Maritime Law
Maritime Contract
Bill of Lading
Carriage of Goods by Sea Act
Contract of Carriage
Carrier
Shipper
Ship’s Manager
Freight Forwarder
OTI
Himalaya Clause
Statute of Limitations
Estoppel
Licensing Requirements
FMC Regulations
Non-Vessel Operating Common Carrier (“NVOCC”)
Lloyd’s List
Hague-Visby
J. Mar. L. & Com.
(…) Dimond hired BDP to ship the Equipment.
Dimond asserted that BDP did not disclose that it was not a licensed Ocean
Transport Intermediary (“OTI”) by the Federal Maritime Commission.
(…) Dimond asserted that BDP had “without
Dimond’s knowledge, consent or approval” hired Logitrans to “perform some, or
all of BDP’s freight forwarding duties including locating/booking or providing
a ship; acting in the capacity as the NVOCC carrier for the shipment . . . and
negotiating loading services . . . .” Dimond alleged that BDP misrepresented
that Logitrans was a Non-Vessel Operating Common Carrier (“NVOCC”).
(…) A non-vessel operating common carrier
“consolidates cargo from numerous shippers into larger groups for shipment by
an ocean carrier.” Prima U.S. Inc. v. Panalpina, Inc., 223 F.3d 126, 129 (2d Cir. 2000). The NVOCC, rather
than the ship that transports the cargo, “issues a bill of lading to each
shipper.”
(…) The following terms in the Bill of Lading
are of particular relevance.
(a)In case the Contract evidenced by this Bill of Lading is subject to the
Carriage of Goods by Sea Act of the United States of America, 1936 (“U.S.
COGSA”), then the provisions stated in said Act shall govern before loading and
after discharge and throughout the entire time the cargo is in the Carrier’s
custody and in which event freight shall be payable on the cargo coming into
the Carrier’s custody.
The Bill of Lading also contained a “Himalaya Clause.”
(a) It is hereby
expressly agreed that no servant or agent of the Carrier (which for the purpose
of this Clause includes every independent contractor from time to time employed
by the Carrier) shall in any circumstances whatsoever be under any liability
whatsoever to the Merchant under this contract of carriage for any loss, damage
or delay of whatsoever kind arising or resulting directly or indirectly from
any act, neglect or default on his part while acting in the course of or in
connection with his employment.
(…) A bill of lading is a contract for the
transportation of goods. It “records that a carrier has received goods from the
party that wishes to ship them, 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).
(…) A “Himalaya Clause” is a clause that imposes
liability limitations. See Kirby, 543 U.S. at 20 & n.2. The name
originates from an English case, Adler v. Dickinson (The Himalaya),
[1955] 1 Q.B. 158, [1954] 2 Lloyd’s List L. Rep. 267, in which personal-injury
claims were brought against the master and boatswain of the Himalaya.
The Himalaya’s owners had included “customary exculpatory clauses”
protecting them from liability for negligent injury to passengers. See Joseph
C. Sweeney, Crossing the Himalayas: Exculpatory Clauses in Global Transport.
Norfolk Southern Railway Co. v. James N. Kirby, Pty Ltd., 125 S. Ct. 385,
2004 AMC 2705 (2004), 36 J. Mar. L. & Com. 155, 161 (2005).
(…) The district court granted the Motions to
Dismiss. It explained that, because bills of lading are “maritime contracts,
governed by federal maritime law,” COGSA governed Dimond’s claims. Dimond
Rigging, 320 F. Supp. 3d at 952–53. Because COGSA has a one-year statute of
limitations for cargo claims in contract or tort that begins to run after the
goods have been delivered, or on the date the goods should have been delivered,
the district court concluded that Dimond should have filed its claims in May
2013, one year after the goods were released to Dimond’s customer. Because it
did not, the district court concluded that Dimond’s claims were outside the
statute of limitations. Id. at 953.
(…) The district court also rejected Dimond’s
arguments that BDP and Logitrans should be estopped from benefiting from
COGSA’s one-year statute of limitations because they allegedly did not comply
with certain licensing requirements. The district court explained that, because
COGSA does not include licensure requirements, Dimond failed to sufficiently
allege that BDP and Logitrans were in violation of COGSA. Id. at 953–54.
(…) The primary issues in this case are whether
COGSA controls, and whether BDP and Logitrans are “carriers” within the meaning
of COGSA. If so, then Dimond should have filed its claim within one year after
delivery, or the date when the goods should have been delivered. See 46
U.S.C. § 30701 (Notes § 3(6)) (…) Dimond argues that this is not a maritime dispute,
but instead is about “breaches of contractual agreements, breaches of fiduciary
duties, and outright fraud,” which do not create maritime jurisdiction. In
determining whether this is a maritime dispute, the “answer ‘depends upon . . .
the nature and character of the contract’ and the true criterion is whether it
has ‘reference to maritime service or maritime transactions.’” Norfolk S.
