Source: http://lawyer.org.ua/?w=r&i=100&d=276
Timestamp: 2019-04-22 02:38:48+00:00

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Accordingly, a multimodal transportation contract is a contract between an ocean carrier and a shipper to transport cargo from an inland point of receipt to an inland point of destination.
The liberalization of trade and the new container technology has influenced the development of the law which set forth the principles of the liability of a carrier. There are two types of contract on carriage of goods, a Bill of Lading, used in the “liner” trades, and a Charter Party, used in “trump” shipping. Containerization has raised questions concerning the relevant responsibilities and attendant liabilities associated with each leg of a multimodal shipment. This paper discusses the applicable law for liability of an ocean carrier and its agents according to a Through Bill of Lading.
“Congress passed the Harter Act and the COGSA to counteract the persistent efforts of carriers, who are the drafters of ocean bills of lading, to insert all embracing exceptions to liability … One of the specific purposes of the COGSA was to obviate the necessity for a shipper to make a detailed study of the fine print clauses of a carrier's regular bill of lading on each occasion before shipping a package,” 494 F.2d 438, 1974 A.M.C. 937.
Thus, one of the reasons for the enactment of the COGSA was to defend the interests of the shipper, which has less power during negotiations with carriers. According to the COGSA (46 U.S.C. 1301(a)) a carrier is the owner or charterer who enters into a contract of carriage with a shipper. The other reason was to make rules which regulate cargo transportation in a uniform and simple way, in order to promote trade. On the other hand, the COGSA is favorable to the carriers, because it includes such provisions as a one-year statute of limitation for bringing a law suit and limitation of the carrier’s and the ship’s liability to not more than the $500 per package or customary freight unit.
The COGSA does not regulate the limits of the ocean carriers’ independent contractors, such as Stevedores, Terminal Operators, and Inland Carriers. Nevertheless, an ocean carrier which issues a Through Bill of Lading to the shipper may include specific clauses in order to limit its liability.
In 1906 Congress passed the Carmack Amendment to the Interstate Commerce Act (49 U.S.C.10730 and 11707) in order to create a uniform regime for the liability of carriers. At first, the Carmack Amendment provisions applied to railroads but later were extended to motor carriers in the Motor Carrier Act of 1935 and to surface freight forwarders. This Act governs the liability of U.S. inland common carriers for lost or damaged goods. The main purpose of this amendment was to reduce the burden of a shipper to search out the particular negligent carrier from all the carriers that were engaged in interstate shipment of his/her goods. Moreover, this Amendment incorporated the common law rule that a common carrier is liable even without the proof of negligence. As the Supreme Court of Florida agreed in King Ocean Central America, S.A., v. Precision Cutting Services, Inc., 717 So.2d 507, 1998 A.M.C. 2372, the Carmack Amendment codified the liability of the carrier for loss or damage to cargo without the proof of carrier’s negligence, unless it can establish one of the common law defenses, such as an act of God, enemies of the King, and inherent vice of the goods. Moreover, this Court ruled that the Carmack Amendment applies only to land carriers by its statutory language.
“Because such a ‘through’ bill of lading includes no separate domestic segment as described above, the Carmack Amendment is inapplicable”.
One of the recent cases that set forth the principles of liability of an ocean carrier during transportation to the final destination is King Ocean Central America, S.A. v. Precision Cutting Services, Inc. 717 So.2d 507, 1998 A.M.C. 2372, decided on June 12, 1998, by the Florida Supreme Court. The Supreme Court declined to follow the decision of the Third District in Harvest International, Inc. v. Tropical Shipping and Construction Co., Ltd. 644 So.2d 112, 19 Fla. L. Weekly D2116, which misconstrued several federal decisions, including Capitol Converting Equipment, Inc., v. LEP Transport Inc. and improperly extended the Carmack Amendment to an ocean carrier which issued a Through Bill of Lading when a separate Bill of Lading was issued for the inland leg of the cargo transportation. In Harvest International the District Court held that an ocean carrier was liable under the Carmack Amendment for damage of the goods during the inland leg of the transportation, because a second, separate Bill of Lading was issued for the inland portion of the transportation by inland carrier.
