06/26/22 1 Prepared by: Su Thiri Khin (Cynthia)
04/08/23 1
Prepared by: Su Thiri Khin (Cynthia)
Overview Liability of International Air Carriage
Warsaw Convention 1929 Provisions as amended in 1955 at The Hague and in 1975 in Montreal Enforcing the Warsaw Convention
Liability of Carriage of Goods by Sea Carriage of Goods by Sea Act 1924
Principles Exceptions to liability Defenses to Liability The Cargo Shortage Problem “Package” Limitation Other Provisions
Amendments to Hague Rules Liability of Transport Intermediaries
Ocean Shipping Reform Act 1998 Marine Cargo Insurance
Insurance Losses and Coverage Websites
2
Liability of International Air Carriers: Warsaw ConventionGeneral Principle: Air Carrier is presumptively
liable for all damage to cargo UNLESS the airline shows:Not at fault or negligentShipper was negligent
Air Carrier liable for death or bodily injury
resulting from accident aboard aircraft or in boarding or disembarkingAccident: event that is peculiar risk of air
travel and “external” to passengerWarsaw Convention is exclusive remedy
3
Warsaw Convention Provisions (As Amended)
Limits liability of Air CarrierFor death or bodily injury, 1999 Montreal
Convention abolished $75K limit; carrier strictly liable for 100K SDR (Subject to contributory negligence)
Carrier liable for damages beyond 100K SDR unless unless: Not due to negligence of airline, employees or
agents Due to negligence or wrongful acts of 3rd
parties
4
Warsaw Convention Provisions (As Amended)
Liability for Cargo Loss or DamageProtocol 4 of 1999: Carrier liable unless due to:
Inherent defect, quality or vice of cargo Defective packaging not by carrier Act of war or armed conflict Act of public authority Contributory negligence of shipper
Cargo: Liability limited to 17 SDR per Kg unless shipper declares higher value ( and pays additional fee if required) Limitation doesn’t apply if damage due to
intentional act or act done recklesslyBaggage: Liability limited to 1000 SDR per
passenger unless has declared higher value; can’t recover more than actual value
5
Enforcing Warsaw ConventionSuits can only be brought in countries that
are signatoriesWhere ticket purchased, final destination or where
carrier has principal place of businessMontreal Convention: suits for death or injury in
passenger’s principal residence if carrier operates there
Time LimitsMust file notice:
Cargo or baggage damage: notify within 7 days of receipt of checked luggage, 14 days from receipt of cargo
Delay of baggage or cargo: notify in writing no later than 21 days from date of actual delivery
Must file suit against air carrier within 2 years
6
Liability for Carriage of Goods by Sea
Historically, carrier absolutely liableCarriers used exculpatory clausesLegal limitations on such clausesHague Rules – 1924 Convention defines liability for
ocean carriersUS Carriage of Goods by Sea Act codifies Hague Rules
Covers liability from loading to unloading (“tackle to tackle”)
Parties can extend application beyond “tackle to tackle” by provisions in Bill of Lading (B/L)
Invalidates all exculpatory clauses in B/LForum selection and arbitration clause in B/L valid –
Vimar Seguros y Reaseguros S.A. v M/V Sky Reefer (USSC
7
COGSA PrinciplesCarrier must use due diligence in
providing seaworthy vessel at beginning of voyageCarrier liable for failure to use due
diligenceBut carrier not liable for damage due to
fire, storms, and negligence in navigating or managing ship
8
COGSA PrinciplesDelivery of damaged cargo: shipper must give written
notice to carrier at port of dischargeFor visible damage: give notice before or at time
goods taken from carrier’s custodyIf damage not apparent or visible, give written notice
within 3 days of deliveryFailure to give notice creates presumption goods
delivered in good conditionSuit must be brought within 1 yearP must show goods loaded in good condition and lost or
unloaded in damaged conditionClean B/L establishes presumption goods delivered to
carrier in good condition – shifts burden to carrierProblem with sealed containers: clean B/L only
establishes outer condition of container
9
COGSA Exceptions to LiabilityErrors in ship
navigation or management
Fire (unless carrier’s fault)
Perils of the seaAct of GodAct of warActs of public
enemiesLegal seizureQuarantine
Acts of shipperLabor strikesRiotsSaving life or
property at seaInsufficient packingInherent defect in
goodsInadequate marking
of goodsLatent (hidden)
defects in ship10
“Warranty of Seaworthiness”: ship reasonably fit to carry cargo undertaken on intended journeyCompetence of crew, suitability of equipment,
etc.Carrier responsibility for proper loading, storing
and carrying, and unloading goodsMay presume unseaworthy if breaks down shortly
after departureErrors in Navigation or Management of ship:
carrier not liable for errors of master, mariner, pilot or crew memberDepends on severity of storm and how cargo
damagedNegligence of crew may void defense 11
COGSA Defenses to Liability
Q-Clause Defense: general exception holding carrier not liable if carrier can prove it wasn’t at fault and show what was the cause of loss
Shipper Liability for Hazardous Cargo: shipper strictly liable for shipping inherently dangerous goods when neither shipper nor carrier had actual knowledge or danger, Senator Linie GmbH & Co. Kg. V. SunwayLine, Inc. (2nd Cir. 2002)
12
COGSA Defenses to Liability
The Cargo Shortage ProblemCarrier may be responsible unless can
use Q clause defenseP must establish that shortage
occurred while goods in carrier’s custody:P can show weight or quantity at
destination less than that listed on B/LDisclaimer – “shipper’s weight”- on B/L
not recognized by court Westway Coffee Corp. v. M.V. Netuno (SDNY ’81) But Plastique Tags, Inc. v. Asia Trans Line, Inc.