Ry. Co. v. Kirby, 543 U.S. 14, 24 (2004) (quoting North Pac. S.S. Co. v.
Hall Bros. Marine Ry. & Shipbuilding Co., 249 U.S. 119, 125 (1919)).
This case arises from a contract to transport used manufacturing equipment by
sea from the United States to China. It is plainly a maritime transaction (…)
Dimond’s argument is without basis. “When a contract is a maritime one, and the
dispute is not inherently local, federal law controls the contract
interpretation.”
(…) Dimond argues that it “was not a party to
the contract of carriage with the ship/carrier directly, or via any authorized
agent . . . .” The district court rejected this argument because Dimond is
listed as a party on the bill of lading. Dimond Rigging Co., LLC v. BDP
Int’l, Inc., 320 F. Supp. 3d 947, 952 n.1 (N.D. Ohio 2018). Dimond signed
the Bill of Lading. We agree with the district court.
(…) COGSA applies “to all contracts for carriage
of goods by sea to or from ports of the United States in foreign trade.” 46
U.S.C. § 30701 (Notes § 13); see Fortis Corp. Ins., S.A. v. Viken Ship Mgmt.
AS, 597 F.3d 784, 787 (6th Cir. 2010). “Every bill of lading or similar
document of title which is evidence of a contract for the carriage of goods by
sea from ports of the United States, in foreign trade, shall contain a
statement that it shall have effect subject to the provisions of this Act.” 46 U.S.C.
§ 30701 (Notes § 13).
(…) Even if Dimond were to have made
arrangements with BDP to cover the overland transportation, we observe that in Kirby,
543 U.S. at 27, the Supreme Court resolved the question of how federal courts
must determine whether a contract for maritime and land transport is a maritime
contract. The Court explained that “so long as a bill of lading requires
substantial carriage of goods by sea, its purpose is to effectuate maritime
commerce—and thus it is a maritime contract.” Ibid. Even if it provides
for some overland transport, it is still a maritime contract as long as
the case is not inherently local. Ibid. The Bill of Lading requires
transport from the port of Cleveland to Xingang. It does not refer to any other
ground transportation. We have already concluded that, contrary to Dimond’s
assertions, this is obviously a maritime dispute.
(…) COGSA permits the use of Himalaya Clauses to
limit parties’ liability. Ibid. But merely because a Bill of Lading
contains a Himalaya Clause does not mean that the Clause covers every entity
or individual involved in a transaction (p. 10).
(…) We first consider whether Logitrans and BDP
are carriers within the meaning of COGSA. See Sabah Shipyard v. M/V Harbel
Tapper, 178 F.3d 400, 404 (5th Cir. 1999) (explaining that COGSA liability
limits only apply to carriers); Shonac Corp. v. Maersk, Inc., 159 F.
Supp. 2d 1020, 1025 (S.D. Ohio 2001) (discussing carriers). A “carrier” under
COGSA means “the owner, manager, charterer, agent, or master of a vessel.” 46
U.S.C. § 30701; see also id. (Notes § 1(a)) (“The term ‘carrier’
includes the owner or the charterer who enters into a contract of carriage with
a shipper.”). “COGSA provides that ‘carriers’ are subject to certain statutory
‘responsibilities and liabilities,’ and in turn they are provided with certain
‘rights and immunities,’ such as a one-year statute of limitations . . . .” Fortis
Corp., 597 F.3d at 787. An NVOCC, consolidates cargo from various shippers
and issues a bill of lading. Prima U.S. Inc. v. Panalpina, Inc., 223
F.3d 126, 129 (2d Cir. 2000) (explaining that NVOCCs are carriers under COGSA).
A freight forwarder “facilitates the movement of cargo to the ocean
vessel.” Ibid. “Freight forwarders generally make arrangements for the
movement of cargo at the request of clients . . . . a freight forwarder does not
issue a bill of lading, and is therefore not liable to a shipper for
anything that occurs to the goods being shipped.” Ibid. (citing United
States v. Am. Union Trans., 327 U.S. 437, 442–43 (1946)).
(…) In Fortis Corp., 597 F.3d at 789, we
considered whether a ship’s manager was a carrier under COGSA. We focused on
the plain language of COGSA in concluding that the manager was not a carrier. Id.
at 789–92. See also Shonac Corp., 159 F. Supp. 2d at 1026
(discussing the “plain language” approach for assessing whether a party is a
carrier). Under this approach, a court considers whether a party satisfies the
statutory definition. See Sabah Shipyard, 178 F.3d at 405. This
is an assessment of function, rather than form. Prima U.S.