The issue presented in the Precision Cutting Services is the issue of applicable law but not the issue of a carrier’s liability. The ocean carrier, King Ocean Central America, S.A. issued a Through Bill of Lading that included an inland transportation by motor carrier in the United States. The Bill of Lading covered the ocean carriage and the land carriage. According to the Bill of Lading the cargo, a container of pants was to be delivered from Costa Rica to Miami to the Precision Cutting Services, Inc. In its "Clause Paramount," the contract's preamble provided that the Bill of Lading should have effect subject to the provisions of the COGSA. The loss of goods happened while they were in the custody of the inland carrier who had issued a separate Bill of Lading. Also the Bill of Lading had a clause which specifically required filing of a claim against King Ocean within one year. King Ocean Central America, S.A. delivered cargo to the inland carrier, Paradise Freightway, Inc. in Miami, which issued a separate Bill of Lading for inland leg of transportation. While the cargo was in possession of the inland carrier, the cargo was stolen from the inland carrier freight yard. Precision filed a claim against King Ocean only after the expiration of the one-year period.
The Supreme Court of Florida decided that the Carmack Amendment to the Interstate Commerce Act, which deals with the liability of railroads, motor carriers, and freight forwarders (U.S. inland common carriers) under receipts and bills of lading for lost or damaged goods, did not govern the liability of the carrier for the loss in King Ocean Central America, S.A. v. Precision Cutting Services. The Carmack Amendment provides two-year statute of limitations for the inland leg of the journey. Carriage of Goods by See Act (COGSA) governs liability of the ocean carrier with the COGSA one-tear statute of limitation. As a result, claim of the Precision Cutting Services, Inc. was dismissed for being untimely filed.
then this ocean carrier is liable for loss (or damage) of the goods which are in the custody of this inland carrier on the ground of the Carriage of Goods by See Act (COGSA), the terms of the Bill of Lading, and the COGSA one-year statute of limitation rather than the Carmack Amendment.
(3) the document of title to property which can be endorsed and negotiated.
The determination of the a "Through Bill of Lading” was given in the King Ocean Central America as a Bill of Lading with “long legs," which is designed to carry goods from the point of origin to the point of destination by several ship-owners or railway companies. This Court also cited the most recent Seventh Circuit Court of Appeals’ definition of a “Through Bill of Lading” in Capitol Converting Equip., Inc. v. LEP Transport, Inc., 965 F.2d 391, 1993 A.M.C. 1609, 965 F.2d 391, 1993 A.M.C. 1609, (7th Cir.1992), as one "issued in a foreign country to govern a shipment throughout its transportation from abroad to its final destination in the United States," 717 So.2d 507, 1998 A.M.C. 2372.
"Any Bill of Lading or similar document of title which is evidence of a contract for the carriage of goods by sea between such [domestic] ports, containing an express statement that it shall be subject to the provisions of this chapter, shall be subjected hereto as fully as if subject hereto by the express provisions of this chapter."
This clause is mandatory in two circumstances: (1) when the contract is for carriage between two U.S. ports and the parties want the COGSA to apply and (2) when the contract is for carriage of goods in foreign trade from a U.S. port.
A Period of responsibility clause may be as separate clause in the Bill of Lading or may be included in the clause Paramount. This clause extends the limitation of liability of the ocean carrier, which according to the COGSA covers “tackle-to-tackle period.” This clause extends the application of the COGSA for a period of time while goods are located in carrier’s custody prior to loading or subsequent to discharge from a vessel. The Period of responsibility clause does not displace conflicting state law by the COGSA. Thus, in Colgate Palmolive Co. v. S.S. Dart Canada, 724 F.2d 313, 1984 A.M.C. 305, the Court of Appeals of the Second Circuit set forth that if the COGSA applies beyond “tackle to tackle” period, it applies as a contractual term, but does not apply by its force. Following this conclusion, in cases, where the COGSA is in conflict with state law during application beyond the “tackle to tackle” period, state law prevails. This decision leads to the conclusion that action against the carrier in this situation is out of the admiralty jurisdiction and is governed by state law. In Colgate Palmolive the Second Circuit stated that in the action against a terminal operator for negligent loss of cargo “provisions of Carriage of Goods by Sea Act incorporated by contract in bill of lading could be valid only insofar as they did not conflict with applicable state law.” The court relied on the decision set forth by the U.S. Supreme Court in Herd & Co. v. Krawill Machinery Corp., 79 S.Ct. 766, 3 L.Ed.2d 820, that in spite of the fact that the COGSA's liability limitation provision does not apply to agents of a carrier, the parties are not precluded from contracting such a limitation.
Limitation of ocean carrier liability may be extended by an agreement between shipper and ocean carrier in the Bill of Lading to the agents, servants and independent contactors of the ocean carrier, such as stevedores, and carriers.  This limitation of liability, which is provided by the COGSA and includes a $500 limitation of liability per package or customary unit, one-year statute of limitations, and complete defenses provided by section 4(2) of the COGSA, such as Acts of God or inherent vice, may be extended to overland carriers by a properly expressed Himalaya clause in a through multimodal Bill of Lading.
