Document: 515 U.S. 528115 S.Ct. 2322132 L.Ed.2d 462 VIMAR SEGUROS Y REASEGUROS, S.A., Petitioner,v.M/V SKY REEFER, her Engines, etc., et al. No. 94-623. Supreme Court of the United States Argued March 20, 1995. Decided June 19, Syllabus * After a New York fruit distributor's produce was damaged in transit from Morocco to Massachusetts aboard respondent vessel, which owned by Panamanian company and chartered Japanese carrier, petitioner insurer paid claim, they both sued respondents under standard form bill lading tendered distributor its Moroccan supplier. Respondents moved stay action compel arbitration Tokyo lading's foreign clause Federal Arbitration Act (FAA). The District granted motion, rejecting argument that unenforceable FAA because, inter alia, it violated § 3(8) Carriage Goods Sea (COGSA) inconvenience costs proceeding Japan would "lesse[n] . liability" sense COGSA prohibits. However, court certified for interlocutory appeal ruling arbitration, stating controlling question law "whether [§ ] nullifies an contained governed COGSA." In affirming order arbitrate, First Circuit expressed grave doubt whether lessened liability 3(8), but assumed invalid resolved conflict between statutes FAA's favor. Held: does not nullify clauses maritime bills lading. Pp. ____. (a) Examined with care, support petitioner's lessens increasing transaction obtaining relief. Because requires "liability" may be "lessen[ed]" "aris[e] failure duties or obligations provided this section," is concerned imposed elsewhere 3, defines explicit procedures designed correct certain abuses carriers, address separate particular forum other procedural enforcement mechanisms. Petitioner's contrary reading undermined Carnival Cruise Lines, Inc. v. Shute, 499 585, 595-596, 111 1522, 1528-1529, 113 622, whereas Court's finds goals so-called Hague Rules, international convention on modeled, pertinent decisions nations. It out keeping such contemporary principles comity commercial practice interpret disparage authority competence forums dispute resolution. irony favor interpretation heightened fact here also based part convention. For able gain benefits accords, courts must construe because plaintiff insular distrust ability arbitrators apply law. (b) Also rejected should enforced there no guarantee will COGSA. According petitioner, follow significantly lessen respondents' providing carriers defense acts omissions stevedores hired shipper, rather than COGSA, makes nondelegable carrier's obligation properly carefully stow goods carried. Whatever merits comparative reading, claim premature at stage, established what receive diminished protection as result. has retained jurisdiction over case have opportunity award-enforcement stage ensure legitimate interest laws been addressed. (c) light foregoing, relevant provisions are accord, Acts given full effect. therefore unnecessary resolve further override were interpreted otherwise. P. 29 F.3d 727 (CA1 1994), affirmed remanded. KENNEDY, J., delivered opinion Court, REHNQUIST, C.J., SCALIA, SOUTER, THOMAS, GINSBURG, JJ., joined. O'CONNOR, filed concurring judgment. STEVENS, dissenting opinion. BREYER, took consideration decision case. Stanley McDermott, III, City, petitioner. Thomas H. Walsh, Jr., Boston, MA, respondents. Justice KENNEDY Court. 1 This us (COGSA), 46 U.S.C.App. 1300 seq., relates contract containing requiring country. Our holding forbid selection (FAA), 9 U.S.C. seq. (1988 ed. Supp. V), our view, conflict. 2 issue evidence purchase shipload oranges lemons. purchaser Bacchus Associates (Bacchus), partnership distributes wholesale throughout Northeastern States. dealt Galaxie Negoce, S.A. (Galaxie), contracted ship transport Massachusetts. M/V Sky Reefer, refrigerated cargo M.H. Maritima, company, time-chartered Nichiro Gyogyo Kaisha, Ltd., company. Stevedores loaded stowed cargo. As customary these types transactions, when received Galaxie, carrier issued shipper consignee. Once set sail Morocco, according terms letter credit posted Galaxie's 3 Among rights responsibilities choice-of-law clauses. Clause entitled "Governing Law Arbitration," provided: 4 "(1) evidenced Bill Lading shall 5 "(2) Any arising referred Maritime Commission (TOMAC) Shipping Exchange, Inc., accordance rules TOMAC any amendment thereto, award final binding parties." App. 49. 