Inc., 223 F.3d at 130 n.1 (explaining that a party calling itself a freight
forwarder that performed carrier functions would be a carrier). The key inquiry
is what the party did. If it issued a bill of lading, then it is usually a
“carrier” under COGSA. See id. at 129; Sabah Shipyard, 178 F.3d
at 405; Shonac Corp., 159 F. Supp. 2d at 1026. It is not dispositive
that the party hired a third party to actually carry the goods. See Sabah
Shipyard, 178 F.3d at 405; Shonac Corp., 159 F. Supp. 2d at 1026.
(…) Sabah Shipyard is illustrative in
resolving whether BDP and Logitrans are “carriers” under COGSA. In that case,
Sabah had to ship some equipment to Malaysia. 178 F.3d at 403. IMB won the bid
to transport the equipment. IMB’s agent, Intermarine, issued a bill of lading.
After some of the equipment slid into the Singapore harbor, Sabah filed suit
seeking damages under COGSA. The district court found that the defendants were
liable for negligence but did not apply a COGSA limit on liability because it
held that IMB and Intermarine were forwarders, not carriers. Ibid. The
Fifth Circuit concluded that the district court erred when it determined that
IMB and Intermarine were not carriers within the meaning of COGSA. Id. at
406. The Fifth Circuit explained that “to determine whether a party is a COGSA
carrier, we have followed COGSA’s plain language, focusing on whether the party
entered into a contract of carriage with a shipper.” Id. at 405. Because
IMB and Intermarine entered into a contract of carriage—namely, they “agreed to
carry Sabah’s goods by sea, and they issued a bill of lading,” they were
carriers. Ibid.
BDP entered into a contract of carriage with
Dimond because it took on the responsibility of transporting the Equipment by
sea. BDP issued the Bill of Lading. Dimond Rigging, 320 F. Supp. 3d at
949. BDP is a carrier. See Sabah Shipyard, 178 F.3d at 405; Bunge
Edible Oil Corp. v. M/Vs Torm Rask & Fort Steele, 949 F.2d 786, 788–89
(5th Cir. 1992) (explaining that charterer of vessel who enters into contract
of carriage with shipper is a carrier); Nitram, Inc. v. Cretan Life, 599
F.2d 1359, 1370 (5th Cir. 1979) (concluding that party that entered into a
contract of carriage covered by a bill of lading is a carrier within COGSA’s
definition). Logitrans also entered into a contract of carriage with Dimond. It
signed the Bill of Lading and is identified as the “carrier.” Accordingly,
Logitrans is also a carrier. See Bunge Edible Oil Corp., 949 F.2d at
788; Nitram, Inc., 599 F.2d at 1370. Because we conclude that BDP and
Logitrans are “carriers” within the meaning of COGSA, there is no need to
address the Himalaya Clause.
(…) The district court ruled that there was no
basis to apply equitable estoppel because COGSA does not include licensure
provisions. Dimond Rigging, 320 F. Supp. 3d at 953–54. To be sure, COGSA
does not supersede rights and obligations set forth in other federal statutes. See
46 U.S.C. § 30701 (Notes §§ 8, 12). COGSA establishes “particularized
duties and obligations upon, and grants stated immunities” to carriers. Robert
C. Herd & Co. v. Krawill Mach. Corp., 359 U.S. 297, 301 (1959). We
explained in Fortis Corp., 597 F.3d at 789, that COGSA “was drafted to
address the belief that carriers used their superior bargaining power against
shippers when contracting for the carriage of goods, and could often dictate
the terms of bills of lading to exempt themselves from any liability.”
Nonetheless, the district court was quite correct that COGSA does not concern
itself with licensing.
(…) FMC regulations concerning licensing,
particularly 46 C.F.R. § 515.3, which provides: “Except as otherwise provided
in this part, no person in the United States may act as an ocean transport
intermediary unless that person holds a valid license issued by the
Commission.”
(…) Hague-Visby refers to the 1924 International
Convention for the Unification of Certain Rules of Law Relating to Bills of
Lading, which was subsequently modified by the Hague-Visby Amendments of 1968. See
Royal Ins. Co. of Am. v. Orient Overseas Container Line Ltd., 525 F.3d 409,
413 (6th Cir. 2008).
(U.S. Court of Appeals for the Sixth Circuit,
January 25, 2019, Dimond Rigging Company, LLC v. BDP International, Inc.;
Logitrans International, LLC, Docket No. 18-3615, Boggs, Circuit Judge,
recommended for full-text publication)
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