The Ninth Circuit just issued a decision interpreting a bill of lading in light of the Carriage of Goods at Sea Act (COGSA). The decision is in the APL Co. Pte. Ltd. v. U.G. Co., Inc. case which can be downloaded here. The facts are a bit convoluted, but not surprising in the global maritime trade.
U.G. is a California company that bought hair spray and mousse from UK Aerosols, an English company; via Kamdar, an Illinois purchasing agent. UK requested APL, a Singapore company, to ship the cargo from Turkey to Long Beach. APL issued a bill of lading listing APL as carrier, UK Aerosols as shipper and Kamdar and U.G. as "notify party." The bill of lading had a provision that required the "merchant" to indemnify APL from losses caused by the manner in which the goods were packed. The "merchant" was defined as the shipper, holder of the bill of lading and owner of the cargo. The bill also required indemnity related to hazardous nature of any cargo. Finally, the bill required that any matter not included in the bill be resolved by Singapore law.
The goods arrived in Long Beach in a "leaking, dangerous and hazardous" condition and APL spent $700,000 cleaning and disposing of the shipment.
The first issue decided relates to the definition of "shipper" under COGSA. COGSA provides that "the [s]hipper shall not be responsible for loss or damage sustained by the carrier or the ship arising or resulting from any cause without the act, fault, or neglect of the shipper, his agents, or his servants." So, the issue is were U.G. and Kampar "shippers" under COGSA such that they would be immune from liability for APL's cleanup expenditures.
The court said no, U.G. and Kampar were not shippers under COGSA. The court, relying on the context of the statutory scheme (in the absence of an express definition), found that COGSA immunity was limited to parties listed as "shippers" on the bill of lading. Because U.G. and Kampar were not so noted, they were not immune under COGSA.
Second, the court addressed the merchant indemnity provision in the bill of lading. U.G. and Kampar tried to argue that the term was void because it conflicted with COGSA. Section 1303(8) of COGSA states, "any clause ...in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from the negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect." The court found the provision not voided by COGSA because it does not impose strict liability on the shipper. This clause of the bill of lading is triggered when a person other than the carrier is negligent. Ergo, APL's liability was not lessened by this provision.
Finally, the court addressed an issue of foreign law and the availability of attorney's fees for the prosecution and defense of this dispute. In U.S. federal law, under the "American Rule," litigants must pay their own attorney's fees. This rule is obviated by numerous federal and state statutes and parties can contract around it, but it remains the default. Singapore is apparently an "English Rule" jurisdiction which provides that prevailing parties are entitled to an award of their attorney's fees. Because COGSA and the bill of lading were silent as to attorney's fees to prevailing party and because the bill of lading chose Singapore law to fill in the blanks, the court found that Singapore law had to be addressed and the trial court erred by not applying Singapore law and the "English Rule."
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