6 When vessel's hatches opened discharge Massachusetts, discovered thousands boxes had shifted holds, resulting $1 million damage. $733,442.90 compensation Vimar Seguros y Reaseguros (Vimar Seguros), Bacchus' marine became subrogated pro tanto rights. Petitioner then brought suit against Maritima personam Reefer rem These defendants, here, FAA, proceedings enforce agreements covered Act. opposed arguing adhesion 3(8). premise latter those used 7 argument, observing Congress defined enforceable include lading, 1, sophisticated party familiar negotiation shipping transactions. parties submit motion judicial arbitration; pending request, 28 1292(b) [COGSA Pet. Cert. 30a. 8 arbitrate. (1994). Although F.3d, 730, Appeals considered later enacted more specific statute, id., 731-733. We certiorari, 513 ----, 115 571, 130 488 (1994), split enforceability Compare below (enforcing assuming arguendo COGSA), State Establishment Agricultural Product Trading Wesermunde, 838 F.2d 1576 (CA11) (declining violate cert. denied, 916, 109 273, 102 262 (1988). now affirm. II devote much their priority. "[W]hen two capable co-existence," however, "it duty courts, absent clearly congressional intention contrary, regard each effective." Morton Mancari, 417 535, 551, 94 2474, 2483, 41 290 (1974); Pittsburgh & Lake Erie R. Co. Railway Labor Executives' Assn., 491 490, 510, 2584, 2596-2597, 105 415 (1989). There unless own clause, we choose assume nullification arguendo, did. consider arguments made first second risk A. 10 leading invalidation Second Indussa Corp. S.S. Ranborg, 377 200 (1967) (en banc). found invalidated designating "puts 'a high hurdle' way enforcing liability, thus effective means secure settlements lower if [owners] could sue convenient forum," 203 (citation omitted). observed "there assurance [the court] [COGSA] same American tribunal subject uniform control Court," 203-204. Following Indussa, Courts without exception See Union Ins. Soc. Canton, Ltd. Elikon, 642 721, 723-725 (CA4 1981); Conklin Garrett, Ltd Finnrose, 826 1441, 1442-1444 (CA5 1987); see G. Gilmore C. Black, Admiralty 145-146, n. 23 (2d 1975) (approving rule). subset general, Scherk Alberto-Culver Co., 506, 519, 2449, 2457, 270 (1974), extended well. Trading, supra, 1580-1581; cf. Reaseguros, 730 (assuming applies). logic extension quite defensible, cannot endorse reasoning conclusion rule itself. 11 determinative provision examined advanced Section provides follows: 12 "Any covenant, agreement carriage relieving loss damage connection goods, negligence, fault, section, lessening otherwise chapter, null void effect." 1303(8). "liability section." statute addresses Act, addressing liability. difference statutory guarantees procedure them, applicable vindicated. 13 standards conduct, carriers. 19th century prevalent common insert exempting themselves loss, limiting period plaintiffs present notice bring suit, capping damages awards per package. 2A M. Sturley, Benedict 11, pp. 2-2 2-3 (1995); T. Schoenbaum, 10-13 1994); Yancey, Goods: Hague, Visby, Hamburg, 57 Tulane L.Rev. 1238, 1239-1240 (1983). Thus, "Responsibilities liabilities ship," "exercise due diligence [m]ake seaworthy" "[p]roperly man, equip, supply ship" before beginning voyage, 3(1), "properly load, handle, stow, carry, keep, care for, carried," 3(2), specified contents, 3(3). 1303(1), (2), (3). 3(6) allows owner provide within three days one year. substantive prohibits altering advantage Nothing suggests prevents agreeing forum. By terms, establishes obligations, apart mechanisms enforcement. 14 construction similar 622 (1991). number Washington residents argued Florida cruise ticket expense litigation "caus[e] unreasonable hardship asserting rights," 596, S.Ct., " 'lessen, weaken, avoid right claimant trial competent injury, measure therefor' violation Limitation Vessel Owner's Liability U.S., 1528 (quoting 183c). "does purport limit negligence," 596-597, 1529, dissent's line cases, cost traveling miles "lessens weakens [plaintiffs'] recover." 603, 1532 (Stevens, dissenting). 15 If answered reference owner, principled basis distinguishing national Even reasonable read make distinction travel time, airfare, hotels bills, factors susceptible simple domestic forums. Requiring Seattle arbitrate likely imposes burdens Vancouver. unwieldy unsupported policy require proceed tally means, size claims, relative burden carrier. 