oral Arguments held July 11, 2017 at 5:50-

6:15, http://www.ca3.uscourts.gov/oral-argument-recordings. 

Additionally, the Federal Rules of Civil Procedure 

Supplemental Rules allow for a similar procedure. 
13

LWI’s inability to recover seems to be a consequence of its 

own deliberate inaction: First, it refused to file an in 

personam suit against S.K. Shipping in South Korea. Second, 

it did not obtain an LOU that would be applicable to an in 

personam suit. LWI’s own willful limitation of alternatives, 

not the forum selection clause, has eliminated its ability to 

recover. For this reason, we hold that the forum selection 

clause did not effectively lessen or eliminate the Vessel’s

liability and that it is valid under COGSA.

Because LWI has not raised any other arguments as to 

how the District Court abused its discretion in enforcing the 

forum selection clause, we will affirm the District Court’s 

dismissal of the suit. 

IV.

In this case, we are asked to support an interpretation 

of COGSA that would invalidate a host of foreign forum 

selection clauses for the sake of a procedural device available 

in few countries besides the United States. Where parties 

have contracted to bring suit abroad, the U.S. must be 

cognizant of its status as a member of a global community 

and respect the competence of other jurisdictions to 

adjudicate claims. In light of this and in light of the fact that 

the forum selection clause did not lessen or eliminate ship 

liability for cargo damage, we decline to impose LWI’s 

restrictive interpretation of COGSA. COGSA does not 

invalidate the forum selection clause simply because the 

selected jurisdiction does not acknowledge in rem suits. For 

this reason, we will affirm the District Court’s order, 

dismissing the action. 
1

AMBRO, Circuit Judge, concurring 

For a maritime creditor an action in rem is a procedure 

for obtaining pre-judgment security and post-judgment 

enforcement. In the global shipping business the debtor’s 

ship is typically the main asset on which a judgment-creditor 

can rely to collect from a defendant located perhaps on the 

other side of the world. A court can easier locate, bring 

within its jurisdiction, and arrest the ship than a defendant’s 

other foreign assets. 

It is no surprise then that maritime law supplies in rem

liability against a ship, that is, permits an action naming the 

ship as though it were the defendant. As is relevant here, in 

the United States a ship can be liable in rem for cargo 

damage, the idea being that the ship impliedly ratified the 

shipping contract when the carrier loaded the cargo onboard. 

See Man Ferrostaal, Inc. v. M/V Akili, 704 F.3d 77, 83 (2d 

Cir. 2012); see also Pioneer Import Corp. v. Lafcomo, 49 

F.Supp. 559, 561–62 (S.D.N.Y. 1943), aff’d, 138 F.2d 907 

(2d Cir. 1943) (“A lien against the ship arises for damage to 

cargo caused by improper storage.”). 

The Carriage of Goods by Sea Act, or COGSA, 

assumes the availability of an action against the ship. Indeed, 

§ 3 of COGSA is titled, “Responsibilities and Liabilities of 

Carrier and Ship.” (emphasis added). And under § 3(8), the 

parties to a contract for shipping goods by sea cannot agree to 

lessen or relieve the liability of the “carrier or the ship.” 

However, an action in rem is only one way to impose liability 

on a ship. Although South Korean law does not allow in rem

suits, Liberty Woods International concedes that equivalent 

security for in personam suits is available. As it chose not to 

pursue this avenue for relief, I agree with my colleagues that 

any lessening of the ship’s liability is the fault of Liberty 

Woods, not the selection of a foreign forum. 

If, however, a forum-selection clause were to operate 

such that a shipper could never enforce the selected forum’s 

judgment against the value of the ship that carried the 

shipper’s damaged goods, the clause would be unenforceable 

per COGSA § 3(8). See Vimar Seguros y Reaseguros, S.A. v. 

M/V Sky Reefer, 515 U.S. 528, 540 (1995) (“[W]ere we 

persuaded that the choice-of-forum and choice-of-law clauses 

operated in tandem as a prospective waiver of a party's right 
2

to pursue statutory remedies, we would have little hesitation 

in condemning the agreement as against public policy.”

(internal quotations and ellipsis omitted)). My concern is 

that, in another case, the common shipping industry practice 

of chartering and sub-chartering a ship risks placing it and its 

owner beyond the reach of the designated forum’s in 

personam jurisdiction. Here, because sub-charterer SK 

Shipping Co. Ltd. operated the Ocean Quartz, the parties 

agree that its owner, Dalia Ship Holding S.A., bears no 

liability for damage to Liberty Woods’ cargo. This naturally 

leads to a question: if Dalia Ship Holding bears no liability, 

how could Liberty Woods attach Dalia Ship’s property—that 

is, the Ocean Quartz—to enforce a judgment against someone 

else (i.e., SK Shipping)? 

As noted, the parties do not contest that Liberty Woods 

could have enforced a judgment obtained in South Korea 

against the Ocean Quartz’s value. So there is no reason to 

question that proposition here. But I am not convinced it will 

hold in every case. It is easy to imagine a shipowner

contending that a personal judgment against a sub-charterer

several steps removed should not be enforceable against the 

owner’s vessel. The use of so-called “bareboat” or “demise” 

charter agreements, in which a shipowner surrenders control 

of the vessel to the charterer (and ultimately any sub-charterer 

down the line) and disclaims carrier liability, heightens the 

concern. An owner can credibly “seek to use the bareboat 

charter as a shield against in personam liability.” Backhus v. 

Transit Cas. Co., 532 So. 2d 447, 449 (La. Ct. App. 

1988), aff'd, 549 So. 2d 283 (La. 1989). If the sub-charterer

has few assets or becomes insolvent, the shipper might be left 

high and dry without compensation for damage to its cargo. 

A suit in rem provides a means of cutting through a 

web of sub-charter agreements to impose liability on the ship 

directly and vindicate § 3(8)’s command (and thereby protect 

shippers in the face of judgment-proof sub-charterers). Other 

jurisdictions may provide other procedural vehicles to deliver 

these protections (as apparently South Korea does). In my 

view, COGSA requires that a shipper have some means to 

assess liability for damaged goods against the value of the 

ship. Because Liberty Woods has not explained why it would 

be impossible to vindicate its rights in the designated forum, I 

agree with my colleagues that we must affirm the dismissal of

its in rem action.