Carriage of goods by sea in the USA

Is your jurisdiction party to any international conventions on the carriage of goods by sea? If so, does the relevant domestic implementing law contain any notable modifications (eg, extensions to the scope of application)?

The United States applies a version of the Hague Rules through the Carriage of Goods by Sea Act (for goods in foreign commerce), as well as the Harter Act (for mostly domestic carriage). The United States also signed the Rotterdam Rules, which are not yet ratified. The Carriage of Goods by Sea Act applies “tackle to tackle”, but the period that it covers is frequently extended by clauses in bills of lading.

Carrier’s responsibility

What is the official extent of the carrier’s responsibility for goods?

The vessel owner may not be liable under the Carriage of Goods by Sea Act if it is not the contractual carrier. However, the vessel itself will be liable in rem for having carried the cargo and ratified the bill of lading. Under the Carriage of Goods by Sea Act, a carrier may limit its liability to $500 per package or customary freight unit. However, the act’s limitations and defences can be lost if the carrier commits an unreasonable deviation, for example.

Contractual limitation of liability

May parties contract out of any legal provisions governing cargo liability?

Under the Carriage of Goods by Sea Act, the parties to a bill of lading may contract for higher limitations than the $500 per package or freight unit provided by the act.

Title to sue

Who has title to sue on a bill of lading?

A real party in interest may bring a suit under a bill of lading and cargo claims are frequently brought by shippers and their insurers.

Time bar

What is the time bar for cargo claims?

The Carriage of Goods by Sea Act contains a one-year statute of limitations.

Definition of ‘carrier’ and ‘goods’

How are ‘carrier’ and ‘goods’ defined in respect of cargo claims? Is there any especially pertinent case law on this issue?

Under the Carriage of Goods by Sea Act, the term ‘carrier’ includes the owner or the charterer which enters into a contract of carriage with the shipper. The term ‘goods’ includes goods, wares, merchandise and articles of every kind – except live animals and cargo that is stated by the contract of carriage as being carried on deck and is so carried.

Defences available to carrier

Under what circumstances may the carrier rely on the perils of the sea defence? What other defences are available to the carrier?

‘Peril of the sea’ is one of 16 specifically excepted causes of cargo damage for which ocean carriers are not liable under the Carriage of Goods by Sea Act. Briefly stated, this has been defined as a fortuitous action of the elements at sea, of such force as to overcome the strength of well-found ships or the usual precautions of good seamanship. The validity of the peril of the sea defence depends on the nature and cause of the cargo loss. Negligence or fault of the ocean carrier voids the defence. The act sets out 15 other defences, as well as a catch-all exception which relieves ocean carriers from cargo liability for any cause arising without the actual fault of the carrier or its agents.

Third parties

What legal protections and defences against cargo claims are available to agents of the carrier and other third parties (eg, Himalaya clauses)?

The $500-per-package limitation of liability contained in the Carriage of Goods by Sea Act extends only to a carrier of goods by sea and not to third parties which are not carriers, such as stevedores or terminal operators. However, non-carriers may become third-party beneficiaries of the act’s limitations and conditions by inserting a provision in the bill of lading known as a ‘Himalaya clause’. Although a carrier is free to contract with the owner or consignee of cargo to extend the benefits of the act to the carrier’s agents, servants and independent contractors pursuant to a Himalaya clause, the clause is strictly construed against the carrier and its third-party beneficiaries. The contractual extension of the act’s limitation of liability benefits pertains to third parties only if this intention is clearly and unambiguously expressed in the bill of lading.

Deviation from route

Under what circumstances is deviation from the agreed route allowed?

Deviations generally fall into two types: geographic and non-geographic. The former is the carrier’s failure to proceed in the most direct and customary route to the port of delivery. The latter is an action taken by the carrier that increases risk of loss or damage to cargo (eg, the stowage of cargo on deck), without the knowledge and consent of the shipper. Under the Carriage of Goods by Sea Act, carriers are not liable for losses resulting from reasonable deviations.

Claims against shipper

What claims can the carrier pursue in respect of the shipper’s failure to meet its obligations?

Under the Carriage of Goods by Sea Act, the shipper is responsible for proper marks, number, quantity and weight of the cargo, and must indemnify the carrier “against all loss, damages, and expenses arising or resulting from inaccuracies in such particulars”. Shippers have been held liable to carriers and other cargo interests for negligence or due to the undisclosed dangerous nature of cargo.

Multimodal carriage of goods

How is multimodal carriage regulated in your jurisdiction?

The US Supreme Court has held that a through bill of lading is a maritime contract even for those portions of the transport services that take place on land. Other cargo liability regimes cover rail and truck transport that, at times, conflict with the Carriage of Goods by Sea Act and may affect the carrier’s liability in the event that the cargo is not aboard a vessel.

Source: Seward & Kissel LLP

 

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