Opinion ID: 3064673
Heading Depth: 3
Heading Rank: 2

Heading: The Himalaya Clause’s Coverage

Text: MOB Cougar argues that the defendant vessel M/V COUGAR ACE, being personified for the purposes of this in rem suit, is an “agent, servant or Sub-Contractor” of the “Carrier” under the plain meaning of the Himalaya clause. Given the definition of Sub-Contractor under the bills of lading, we agree. The defendant vessel is therefore entitled to invoke the forum selection clause as a defense that would be available to the Carrier. [5] Although we are most concerned with the second sentence of the Himalaya clause, which extends the Carrier’s contractual defenses to Sub-Contractors, we begin with the first sentence because it sets out the types of claims to which the clause applies. The first sentence purports to forbid claims against any “servant, agent or Sub-Contractor” that would impose liability on them “or upon any vessel owned or operated by any of them.” (Emphasis added.) MOB Cougar conceded at oral argument that this complete disclaimer of the MAZDA v. M/V COUGAR ACE 5393 vessel’s liability is unenforceable under COGSA. See 46 U.S.C. § 30701 Notes Sec. 3(8) (“Any clause . . . 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 . . . shall be null and void and of no effect.”). Even if substantively unenforceable, however, the first sentence leaves no doubt that the Himalaya clause applies to suits that would impose liability on a vessel, such as the in rem suit here. The substance of the Himalaya clause is found in the second sentence, which states that all provisions benefitting the Carrier also benefit Sub-Contractors “as if such provisions were expressly for their benefit.” By agreement, Sub-Contractor includes “anyone assisting the performance of the Carriage.” The parties’ use of inclusive language — “anyone” — unambiguously evidences their intent to extend provisions benefitting the Carrier to a wide group of entities. See Kirby, 543 U.S. at 31-32 (noting the expansive plain meaning of “any”). Applying this definition, we hold the defendant vessel is a Sub-Contractor because it plainly assisted the performance of the Carriage; as the carrying vessel, it was indispensable to that performance. Mazda does not dispute that the forum selection clause is a “provision[ ] . . . benefitting the Carrier,” so we see no reason why the forum selection clause should not also benefit the defendant vessel here. [6] Our cases interpreting Himalaya clauses support this reading. To decide whether an entity benefits from a Himalaya clause, “the proper test is to consider ‘the nature of the services performed compared to the carrier’s responsibility under the carriage contract.’ ” Akiyama Corp. of Am. v. M.V. Hanjin Marseilles, 162 F.3d 571, 574 (9th Cir. 1998) (quoting Taisho Marine & Fire Ins. Co. v. Vessel Gladiolus, 762 F.2d 1364, 1367 (9th Cir. 1985)). The Himalaya clause in that case also applied to every “servant, agent and sub-contractor,” and the clause’s language extending defenses to other parties was identical to the clause here. See id. at 573. We held that a terminal operator and a stevedore fell under the Himalaya clause 5394 MAZDA v. M/V COUGAR ACE because “subcontractor” included terminal operators and stevedores by definition and because the services those parties provided were the same as the services the carrier promised to perform. See id. at 574. The corresponding defined term here is “Sub-Contractor,” which is defined broadly enough to include the defendant vessel. Further, the ocean carriage the vessel provided was precisely the same as Mitsui’s chief responsibility under the bills of lading. Therefore, the COUGAR ACE, not unlike a stevedore, is “directly related to the carrier’s responsibilities under the carriage contract” and can benefit from the Himalaya clause. Mori Seiki USA, Inc. v. M.V. Alligator Triumph, 990 F.2d 444, 450 (9th Cir. 1993). [7] The Supreme Court’s holding in Kirby also supports our interpretation of the bills of lading. The Himalaya clause in Kirby also extended contractual protections to any entity “whose services contribute to performing the contract.” Kirby, 543 U.S. at 31. The Court held this expansive language must include a land carrier because the contract called for transportation to an inland destination in Alabama, 366 miles from the port. “Thus, the parties must have anticipated that a land carrier’s services would be necessary for the contract’s performance.” Id. at 32. Here, the defendant vessel’s services were even more obviously necessary for completion of the carriage; the parties must have anticipated that the vessel’s services would be necessary for performing a contract for ocean carriage. Mazda insists this reading of the Himalaya clause subverts the parties’ intent because the Himalaya clause does not include “Vessel” alongside “servant, agent or SubContractor.” Citing a district court case, Mazda urges a familiar canon of construction: that the “conspicuous omission” of a defined entity from “the exhaustive list of third parties to whom the ocean carrier’s protections extend speaks as loudly as an explicit exclusion.” Sun-Bar Materials Int’l, Inc. v. Am. President Lines, Ltd., 1993 A.M.C. 2639, 2643 (N.D. Cal. 1993). We reject Mazda’s proposed construction because the MAZDA v. M/V COUGAR ACE 5395 Himalaya clause and its incorporated definition of SubContractor are unambiguous. See Inst. of London Underwriters v. Sea-Land Serv., Inc., 881 F.2d 761, 767 (9th Cir. 1989) (rejecting maritime plaintiff’s canon of construction because the Himalaya