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Through Transport - Another US Supreme Court Admiralty Decision about a Train Wreck

SSM Roundel

Steamship Mutual

Published: September 01, 2010

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Kawasaki Kisen Kaisha Ltd.v Regal-Beloit Corp.: In June 2010, the U.S. Supreme Court resolved a split between the U.S. Courts of Appeals as to whether a law regulating railroad carriage of goods, the Carmack Amendment (“CA”), applied to the inland portion of an international shipment under a through bill of lading and thereby “trumped” the forum selection clause in it.  The Ninth Circuit Court of Appeal held that it did.  It reversed the trial court which had granted a motion to dismiss on the basis that “K” Lines’ “Tokyo District Court” and Japanese law clause was reasonable and applicable to the inland rail carrier, Union Pacific, based on the Himalaya clause in the “K” Lines’ through bills of lading.  That court was, in turn, reversed by the Supreme Court, in a ruling that now is binding on all lower federal courts.

The Facts

The Ninth Circuit had followed the Second Circuit (Sompo Japan Ins. Co. v Union Pacific R. Co., 456 F.3d 54 (2d Cir. 2006)) so perhaps it is not entirely surprising that the newly elevated judge from that court, J. Sotomayor, wrote the dissent, in which Justices Ginsburg and Stevens joined.  She considered the CA’s language to have an “expansive intent to provide the liability regime for rail carriage of property” within the US so that it, and not the bill of lading, would govern. She concluded, quoting from Kirby: “It is not … this Court’s task to structure the international shipping industry.” 

Conclusion

The decision providing COGSA protections under a Himalaya clause and for enforceability of reasonable forum selection clauses to U.S. inland rail carriers under through bills of lading (where the carriage of cargo starts overseas) is a singular vindication of COGSA and of its importance to “the international shipping industry”, including its sub-contractors.   

 

Article by Jeremy Harwood of Blank Rome LLP, New York. The reference in the title is to the description used by the Court in Kirby.

https://www.steamshipmutual.com/pdf.htm?id=277923&pdf=true

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