The Court of Appeals for the Ninth Circuit just issued its opinion in the case of Mazda Motors of America, Inc. v. M/V Cougar Ace (opinion here).
The legal issue is whether a defendant in rem can assert a contract right despite being a non-party to the contract. The clause in question was a forum selection clause.
This case arises out of the M/V Cougar Ace mishap (depicted here)
The bills of lading for the cargo had a forum selection clause requiring that disputes be resolved in Tokyo, Japan. The ship itself was not a party to the bills of lading, but was named as a defendant in a proceeding brought in Portland, Oregon. The bills of lading had a Himalaya clause which provided:
The Merchant undertakes that no claim or allegation shall be made against any servant, agent or Sub- Contractor of the Carrier which imposes or attempts to impose upon any of them, or upon any vessel owned or operated by any of them, any liability whatsoever in connection with the Goods, and, if any such claim or allegation should nevertheless be made, to indemnify the Carrier against all consequences thereof. Without prejudice to the foregoing, every such servant, agent and Sub-Contractor shall have the benefit of all provisions herein benefiting
the Carrier as if such provisions were expressly for their benefit; and in entering into this contract, the Carrier, to the extent of those provisions, does so not only on its own behalf, but also as agent and trustee for such servants, agents and Sub-Contractors.
The Himalaya clause contractually allows non-parties to assert rights under the contract. The Ninth Circuit's opinion seemed compelled by the Supreme Court's 2004 decision in the Norfolk Southern Railway Co. v. Kirby decision. The unanimous decision required an expansive view of Himalaya clauses (which theretofore had been construed narrowly). Justice O'Connor stated:
The Court of Appeals' ruling is not true to the contract language or to the intent of the parties. The plain language of the Himalaya Clause indicates an intent to extend the liability limitation broadly — to "any servant, agent or other person (including any independent contractor)" whose services contribute to performing the contract. App. to Pet. for Cert. 59a, cl. 10.1 (emphasis added). "Read naturally, the word `any' has an expansive meaning, that is, `one or some indiscriminately of whatever kind.'" United States v. Gonzales, 520 U. S. 1, 5 (1997) (quoting Webster's Third New International Dictionary 97 (1976)). There is no reason to contravene the clause's obvious meaning. See Green v. Biddle, 8 Wheat. 1, 89-90 (1823) ("[W]here the words of a law, treaty, or contract, have a plain and obvious meaning, all construction, in hostility with such meaning, is excluded"). The expansive contract language corresponds to the fact that various modes of transportation would be involved in performing the contract. Kirby and ICC contracted for the transportation of machinery from Australia to Huntsville, Alabama, and, as the crow flies, Huntsville is some 366 miles inland from the port of discharge. See G. Fitzpatrick & M. Modlin, Direct-Line Distances 168 (1986). Thus, the parties must have anticipated that a land carrier's services would be necessary for the contract's performance. It is clear to us that a railroad like Norfolk was an intended beneficiary of the ICC bill's broadly written Himalaya Clause. Accordingly, Norfolk's liability is limited by the terms of that clause.
Apparently, there had never been a reported decision of an in rem defendant being protected by the Himalaya clause...till today.
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