clause was unambiguous). Under the circumstances, “[t]here is no reason to contravene the clause’s obvious meaning.” Kirby, 543 U.S. at 31-32. Moreover, refusing to apply the Himalaya clause to the defendant vessel because the otherwise unambiguous clause does not specifically name the “Vessel” would contravene Kirby’s rule that Himalaya clauses need not be drafted with “linguistic specificity.”3 Id. Mazda also stresses that neither party cited any case in which a vessel sued in rem was deemed a Himalaya beneficiary. This may be a function of the relatively recent rule of interpreting Himalaya clauses without regard to special rules of linguistic specificity. See Kirby, 543 U.S. at 30-31. PreKirby, we strictly construed Himalaya clauses and required a “clear and unequivocal intent” to extend the carrier’s contractual defenses to a readily identifiable entity. Taisho, 762 F.2d at 1367. Now, absent any special rule of strict construction, we enforce the bills of lading as drafted and in accordance with their inclusive list of Himalaya beneficiaries. Further, the ultimate result here — that the defendant vessel may invoke the forum selection clause — is not unprecedented. See Kukje Hwajae Ins. Co. v. M/V Hyundai Liberty, 408 F.3d 1250, 3 We reject Mazda’s related argument that deeming the defendant vessel a “Sub-Contractor” under the bills of lading would render other terms in the bills of lading meaningless. Mazda argues that the Himalaya clause disclaims Sub-Contractor liability, so if the Vessel is also a SubContractor, other references in the bills of lading to the Vessel’s liability would be nonsensical. Mazda is mistaken. As is clear from the second sentence of the Himalaya clause and MOB Cougar’s explanation at oral argument, the parties contemplated that the liability disclaimer would be unenforceable and provided for that contingency. Thus, references to the Vessel’s liability are not meaningless in light of the probability that courts applying COGSA would refuse to enforce the Himalaya clause’s disclaimer. See 46 U.S.C. § 30701 Notes Sec. 3(8). 5396 MAZDA v. M/V COUGAR ACE 1253, 1255 (9th Cir. 2005) (enforcing a forum selection clause that applied to “any and all action concerning custody or carriage” (emphasis omitted)); Fireman’s Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336, 1337 (9th Cir. 1997) (enforcing a forum selection clause that applied to “any claim or dispute”).4 Finally, Mazda argues that the vessel cannot be a Himalaya beneficiary because Himalaya clauses are “used to extend a carrier’s defenses and liability limitations to certain third parties performing services on its behalf.” Mori Seiki, 990 F.2d at 450 (emphasis added). Here, the parties agree that the vessel ratified the bills of lading by transporting the cargo, which Mazda argues made the vessel a first party to those bills of lading. The district court, in dismissing this suit, also noted the logical difficulty in the vessel’s status as both a first and third party to the bills of lading.5 [8] We disagree that merely transporting the cargo made the vessel a party to the bills of lading. At oral argument, Mazda cited the Fifth Circuit case Lykes Lines, 398 F.3d at 325, which recites the general ratification rule. When cargo has been stowed on board the vessel and bills of lading are issued, the bills of lading become binding contracts on the vessel in rem upon the sailing of the vessel with the cargo. The sailing of the 4 Our holding is also consistent with the strong judicial preference for enforcement of forum selection clauses in admiralty cases. See, e.g., M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972) (“[T]he forum selection clause should control absent a strong showing that it should be set aside.”); Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991) (upholding a forum selection clause in a passenger cruise line’s ticket); Fireman’s Fund, 131 F.3d at 1340. 5 Because we affirm on the basis of the Himalaya clause, we do not reach MOB Cougar’s separate ratification argument — that by accepting the cargo, the defendant vessel was entitled to invoke any defense in the bills of lading, regardless of the Himalaya clause. MAZDA v. M/V COUGAR ACE 5397 vessel constitutes a ratification of the bills of lading. This action gives rise to a maritime lien which is the basis of the in rem recovery. Id. (quoting Cactus Pipe & Supply v. M/V Montmartre, 756 F.2d 1103, 1113 (5th Cir. 1985) (citations omitted)). We have found no Ninth Circuit case directly mentioning the ratification doctrine, but in All Pacific Trading, Inc. v. Vessel M/V Hanjin Yosu, 7 F.3d 1427, 1433 (9th Cir. 1993), we also held that “[w]hen a cargo owner has a direct contractual relationship with the operator of a vessel, the cargo owner has a lien on the vessel for any injury caused by the operator’s lack of due diligence.” See also Osaka Shosen Kaisha v. Pac. Export Lumber Co., 260 U.S. 490, 499 (1923). Thus, Mazda is correct that ratification binds the vessel to the terms in the bills of lading, but not because the vessel somehow becomes a party. Rather, the cargo owner’s basis for in rem recovery is a maritime lien, a security interest arising from the transportation of goods. See 2 Benedict on Admiralty § 43, at 3-48-49 & n.12 (7th ed. rev. 2008) (“[I]t is not the existence of a lawful contract of affreightment but the transport of goods under it that marks the commencement of the lien.” (citing Osaka Shosen Kaisha, 260 U.S. 490)). The defendant vessel’s ratification is therefore no obstacle to its status as a Himalaya beneficiary.