In a case of major importance for ocean liner carriers and the railroad industry the United States Supreme Court issued a decision on June 21, 2010 holding that the Carmack Amendment does not apply to a shipment originating overseas under a through bill of lading. Kawasaki Kisen Kaisha Ltd, et al v. Regal-Beloit Corp.
The case before the Court involved container shipments that started with ocean transport from China to Long Beach, which was then followed by transfer to a rail carrier in the United States. A train derailment in Oklahoma resulted in damage to the cargo. The through bill of lading was issued by the ocean carrier and contained a Himalaya Clause extending the benefit of the carrier's rights to the railroad. When suit was filed for the cargo loss in a federal district court in California, the ocean carrier and railroad moved to dismiss based on a Tokyo, Japan forum selection clause.
The Supreme Court's decision permits the ocean carrier and railroad to enforce the forum selection clause. The Court held that the Carmack Amendment does not apply to a shipment originating overseas under a single through bill lading. Instead, COGSA applies and, as stated by the Court, "the terms of the bill govern the parties' rights." In so holding, the Supreme Court reversed a decision of the United States Court of Appeals for the Ninth Circuit. The Court's decision relies heavily on its prior decision in Norfolk Southern R. Co. v James N. Kirby, Pty Ltd., 543 U.S. 14 (2004) and also should preserve to the ocean carrier and the railroad in such cases that benefit of the COGSA package limit with respect to the cargo claims.
For more information about the decision, please contact John Kimball or Lora Epstein. To read the case, click here.
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