Opinion ID: 3064673
Heading Depth: 3
Heading Rank: 1

Heading: The Contractual Terms

Text: [1] Under the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. § 30701, Notes Sec. 3(3) (2006) (Responsibilities and liabilities of carrier and ship), any carrier bringing goods to or from the United States in foreign trade must issue a bill of lading to the shipper of those goods. A bill of lading “states the terms of carriage, and serves as evidence of the contract for carriage.” Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18-19 (2004). Here, the parties dispute the appropriate construction of several clauses in the bills of lading. Their primary disagreement concerns the scope of the forum selection clause, which states: LAW AND JURISDICTION The contract evidenced by or contained in this Bill of Lading shall be governed by Japanese law except as may be otherwise provided for herein. MAZDA v. M/V COUGAR ACE 5389 Unless otherwise agreed, any action against the Carrier thereunder must be brought exclusively before the Tokyo District Court in Japan. Any action by the Carrier to enforce any provision of this Bill of Lading may be brought before any court of competent jurisdiction at the option of the Carrier. Mazda asserts that this clause applies by its terms only to suits against the “Carrier.” Carrier is a defined term under the bills of lading to mean “Mitsui O.S.K. Lines, Ltd., on whose behalf this Bill of Lading has been issued.” The bills of lading also define “Vessel” as the vessel named on the face of the bills of lading; here, all six bills of lading name the M/V COUGAR ACE. Mazda argues that because this is an in rem suit against the vessel, not an in personam suit against Mitsui, the plain language of the forum selection clause makes it inapplicable here. MOB Cougar advances three arguments responding to Mazda’s reading of the forum selection clause. First, MOB Cougar emphasizes that public policy favors the enforcement of forum selection clauses in international shipping contracts, even when plaintiffs would be forced to bring their claims overseas. See, e.g., M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972) (“The choice of that forum was made in an arm’s-length negotiation . . . , and absent some compelling and countervailing reason it should be honored by the parties and enforced by the courts.”). This argument is premature. Whether the forum selection clause is enforceable on public policy grounds is not before us. Rather, Mazda’s argument is that the vessel may not invoke the clause by the plain terms of the bills of lading. Second, MOB Cougar argues that Mazda’s reading of the bills of lading would allow the vessel’s separate legal identity to frustrate MOB Cougar’s contractual right to the Tokyo forum. Mazda’s in rem suit is possible only because of the “long-standing admiralty fiction that a vessel may be assumed 5390 MAZDA v. M/V COUGAR ACE to be a person for the purpose of filing a lawsuit and enforcing a judgment.” Cont’l Grain Co. v. The Barge FBL-585, 364 U.S. 19, 22-23 (1960). The purpose of this legal fiction is “to allow actions against ships where a person owning the ship could not be reached.” Id. at 23. MOB Cougar asserts that it would be perverse to allow Mazda to defeat the forum selection clause by strategically filing suit in rem. See id. (“A fiction born to provide convenient forums should not be transferred into a weapon to defeat that very purpose.”). [2] Third, MOB Cougar asserts the ratification doctrine. The parties agree that, by transporting the cargo, the vessel ratified the bills of lading — otherwise Mazda would have no basis for holding the vessel liable in rem for damage to Mazda’s automobiles. See Lykes Lines Ltd. v. M/V BBC Sealand, 398 F.3d 319, 326 (5th Cir. 2005)(“A contract of carriage was created by the acceptance of the cargo on board the SEALAND for transport and the terms of the bill of lading, even if not authorized by the vessel, set the terms of the agreement.”). The parties reach different conclusions from the vessel’s ratification, however. MOB Cougar successfully argued to the district court that if the vessel can be liable under the bills of lading, it should also benefit from the defenses therein, particularly the forum selection clause. Mazda counters that the bills of lading were ratified only as they were written, with a forum selection clause that applies only to in personam suits against the carrier.2 [3] We need not decide whether the forum selection clause, operating alone, applies to this in rem suit notwithstanding the absence of the term “Vessel” from that clause, because the bills of lading also contain a broadly worded Himalaya clause. MOB Cougar argues that the Himalaya clause enables the defendant vessel to invoke the forum selection clause, and 2 Mazda makes a secondary ratification argument pertaining to whether the vessel may benefit from the Himalaya clause, which we address below. MAZDA v. M/V COUGAR ACE 5391 we agree. Under the Himalaya clause, contractual provisions benefitting the carrier also benefit certain other parties. As we shall explain, the defendant vessel, which is considered a separate legal person for the purposes of this in rem suit, benefits from any provision in favor of the carrier, including the forum selection clause. The Himalaya clause appears under the heading “SUBCONTRACTING AND INDEMNITY”: The Merchant undertakes that no claim or allegation shall be made against any servant, agent or Sub- Contractor of the Carrier which imposes or attempts to impose upon any of them, or upon any vessel owned or operated by any of them, any liability whatsoever in connection with the Goods, and, if any such claim or allegation should nevertheless be made, to indemnify the Carrier against all conse- quences thereof. Without prejudice to the foregoing, every such servant, agent and Sub-Contractor shall have the benefit of all provisions herein benefiting the Carrier as if such provisions were expressly for their benefit; and in entering into this contract, the Carrier, to the extent of those provisions, does so not only on its own behalf, but also as agent and trustee for such servants, agents and Sub-Contractors. The bills of lading specifically define each of the terms beginning with a capital letter. Mazda is the “Merchant” because it is a consignee of the goods. As explained, “Carrier” refers to Mitsui, who issued the bills of lading. “Sub-Contractor” is defined broadly, and that broad definition is crucial to our analysis. “Sub-Contractor” includes owners and operators of Vessels and space providers on Vessels (other than the Carrier), stevedores, terminal and groupage operators, any independent contractor directly or indi5392 MAZDA v. M/V COUGAR ACE rectly employed by the Carrier in performance of the Carriage, their respective servants and agents, and anyone assisting the performance of the Carriage. (Emphasis added.) In turn, “ ‘Carriage’ means the whole or any part of the operations and services undertaken by the Carrier in respect of the Goods under this Bill of Lading.” [4] To decide whether the defendant vessel is covered by the Himalaya clause, we apply general contract interpretation principles, because a bill of lading is a contract like any other. See Starrag v. Maersk, Inc., 486 F.3d 607, 616 (9th Cir. 2007). Particularly, the Supreme Court has rejected a rule of narrow construction for Himalaya clauses, holding that the plain language of such a clause is the best evidence of the parties’ understanding of which other entities may invoke the carrier’s contractual defenses. See Kirby, 543 U.S. at 31-32.