(11th Cir. 1996)13
COGSA “Package” LimitationLimits carrier liability to $500 per
package or customary freight unit unless shipper declares (and pays for) higher valueContainer not package under COGSA if
contents and number of units disclosed on B/LZ.K. Marine v. M/V Archigetis (SDFl 1991): is
yacht a “package”?COGSA limitations generally don’t apply
to goods carried above deck – but parties can provide for coverage in B/L (clause paramount)
14
Other COGSA ProvisionsCOGSA holds carrier liable for a
material deviation unless necessary to save lives or property at seaMaterial deviation from terms of B/L causes
carrier to lose protection under COGSAStowage of cargo above deck unless B/L so
provides is material deviation – but not for sealed container
Himalaya Clauses: clause in B/L extending Hague Rules protection to agents, indpt. contractors, etc.Recognized in USNot recognized in UK and Canada
15
Amendments to Hague RulesHamburg Rules: 1978 Convention
Not adopted by USWould hold carrier liable for negligence and errors of
navigation or management of shipRules opposed by insurance companies and carriersSo far, most of endorsing states have been developing
countries Visby Amendments to Hague Rules
Not adopted by USRaised liability per package to approx. $1000Carrier liable for losses from recklessness in operation
and navigationAdopted by UK, Canada, Singapore, Japan, Western
European Countries
16
Liability of Transport Intermediaries
Freight Forwarders: act as agent of shippersUS: must be licensed to operate; regulated by US
Fed. Maritime Comm. and Int. Air Transport Assoc.May also act as Customs BrokersMust post bond and have power of attorneyPrima US Inc. v. Panalpina, Inc. (2nd Cir. 2000): FF
not liable for cargo during shipment
Non-Vessel Operating Common Carriers: act as freight consolidators for smaller shippersIssue B/L Liable for loss or damage to goods during transport
17
Ocean Shipping Reform Act 1998Amends Shipping Act of 1984 to allow
carriers greater flexibility in contractingCarriers can enter “service contracts”: confidential
bargained freight rates instead of posted tariff schedules
Service contracts function as contracts of carriage – no need to issue B/L
Carriers not acting as common carriers, so not subject to COGSA; can negotiate own liability terms
Ocean carriers exempted from antitrust lawsCarriers must treat FF’s and NVOCC’s as shippersCarriers may not unreasonably refuse to deal or
negotiate with shippers or intermediaries
18
Marine Cargo Insurance
Large volume shippers maintain open cargo policiesExporter authorized by insurer to issue
certificate of insuranceUsed under CIF contractsUS: certificate of insurance acceptable
substitute for insurance policy; incorporated in UCC
UK: certificate of insurance not substitute General average ( average means loss): loss
that results when extraordinary expenses or losses result in saving the cargo or vessel at sea
19
Insurance Losses and Coverage Policies cover total loss of all or part of shipment General average loss: incur loss or extraordinary expenses in
saving vessel or cargo from real and substantial danger at sea York-Antwerp Rules of 1950: accepted principles of general
average – incorporated into B/L’s Particular average loss: partial loss to cargo
Depends on policy provisions: “free of particular average” (FPA) means no coverage for partial losses
Coverage: Perils Clause: covers basic risks of ocean voyage; fortuitous
losses only All Risks Coverage: covers risks except those particularly
excluded War Risks: typically not covered but available for ocean
shipments Shaver Trans. Co. v. The Travelers Indemnity Co. (S. Ore. 1979):
FPA and standard perils coverage, shore coverage clause, Inchmaree clause 20
Web Sites
21