16 "lessening exclude increases Brussels Convention Unification Certain Rules Relating Bills Lading, 51 Stat. 233 (1924) (Hague Rules), modeled. Sixty-six countries, including Japan, Convention, Department State, Office Legal Adviser, Treaties Force: A List Other International Agreements Force January 1994, p. 367 (June appears none enactment prohibit clauses, Uniform Laws National Courts: Influence Domestic Conflicts Interpretation, 27 Va.J.Int'l L. 729, 776-796 (1987). English long ago adopted court. Maharani Woollen Mills Anchor Line, [1927] Lloyd's Rep. 169 (C.A.) (Scrutton, L.J.) ("[T]he me remain exactly clause. only procedure—where enforced? —and I do liability"). And countries recognize rely effect versions see, e.g., Sea-Carriage 1924, 9(2) (Australia); 1986, (South Africa). culmination multilateral effort "to establish ocean govern shippers se trade," Robert Herd Krawill Machinery Corp., 359 297, 301, 79 766, 769, 820 (1959), decline version manner every nation addressed issue. 736 (conflicts destroy aesthetic symmetry legal impose real system govern). 17 objects country skepticism reliance aspect give practice. Bremen Zapata Off-Shore 407 92 1907, 32 (1972), historical resistance "has little place era businesses once essentially local operate world markets." Id., 12, 1914. "The expansion business industry hardly encouraged," explained, "if, notwithstanding solemn contracts, insist parochial concept all disputes courts." 9, 1912. Mitsubishi Motors Soler Chrysler-Plymouth, 473 614, 638, 3346, 3359-3360, 87 444 (1985) (if arbitral institutions "are take central order, need 'shake off old hostility arbitration,' understandable unwillingness cede transnational tribunal") omitted); 516, 2456 ("A refusal agree- ment" frustrate "the orderliness predictability essential transaction"); Allison, Private Antitrust Claims Trade: Study Subordination Interests Demands World Market, 18 N.Y.U.J. Int'l Politics 361, 439 (1986). That heightens convention, 201 (codifying Nations Recognition Enforcement Foreign Arbitral Awards, 10, 1958, [1970] 21 U.S.T. 2517), T.I.A.S. 6997, intended encourage recognition contracts unify signatory countries," Scherk, 520, 15, 15. involve interstate commerce, Allied-Bruce Terminix Cos. Dobson, 834, 753 (1995), §§ 2, 201, 202, where independent equity revocation. Cf. 595, ("forum-selection passage scrutiny fundamental fairness"). accords role trusted partner endeavors, most cautious interpreting legislation agreements. concern counsels construing B 19 objection raises substance. landing relieve diminish question, therefore, applied reduce guarantees. Motors, 637, 3359, 19. 20 argues which, contends, least significant respect. said, 112, Article (carrier liable "when he persons employed him" fail care), while 1303(2); Associated Metals Minerals Arktis Sky, 978 47, 50 (CA2 1992). But 4(2)(i), 1304(2)(i) ("[N]either nor responsible [a]ct omission his agent representative"); 1303(8) (agreement "otherwise chapter"); Hegarty, Carrier's Duty Load Stow Cargo Nondelegable, Is It?: Mar. L.J. 125 (1993). counterpart, premature. At claims conclude applies force so that, another controls. seek agreement. district "will addressed." 3359; Restatement (Third) Relations 482(2)(d) (1986) judgment state itself, repugnant public States"). Were subsequent review persuaded choice-of-forum operated tandem prospective waiver party's pursue remedies ., hesitation condemning policy." Knott Botany Mills, 179 69, 30, 45 L.Ed. 90 (1900) (nullifying Harter precursor British purported exempt caused negligence loading stowage cargo); Hollandia, [1983] A.C. 565, 574-575 (H.L.1982) (noting choice ex facie offend article paragraph 8," chosen exclusive result sum [English COGSA] applied"). Under circumstances case, reserve decided instance arbitrator, jurisdiction, mere speculation might depending proper itself 22 hold circumstances, affirmed, remanded consistent ordered. 24 BREYER 25 dissenting. 26 (COGSA),1 1936 supplement 1893 Act,2 regulates transporting ports provides: Petitioners challenge coupled choice-of-foreign-law covering shipment bill, (1) 'shall law,' (2) arbitrated Tokyo. ante, uniformly followed endorsed scholarly commentary decades, "relieve" "lessen" Nevertheless, relying almost entirely recent involving even (1991), today unwisely discards settled adopts novel owners included stipulations losses occasioned employees. (and is) adhesion, accept else find position bargain around no-liability stipulations, Compania de Navigacion la Flecha Brauer, 168 104, 117-118, 42 398 (1897), citing Peck North Staffordshire Railway, H.L. Cas. 473, 493, 494 (1863), concluded, prior "contrary policy, consequently void." Liverpool Great Western Steam Phenix 129 397, 442, 469, 472, 788 (1889).3 noted several held stipulation England." 