The principle of the Himalaya clause was developed in the British case Adler v. Dickson, 1 Q.B. 158 (C.A.1954), where a passenger, Mrs. Adler, injured on the steamship “Himalaya”, sued master and boatswain in tort because she could not sue the carrier, which was contractually exempt from all liability. The passenger won the case because the contract between her and the company did not have a clause extending the exemption to master and boatswain. Generally, a "Himalaya clause is any clause in a Bill of Lading which seeks to extend to non-carriers any immunity, defense, limitation or other protection afforded to the carrier by law and/or the Bill of Lading.” The extension of the COGSA provisions to third parties means not only a $500 package or customary unit limitation and a one-year statute of limitation for claims, but also defenses, provided by section 4(2) of the COGSA, such as Acts of God or inherent vice.
The Supreme Court also set forth a clarity requirement for identification in the Bill of Lading of parties who can obtain the benefits of the COGSA limitations. In sum this decision set forth the requirements for a valid Himalaya clause in the Bill of Lading in order to limit the liability of negligent carrier’s agents.
In Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 15 S.Ct. 2322, 1995 A.M.C. 1817, the U.S. Supreme Court ruled on the question of validity of the choice of law and choice of forum clause in the Bill of Lading in international carriage of goods. In this case the Supreme Court held that a clause calling for foreign arbitration of a cargo damage dispute in a Bill of Lading does not lessen the carrier's liability under the COGSA. In this case Bacchus Associates of New York, a wholesale fruit distributor in New England, was the shipper and consignee of a shipload of oranges and lemons shipped from Agadir, Morocco to New Bedford, Massachusetts. The cargo was carried by the vessel Sky Reefer. Because of improper loading of the cargo on board by the stevedore hired by the carrier and shifting of the boxes during voyage, the cargo was damaged during transportation, causing damage to the shipper in the amount of $1 million.
Shipper sued the vessel, time charterer of the vessel, and owners of the vessel, alleging negligence, breach of contract, and unseaworthiness of the vessel. Defendant moved to dismiss, claiming that the Bill of Lading had a Korean forum selection clause for the settlement of disputes. Yukong Line Union Steel objected to the enforcement of the forum selection clause, arguing that enforcement of the selection clause would violate the Carriage of Goods by Sea Act (COGSA) Document1zzFN_F17and the Harter Act.
“[T]he Supreme Court held that foreign arbitration clauses are not invalid under COGSA in all circumstances… Where such a clause is challenged, the controlling question is ‘whether the substantive law to be applied will reduce the carrier's obligations to the cargo owner below what COGSA guarantees.’"
(4) enforcement of the forum selection clause would contravene a strong public policy of the forum state.
Court set forth, citing the federal decisions in The Bremen, 407 U.S. at 10, 15, 92 S.Ct. 1907; Mitsui & Co. (USA) v. Mira M/V, 111 F.3d 33, 35 (5th Cir.1997), that a party which seeks to avoid enforcement of the clause has a burden to show that the forum selection clause is unreasonable.
The Court also analyzed the foreign law from the point of reduction of the carrier’s obligation “below what …COGSA guaranteed.” On this basis the Court granted the Motion to Dismiss complaint against carrier and denied motion as to other defendants.
Kelso Enterprises, Ltd. v. M/V Wisida Frost, 8 F. Supp. 2d 1197, 1998 A.M.C. 1351 (C.D. Cal. 1998)), where the District Court stated that under law, a Forum selection clause is presumptively valid and can be voided only when defendant shows that the enforcement of the Bill of Lading will be unreasonable and unjust, or this clause was the result of fraud or overreaching. This court also ruled that a foreign forum, selected by the parties, must determine whether parties' transaction was subject to the (COGSA); whether carrier committed unreasonable deviation depriving them of protection according to the bills of lading; and that plaintiffs' negligence and tortious interference claims related directly to bills of lading and were subject to the forum selection clause.
Hartford Fire Insurance Company v. Novocargo U.S.A. Inc. et. al., 156 F.Supp.2d 372, 2002 AMC 314 9S.D.N.Y. 20010), reconsidered in 2002 AMC 319 (S.D.N.Y. 2002) and which upheld that validity of the mandatory Forum selection clause can be waived only if defendant shows that the forum selection clause is unreasonable under the specific circumstances.
Acciai Speciali Terni USA, Inc. v. M/V Berane, et al., 2002 AMC 528 (D.Md. 2002); and Acciai Speciali Terni USA, Inc. v. M/V Berane, et al., 2002 AMC 519 (D.Md. 2002), where the Court ruled that the forum selection and choice of law provisions are prima facie valid and enforceable.
