Carriers often mount efforts to extend the defenses and protections they enjoy under the Carriage of Goods by Sea Act to their agents and subcontractors.
Carriers often attempt to extend the defenses and protections they enjoy under the Carriage of Goods by Sea Act (COGSA) to their agents and subcontractors with what’s called a “Himalaya clause.” (The name comes from a 1954 English Court of Appeal decision that revolved around a personal injury to a passenger injured in a fall from a gangway to a ship called the S.S. Himalaya.)
In early 2016, Global Oil Tools was negotiating the sale of a large number of tools for oil and gas exploration and related intellectual property allegedly worth $2.4 million to an overseas buyer.
In anticipation of the sale, Global packed the tools into two shipping containers and contracted with non-vessel-operating common carrier Expeditors International of Washington Inc. to arrange for their shipment to Romania.
Expeditors arranged to have the containers sail from the Port of New Orleans on March 12, 2016, aboard a Hapag-Lloyd ship.
The containers arrived in New Orleans on March 8, but Global, through Expeditors, requested Hapag-Lloyd delay the transatlantic shipment for two weeks and then asked for a second two-week delay.
Expeditors passed on the request, but Hapag-Lloyd failed to relay it to defendant Ports America, the stevedoring company responsible for loading the containers.
The containership Bavaria sailed from New Orleans with Global’s containers on board. After the ship departed, Global agreed to have the containers discharged in Constanta, Romania. The containers were transshipped in Cagliari, Italy, and arrived at Constanta on April 23.
The sale was never consummated, and the containers remained in Constanta. And some of the tools purportedly were damaged during transit.
Global sued Expeditors and Zurich American Insurance Co., Expeditors’ liability insurer, on Nov. 15, 2016, for damages and declaratory relief. Later, it added Hapag-Lloyd, Ports America and Andrea Merzario S.A., the agent for Romarftrans Group and intermediate agent for Global in Romania, as defendants.
Several of the defendants filed crossclaims and counterclaims. Hapag-Lloyd moved for summary judgment on Global’s claims. Ports America moved for summary judgment on Global’s claims and Expeditors’ and Andrea Merzario’s crossclaims. Global and Expeditors filed opposing motions, but Andrea Merzario did not.
Hapag-Lloyd and Ports America sought summary judgment, stating they were protected by the Himalaya clause in the bill of lading between Expeditors and Global. The court agreed.
As an NVO, Expeditors was Global’s carrier, but to Hapag-Lloyd, Expeditor was the shipper.
In its opinion (Global Oil Tools Inc. v. Expeditors International of Washington Inc. et al. U.S. District Court, E.D. of Louisiana. No. 16-16372. April 2), the court said as the carrier, Expeditors had a duty to “properly and carefully load, handle, stow, carry, keep, care for and discharge the goods carried.”
Those duties were incorporated into the bill of lading, which also included a Himalaya clause. The decision explained that meant Global “covenanted not to sue any party involved in the transportation of its shipping containers, except Expeditors. Thus, under the plain language of the bill of lading, plaintiff relinquished any right to sue Hapag-Lloyd or Ports America.”
Global argued the Himalaya clause did not apply because the bill of lading was not issued until after the erroneous shipment and was executed after shipment.
But the decision noted “courts routinely enforce bills of lading issued after goods are damaged during carriage.” And it said “a bill of lading need not be signed by a shipper to be enforceable, so long as the shipper had notice of the bill of lading’s terms.” Here, it said Global “explicitly approved the bill of lading by email on May 27, 2016.”
Global argued that the promise not to sue in the Himalaya clause was unenforceable, because it violated public policy. It pointed to a provision in federal law, which states: “A carrier may not insert in a bill of lading … a provision avoiding its liability for loss or damage arising from negligence or fault in loading, stowage, custody, care or proper delivery.”
Global contended that the promise not to sue Hapag-Lloyd violated this provision because Hapag-Lloyd is a carrier. Global also suggested Hapag-Lloyd violated COGSA by not issuing a bill of lading itself.
But the court said Hapag-Lloyd did issue a bill of lading, albeit one which properly designated Expeditors as the shipper. In its motion for summary judgment, Hapag-Lloyd instead relied on the Himalaya clause in Expeditors’ bill of lading.
The court rejected Global’s argument that the Himalaya clause did not apply because Hapag-Lloyd and Ports America acted without authority and outside any contractual relationship when they erroneously loaded Global’s containers. Since the two companies “clearly performed part of the carriage as contemplated by the bill of lading, which the Court has already deemed enforceable,” the court granted Hapag-Lloyd and Ports America summary judgment on Global’s claims against them.
Finally, the court granted Ports America’s motion for summary judgment on the claim from Global, and crossclaims from Expeditors and Andrea Merzario, stating they had “pointed to no authority for the proposition that stevedore has a duty to inspect shipping containers that it did not pack or to ensure that the containers are properly inspected, insured and documented. Nor is there any evidence suggesting that Ports America had any reason to believe that the containers had been improperly packed.
“Moreover, Ports America was entitled to follow the loading instructions of Hapag-Lloyd. Ports America had no contractual relationship with either Expeditors or plaintiff, and it relied solely on Hapag-Lloyd’s loading instructions,” the court said.
Shippers’ Law: Attempting to top ‘Himalaya clause’
