Carriage of Cargo on Deck: An Update— Lessons from AGCS Marine Insurance Co. v. M / V Imabari Logger
Two bills of lading governed the shipment: one issued by the vessel owner and one issued by the NVOCC. Both bills of lading contained broad“ shipper’ s risk” clauses purporting to exonerate the carriers from any liability for loss or damage to on-deck cargo,“ howsoever caused and even if caused by owners’ negligence or unseaworthiness of the vessel.” Critically, neither bill of lading expressly extended COGSA to on-deck cargo.
NOE S. HAMRA Partner
THOMAS H. BELKNAP, JR. Partner
Introduction In April 2022, we published an article titled“ Carriage of Cargo on Deck: Carriers Be Aware,” in which we discussed the legal risks carriers face when transporting cargo on deck under bills of lading governed by United States law. That article highlighted a critical but frequently overlooked point: neither the Hague Rules nor the United States Carriage of Goods by Sea Act(“ COGSA”) applies to cargo that the contract of carriage states is being carried on deck and is so carried. We recommended that carriers include express language in their bills of lading incorporating COGSA into on-deck carriage so as to avail themselves of the statute’ s defenses and limitation of liability. Since that article was published, the United States District Court for the Southern District of New York has issued a significant ruling in AGCS Marine Insurance Co. v. M / V Imabari Logger, No. 22-CV-9283( S. D. N. Y. 2024), that reinforces the very concerns we raised and offers new practical guidance for carriers and their counsel.
Background The dispute in the Imabari Logger case arose from the shipment of 50 large pumping units from China to the United States. The machines, which had a total cost value of approximately $ 5.85 million, were carried on the vessel’ s deck. During the transpacific voyage, 26 of the machines were lost overboard and others sustained damage. The cargo interests, the purchaser, and its subrogated insurer, brought claims in admiralty against the vessel, the non-vessel operating common carrier(“ NVOCC”), and the freight forwarder.
1
No. 95 Civ. 2174, 1997 WL 291834( S. D. N. Y. June 2, 1997).
2
259 F. Supp. 857, 865( S. D. N. Y. 1966).
The Harter Act Governs On-Deck Cargo Consistent with our prior article, the Court confirmed that because both bills of lading stated the cargo was being carried on deck, COGSA, by its own terms, did not apply. The Court then addressed a question left somewhat open in the precedent: whether the Harter Act continues to apply to on-deck cargo during the tackle-to-tackle period, notwithstanding COGSA’ s general supersession of the Harter Act for international shipments. Relying on Second Circuit authority in Sompo Japan Insurance Co. v. Union Pacific Railroad Co., 456 F. 3d 54( 2d Cir. 2006), and district court decisions including Saudi Pearl Insurance Co. v. M. V. Aditya Khanti 1 and Blanchard Lumber Co. v. S. S. Anthony II, 2 the Court held that the Harter Act continues to regulate on-deck cargo in international trade during the tackle-to-tackle period where COGSA does not apply.
Exoneration Clauses Voided, but Limitation Clauses Upheld Having determined that the Harter Act governs, the Court reached a conclusion that should give every carrier pause. The broad exoneration clauses in both bills of lading were declared void under the Harter Act. The Harter Act prohibits carriers from inserting provisions in a bill of lading that avoid liability for loss or damage arising from negligence or fault in loading,
Having determined that the Harter Act governs, the Court reached a conclusion that should give every carrier pause. The broad exoneration clauses in both bills of lading were declared void under the Harter Act.
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