118, valid remained open until passed 1893. 30 unlawful master vessel whereby "shall relieved negligence."4 (1900), presented prohibition controlling. held: 31 "Th[e] express act overrides ship's flag." 77, 33. rested Act's 72, 31. Since, Knott, consistently understood create flat ban See, 1967). embodies broader "relieving" Indeed, panel 1955 permit Muller Swedish Line 224 806 1955), scholars seems impossible reconcile Knott."5 Eventually agreeing, en banc unanimously overruled 1967. F.2d, 200. 33 1957 edition treatise Admiralty, Black criticized Muller, They wrote: 34 abroad Cogsa, obviously destroys shipper's certainty Cogsa applied. Further, unrealistic look overseas 'lessening' puts hurdle liability." 125, 23. 35 Judge Friendly's reasoning. Norway Norwegian law.6 Friendly remarked harsh consequence "requiring consignee claiming modest $2600 journey some 4200 having different employing language." 201. decision, impact relatively small fair broad language explained: 36 "[Section] says 'any dereliction duties] effect.' From practical standpoint, assert distant substantially, particularly small. Such 23, making triable certainly neither Rules. regimes, since them can well potential simply demonstrable 203-204 (citations 37 notes, ____, Appeal Indussa. 1975 treatise, holding, adding comment: 38 "Cogsa freedom contracting direction shipowner's liabilities, never diminishing them. apparent onesidedness commonsense inequality bargaining power redress, great objectives prevent impairment value negotiability Obviously, ensue increase duties." Law, 146-147 ed.) (emphasis original) (footnote 39 federal courts' buttressed uniformity, demonstrate purporting pursuant today.7 40 potentially prohibitive who travel—and lawyers, witnesses exhibits—to redress. inclined either settle discount forgo bringing all. foreign-law leaves application unfamiliar disadvantageous standards, obtain (perhaps years later) vacation awards.8 Wilko Swan, 346 427, 436-437, 74 ,S.Ct. 182, 187-88, 98 (1953). Accordingly, always 1576, 1580-1582 (CA11), (1988), much, 727, 732, 1994).9 Yet holds foreign-arbitration into validity undergirding doctrine stare decisis greatest preserving governing meaning accepted periods time,10 nevertheless concluded change made. Its law-changing supported arguments: misconstrued; understanding "undermined" case; (3) new honor 1924 "Hague Rules." None persuasive. assumes words narrowly construed refer define obligations. Ante, contractual amount consignee's net recovery, likelihood recovery all, beyond scope statute. 43 my opinion, view flatly inconsistent purpose section responds inherent carriers' historic tendency exploit whenever possible immunize fault. document prepared presents take-it-or-leave-it basis. Bremen, Problem Conflicting Vand. J. Transnat'l 365, 368 (1973); Steam, 441, 471-72. Characteristically, arms-length bill's terms; agree standard-form language, refrain using services. written, slip fraction damages, recourse.11 represents Congress' attempt respond problem. invalidates "lessening" duty. 44 reads policies behind COGSA's enactment, perfectly clear "relieves" "lessens" associated exceed many disputes. matter, matter how formal be, subrogee protects being anything "lessened" inability "relieved" large enough justify Asia,12 inevitably recovery. If, reasoning, affect appear permissible pay perhaps expenses fees expert witnesses, interpreters, lawyers parties. wise judges shared surely concluding perverse text. More stake allocation besides carriage, negotiable instrument controls possession shipped. sold, traded, though Disuniformity impair negotiability. 723, 1975). security interests through others Liechtenstein, suffer uncertainty. recognizes depends upon financial community's capacity enforceability, accessible forum, bills' terms. Today's capacity. 