COGSA
Carriage of Goods by Sea Act or COGSA
Applies only to shipments evidenced by bill of lading
Period of coverage: “the time when the goods are loaded on to the time they are discharged from the ship”
Unless… Warehouse-to-warehouse clause or marine extension is incorporated to bill of lading
Use of stevedore companies (third party companies) by common carriers - to move the goods to and from the ship and to load and off load the goods – protected through the use of a Himalaya clause.
COGSA (Himalaya Clause)
No servant or agent of the Carrier (including every independent contractor from time to time employed by the Carrier) shall in any circumstances whatsoever be under any liability whatsoever to the Merchant (shipper). Every right, exemption, defense and immunity whatsoever nature applicable to the Carrier shall also be available and shall extend to protect every such servant or agent of the Carrier.
COGSA
Primary objective: To limit the liability of the common carrier while at the same time ensuring a claim for damages by shippers.
$ 500 limit per package
17 exemptions that fully exempt the common carrier from all liability for damage or loss of goods. = If loss relates to a number of enumerated duties (eg. Failure to perform due diligence, material deviation, or fair opportunity)
As to Package
Definition: “where a container, pallet, or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units.”
How about goods NOT PACKED for shipment?
Customary Freight Unit (CFU) -
tons (coal)
-
cubic yards (wheat)
-
barrels (oil)
$500 Per Package or more
If value of goods < $500 per package, carrier liable only for the lesser amount.
If value of goods > $500 per package but not declared, carrier’s liability capped at $500 per package only.
Determination of value of goods: Commodity exchange price, current market price, or “the normal value of goods of the same kind and quality”
= Declaration of higher value by shipper on bill of lading - cap of $500 per package is overridden.
Carrier Duties
Mandatory requirements: -
Issuance of Bill of Lading
-
Inclusion of basic information including “leading marks” provided by shipper for identification of goods
=
prima facie evidence – goods were so delivered to the carrier; carrier becomes guarantor of the information provided.
COGSA – Claim for Loss
If goods delivered - not in condition as stated on the bill of lading or there is a shortage as to quantity =
burden of proof – presentation of bill of lading
Two procedural requirements: 1.
notice of loss – at port of discharge or at the time of receiving the goods from carrier.
2. If loss not apparent at the time of receiving the goods, then notice must be given in writing within 3 days. =
failure to give notice– prima facie evidence that goods received were as indicated on the bill of lading.
=
One-year statue of limitations to commence suit.
Seaworthiness
Due diligence in the preparation and inspection of the ship to ensure its seaworthiness -
Done before ship departs from port of shipment
= Seaworthiness determination – at time of departure
What if ship becomes unseaworthy after it leaves port? -- remains protected under COGSA
= Four parameters (as to seaworthiness):
1. appropriate for the type of carriage 2. must be properly equipped for the ‘reception, carriage, and preservation’ of the goods 3. competent crew, properly trained to operate the ship and its equipment
4. carrier must properly and carefully load, handle, stow, keep and discharge the goods carried.
COGSA Coverage COGSA
Hamburg
Liability
Limits liability of the carrier to the time frame represented from ‘tackle to tackle’ or from time of loading to time of discharge
Extended period of responsibility to include when the goods are in the control of the carrier but not on the ship
Carrier definition
Reference to ‘carrier’; Applies only to shipments covered by a bill of lading
Any person by whom a contract of carriage of goods by sea has been concluded with a shipper
Burden of proof
Shipper
Carrier presumed at fault
Limitation
Within 3 days; 1 yr statue of limitations
Within 1 working day; 2 yrs.
Removal of carrier’s liability limitation under the per package rule
Three areas (full liability for all damages): A. Material Deviation -
above-deck carriage of goods
-
change in the expected route of the ship
= Clause Paramount - common carrier generally prevents a material deviation claim for above-deck carriage by inserting such clause in the bill of lading.
Clause Paramount The bill of lading shall have effect subject to all the provisions of the Carriage of Goods by Sea Act of the United States. The defenses and limitations of said Act shall apply to goods whether carried on or under the deck (1), to carriage of goods between U.S. ports, or between non-U.S. ports (4), before the goods are loaded on and after they are discharged from the vessel, and throughout the entire time the goods are in the actual custody of Carrier (2), whether acting as carrier, bailee, or stevedore (3).
Clause Paramount Carrier shall be entitled to the full benefit of all rights and immunity under and all limitations and exemptions from liability contained in any law of the United States or any other place whose law shall be compulsorily applicable. If any term of this bill of lading be repugnant to the Carriage of Goods by Sea Act or any other law compulsorily applicable, such term only shall be void. This bill of lading shall be construed and the rights of the parties determined according to the laws of the United States (5).
Clause Paramount
The clause does more than simply extend COGSA to abovedeck carriage (1).
It also extends COGSA’s coverage beyond tackle-to-tackle to the entire period that the goods are in the possession of the carrier (2).
It extends COGSA protection to all third parties involved with the transport of goods by sea including stevedores (3) [Himalaya Clause].
It preempts the application of the Harter Act extending coverage to shipments between U.S. ports (4).
It selects U.S. law to be used to interpret carrier’s obligations and liabilities under the bill of lading (5) [choice of law].
Removal of carrier’s liability limitation under the per package rule B.
Fair Opportunity - shipper not given a fair opportunity to declare a higher per package value for the goods. =
carrier – initial burden of producing prima facie evidence that demonstrates that it provided notice of a choice of liabilities and rates to the shipper (incorporation of the language of COGSA Section 4(5)) C.
Misdelivery of goods = carrier obligated to deliver the goods ONLY to the holder of the bill of lading
= carrier becomes bailee of the goods until they are delivered to the holder of the bill of lading.
COGSA Exemptions a.
Act, neglect, or default of master or employees in the navigation or in the management of the ship
b.
Fire
c.
Perils of the sea
d.
Act of God
e.
Act of war
f.
Act of public enemies
g.
Arrest or restraint or seizure under legal process
h.
Quarantine restrictions
i.
Act or omission of the shipper or owner of the goods
j.
Strikes, lockouts, or stoppage of labor
COGSA Exemptions
k.
Riots and civil commotions
l.
Saving or attempting to save life or property at sea
m.
Wastage in bulk or weight or any other loss arising from inherent vice of the goods
n.
Insufficiency of packing
o.
Insufficiency of marks
p.
Latent defects not discoverable by due diligence
q.
Any other cause arising without actual fault or privity of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception.
Q-clause exception
‘catch-all’ exception -- grants the carrier a general exemption for any damages that arise from a cause that was not the ‘actual fault of the carrier or those of the agents or servants of the carrier.’ = burden of proof – on the carrier to prove the absence of contributory negligence.
Freight Forwarders and Multimodal Transport Operations
Freight Forwarders: =
Three vital functions for importers & exporters:
a.
arrange for the shipment of goods with carriers
b.
act as a freight consolidator
c.
process required documentation
MultiModal Transport Operators (MTOs): =
combined transport using different modes of transport such as sea, rail, road and air.
=
through bill of lading - an ocean carrier agrees to transport goods to their final destination.