Limitation of liability of the ocean carrier and third parties depends on the properly worded language of the Bill of Lading. Thus, in order for third parties, such as stevedores or terminal operators to benefit from limitation of liability by the COGSA, this possibility must be provided in the additional clauses of the Bill of Lading.
If the “carrier demonstrates that the shipper was given a fair opportunity to declare a higher value on paying a higher freight by being offered a choice of rates and valuations, the burden shifts to the shipper to demonstrate that a fair opportunity did not exist,” 137 F.3d 1455, 23 Fla. L. Weekly Fed. C. 1219.
Also, in order to insure limitation of liability of a carrier or third parties a “liberties clause” may be included into the Bill of Lading. A liberties clause is the clause in the Bill of Lading which makes it possible for the ocean carrier or third parties “to make some deviations that may be required in the course of shipment without defeating the COGSA benefits and limitations.”  For example, a voyage clause which allows the ship to sail without tugs, pilots or by different routes.
A Bill of Lading may include clauses such as for carriage of the cargo (especially non-containerized one) on the deck of the ship (Deck Cargo Clause). As the Eleventh Circuit upheld in Hale Container Line, Inc. v. Houston Sea Packing Co., Inc. 137 F.3d 1455, 23 Fla. L. Weekly Fed. C 1219, in order for an ocean carrier to benefit from the $500 per package limitation to on-deck shipments, the information that the cargo is to be carried on-deck and that the COGSA is to be applied must be on the face of the Bill of Lading in plain form.
A Bill of Lading also may include clauses which allow the carrier non-scheduled port calls, changed time of sailing, and through shipments by different modes.
Furthermore, Professor T. J. Schoenbaum has classified others types of clauses: Discharge and delivery clause which allows the carrier to discharge a cargo on the arrival without notice; an Acknowledgement of weight/quality marks clause which limits the carrier responsibility according to “clearly shown” leading marks on packages. A Carriers’ Liberties in the Event of Blockade or Delay clause permits the carrier to discharge cargo at any convenient port if a voyage or a vessel is threatened by specific circumstances such as war or blockade. A Container clause permits the shipper to open, repack a container and abandon a container if it is hazardous. Additionally, the Bill of Lading usually contains terms which are repeated in applicable law such as the COGSA, the Hague Rules, and international treaties.
In spite of the fact that the Bill of Lading is written by the carrier, a carrier will not include in the Bill of Lading clauses which significantly deviate from the COGSA. If any clause significantly deviates from the statutory provisions of the COGSA it can be voided and nullified. As the Second Circuit ruled in General Electric Co. v. S/S Nancy Lykes at 83-84, 706 F.2d 80, 1983 AMC at 1953, the scope of a Clause of the Bill of Lading is limited by COGSA because it does not permit an unreasonable deviation and considers this deviation as a breach of the COGSA, and the contract of carriage, which would deprive the carrier of the benefit of the COGSA liability limitation.
Although the single Through Bill of Lading promotes efficiency and speed of delivery by the carrier in the international carriage of goods, it creates a complicate legal regime regarding the liability of different types of carriers and their agents. In order to determine the applicable law set out in the parties’ contract on multimodal carriage of goods which includes an inland leg it is necessary for the shipper to carefully analyze the Bill of Lading which may include different clauses and applicable law. The absence of the uniform rules means that the determination of carrier’s liability is still uncertain and depends on a properly worded contract between shipper and carrier.
Today, the regime regulating liability of the ocean carrier and third parties is a compromise between carrier and shipper to the level which is permitted by the applicable law. Therefore, in spite of the fact that Congress and courts are focused on creating a uniform and simple legal regime for cargo transportation, carriers can still avoid the strict liability of common law on the principles of freedom of contract. For example, in the case where an ocean carrier issues a Through Bill of Lading which includes inland transportation in the United States by a motor carrier, and which provides that an ocean carrier will be vicariously liable for any loss while the goods are in the custody of the inland motor carrier, and the goods are lost or damaged while in the custody of the inland motor carrier who has issued a separate Bill of Lading, then the ocean carrier's liability as a matter of law is governed by the Carriage of Goods by Sea Act, the terms of the Bill of Lading, and the COGSA one-year statute of limitation, thus favoring an ocean carrier and third parties.
The future of the legal regime regulating cargo transport depends on the decision about what is more important for liberalization of trade: the theory of contractual freedom or the attempt to create an international uniform regime for cargo transport.
 Nothing contained in this article is to be considered as the rendering of legal advice for specific cases; the article is intended for educational and informational purposes only.
 Richard W. Palmer, Frank P. DeGiulio, “Terminal Operations and Multimodal Carriage: History and Prognosis,” 64 TLNLR 281.

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