47 misplaced. passenger enforceable. issue, did parties' dispute. ticket's implicate uniformity served regulation Moreover, limited forum-selection pointedly refused dissent wooden extend outside 604, 1532-1533. extension, compelled Cruise.13 48 Finally, am baffled implicit suggestion (which preceded 1967, somehow unfaithful commitments. concerns about invalidating freely negotiated bearing commonly recognized adhesion. term Much less ignore product negotiations—which forbids enforce- ment discussing Bremen's Professor observed: 49 "[I]t hard looked remit holder true difficulty vary circumstances; Canada Pakistan. palpable 'lessening,' ever enforced, dismiss litigant in. On moderate-sized remission immunization L., 368-369. majority points statutes, signatories countries. (without evidence) depart Nation's mean something statutes. think opposite plausible: nations believed non-enforcement explicit. anything, then, court's contravene mutual treaty presumed know law, Cannon University Chicago, 441 677, 696-699, 99 1946, 1957-1959, 60 560 (1979), justified assuming, today, Australia's South Africa's necessary invalidate existence proves nothing all.14 III Lurking background reason despite decades precedent, violence perceived V). contracts—including countries—the Volt Information Sciences, Board Trustees Leland Stanford Junior Univ., 489 468, 478, 1248, 1255, 103 turn traditional common-law Mastrobuono Shearson Lehman Hutton, 514 1212, 1215, 131 76 837-838, (1995). Appeals, directly FAA. 52 Unfortunately, adopting conflict, deprived force. narrow [of] excludes apparently covers formal, important conflicting wherever possible, ignored damaging harmonize reads: 53 "A written controversy thereafter valid, irrevocable, enforceable, save grounds exist revocation contract." 2. 54 plainly intends footing like "save grounds" suffice other, non-arbitration thereby fulfills jettisoning regime arbitration. Like violating if, example, procured fraud forgery; mistake impossibility; unconscionable; or, illegal Neither thwarted single disfavored treatment; Illegality ground "for contract," 55 correctness becomes considers seeks ameliorate comes contract. freely-negotiated Volt, 478-479, 1255-56. discussed, freely-negotiated. illegal; disserved thereby. contrast, allowing adhesionary stand serves IV 56 excellent example overzealous formalism. eschewing liability," drained potency. compounds, contains, unfortunate respectfully dissent. syllabus constitutes Reporter Decisions convenience reader. Detroit Lumber 321, 337, 282, 287, 499. djQ understand basic First, preclude increased litigating more, Second, proceeds, arise arbitrators' Those affirm below. concur kind divest unlike 1967) one—it is, after leads premature—and decide insofar relied considerations retains vitality context not, qualification, reject [and] itself," wholeheartedly approve "long court," "[f]ollowing 3(8)," prefer disturb unbroken extent 1207, 1300-1315. 445, 190-196. customer equality. individual choice. He afford higgle out, redress courts. prefers sign paper, presents; cases alternative this, abandon business." "Be Senate House Representatives America assembled, lawful manager, agent, master, merchandise property it, he, loading, stowage, custody, delivery committed charge. import inserted receipts 190. rendered obsolete 1303(8), quoted (1st (1957). following provision: 'Any Carrier principal business, except herein.' 200, Of course, objectionable feature instant importance; respects, two. Both substantial shippers, majority's presumably ____; ____ (O'Connor, judgment). distinguish analogous exists reasons infra, unpersuasive. actually uphold standards—these, narrowest Nonetheless, willing allow determine afterwards discussed above, creates serious problems delay clause—it pass discuss say gives shipper. concession perception dictate consider, reject, Eskridge Frickey, 1993 Term Foreword: Equilibrium, 108 Harv.L.Rev. 26, 81 Farr Sugar 191 370, 374 1951), aff'd 343 236, 72 666, 96 907 (1952): "One special note. shipowners stress consensual nature ["Both-to-Blame"] name only; told, practically steamship companies doing Obviously repudiate agreed trade, twenty-eight lengthy paragraphs, 9. lack equality law; exemption allowed stand. Hence definite relinquishment direct authorization law." (Citations omitted.) fora truly wished select outpost Antarctica setting claims. Nor logic. fora—a citizen Maine trouble arbitrating Arizona. eschew fora. adhere yet outrageous result, draw somewhere. sensible line, me, border. Transaction generally, always, crossed. Passports usually obtained, barriers often themselves, distances greater litigants forced cross boundary. wrongly decided, adherence reaches today. puzzling strikes irrelevant. remotely intent constitute

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