Extent of Liability of NVOCC and/or vessel
LET me share with you a very interesting story
which happened in another juris-diction.
In 1990 in Japan, Bubble Line Ltd (a non-vessel
operating common carrier whose principal place
of business is in London) contracted with Otel
(container leasing company) to transport empty
refrigerated containers of the latter from Japan
to Georgia, US. A Conline Booking Note evidencing
the terms and conditions of the shipment including
the clause “English law to apply”
was subsequently issued by Bubble Line Ltd. A
bill of lading was issued and delivered by Bubble
Line Ltd to Otel. The B/L contained a General
Paramount Clause providing for the application
of the Hague Rules in some situations and for
the incorporation of the Hague-Visby Rules in
others, where applicable.
As an NVOCC, Bubble Line Ltd contracted with
Modern Carriers Ltd whose principal place of business
was in Amsterdam (owner of the M/V TICAN) for
the actual carriage of the containers. Modern
Carriers Ltd and Bubble Line Ltd executed a Conline
Booking Note and a B/L containing the terms and
conditions almost identical to those found in
the Bubble Line Ltd/Otel Conline Booking Note
and B/L.
The M/V TICAN made an unscheduled stop in Panama
and the containers were re-stowed. During the
trip from Panama to Georgia, the containers came
loose during heavy weather causing severe damage
to some of the containers.
Otel subsequently sued Modern Carriers Ltd and
Bubble Line Ltd in the District Court for the
Southern District of Georgia seeking to recover
damages sustained by the containers. Bubble Line
Ltd filed a cross-claim for indemnity against
Modern Carriers Ltd.
The District Court held that Bubble Line Ltd
was liable to Otel under the Hague-Visby Rules.
But the Court likewise ruled that Bubble Line
Ltd is entitled to indemnity from Modern Carriers
Ltd under the US COGSA which contains a lower
cap on liability than the Hague-Visby Rules.
Hence, Bubble Line Ltd interposed an appeal to
the Circuit Court of Appeals contending that the
agreements of the parties were intentionally created
as “back to back” contracts to be
governed in all aspects by the same statutory
regime.
The Circuit Court of Appeals ruled in the following
tenor:
“x x x. While the General Paramount Clause
suggests the application of Japanese COGSA, we
nonetheless agree with the district court’s
conclusion that the liability limits of the Hague-Visby
Rules, as enacted in England, apply to the Bubble
Line Ltd/Otel agreement. First, Clause 3 in the
Bill of Lading (forum selection clause) states
that any dispute arising under the Bill of Lading
shall be decided in the country of the carrier’s
place of business. The “carrier” for
the purposes of the Bubble Line Ltd/Otel agreement
is Bubble Line Ltd, whose principal place of business
is London. Thus, Clause 3 points toward the application
of English law. Second, Clause 10 (“English
law to apply”), which is contained in the
typewritten addendum to the Booking Note, calls
for the application of English law.
x x x
As with the Bubble Line Ltd/Otel contract, the
B/L was issued in Japan and the country of shipment
was Japan. Both these facts suggest the application
of the Japanese COGSA liability scheme, which
does not include the Hague-Visby Rules. However,
the Modern Carriers Ltd/Bubble Line Ltd agreement,
like the Bubble Line Ltd/Otel agreemet, also contains
Clause 10, the typewritten term added by the parties
stating “English law to apply”. Therefore,
the only ground for distinguishing between the
Bubble Line Ltd/Otel situation and the Modern
Carriers Ltd/Bubble Line Ltd situation is Clause
3 (forum selection clause), which provides for
the application of the law of the carrier’s
principal place of business. The “carrier”
for purposes of the Modern Carriers Ltd/Bubble
Line Ltd was Modern Carriers Ltd, whose principal
place of business is Amsterdam rather than London.
Thus, Clause 3 calls for the application of Dutch
law. Clause 3, however, is an inadequate ground
upon which to distinguish the Bubble Line Ltd/Otel
contract from the Modern Carriers Ltd/Bubble Line
Ltd contract for two reasons First, Clause 3 specifies
that “(a)ny dispute . . . shall be decided
in the country where the carrier has his principal
place of business and the laws of such country
shall apply, except as provided elsewhere. Clause
10, a typewritten phrase added by the parties,
specifically provided for the application of English
law. Second, even if Clause 10 were eliminated,
the Netherlands, like England, has adopted the
Hague-Visby Rules. Thus, even if the liability
limits of the contract were governed by Dutch
law, the higher liability limits contained in
the Hague-Visby Rules would nevertheless apply.
We therefore conclude that Clause 3 is not an
appropriate ground upon which to distinguish the
Bubble Line Ltd/Otel agreement from the Modern
Carriers Ltd/Bubble Line Ltd agreement. If anything,
Clause 3 evidences an intent to abrogate the liability
limits of the US COGSA in favor of a foreign statutory
scheme with a higher liability limits.”
Thus, the liability of an NVOCC and/or the vessel
is governed by the terms and conditions of the
agreement/s )booking note/bill of lading) executed
by the parties concerned.
For comments or inquiries, the writer may
be reached at jtb@pac-atlantic.com.ph
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Forwarder’s
liabilities to shippers
IS a freight forwarder liable to damages caused
by a shipment it contracted to transport?
NO. Let me share with you a story that happened
in another jurisdiction.
NAPINA, a freight forwarder, was contracted by
W Electric for the transportation of a transformer
from the manufacturer in Italy to the ultimate
consignee in the United States. The former was
to oversee transportation of the shipment by land
and sea but it did not issue a bill of lading.
From a factory in Melegano, Italy, the transformer
was brought to the Port of Genoa for an ocean
trip to the US. As the transformer was oversized,
it had to be secured to a 40-foot “flat-rack”
container. NAPINA hired a local stevedoring company
to load the transformer into the container and
to lash it securely for the ocean trip via the
M/V “Adi”.
The MV “Adi” encountered heavy seas.
The transformer that was negligently lashed, broke
loose and crushed a cutting machine. The insurer-subrogee
of the damaged cutting machine filed a complaint
against the MV “Adi”, W Electric and
NAPINA. A fourth-party action was also filed by
W Electric against NAPINA for indemnification.
The district court found NAPINA liable to W Electric
as the negligence of the stevedore in lashing
the transformer was imputed to NAPINA.
But NAPINA appealed the case contending it was
only a freight forwarder and should not be made
liable to the shipper, W Electric.
The appellate court ruled in the following tenor:
“NAPINA did not issue a bill of lading
and it did not consolidate cargo. It was hired
by W Electric simply as a freight forwarder to
arrange for the transportation of a transformer
from Italy to Iowa. By analogy, NAPINA was hired
to act as a “travel agent” for the
transformer: it set things up and made reservations,
but did not engage in any hands-on heavy lifting.
x x x.
x x x. NAPINA was a freight forwarder, hired
by W Electric to arrange for transportation and
incidental services, and to select the companies
that would perform those tasks. It was not a carrier,
and is therefore not responsible for the damages
caused by the poorly lashed transformer. x x x”.
In my view, had NAPINA issued a bill of lading,
the ruling of the appellate court would have been
different. NAPINA would have been considered as
a carrier in the context of maritime law and liable
to the shipper.
For comments or inquiries, the writer may
be emailed at jtb@pac-atlantic.com.ph.
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Channel Archive : 2007 Q4
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