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The Honorable Wayne T. Gilchrest
April 2, 1998
Page - 5 -

4.

A reprint of 18 Houston Joumal of Interational Law. p.609 (1996) by
Professor Michael Sturley of the University of Texas on changes and
suggestions for changes regarding the new Carriage of Goods by Sea
Act.
Letters of support from the Board of The Maritime Law Association.
Letters of support from the Carriage of Goods Committee members of The
Maritime Law Association throughout the nation.

5. 6.

Finally, I am certain that over the next weeks, further letters of support will be forthcoming from industry representatives and we would appreciate those being included in this report.

Respectfully submitted,

James F. Moseley

James F. Moseley
President, The Maritime Law Association
of the United States

JFM/bt

1.

An executive summary of the Carriage of Goods by Sea Act 1998 that addresses the most significant modern day changes.

47-047 98

Summary of the United States Carriage of Goods by Sea Act of 1998

The United States Carriage of Goods by Sea Act of 1998 (COGSA 98) is the result of a compromise amongst various United States parties interested in the carriage of goods by sea. It will bring the United States closer to uniformity with our trading partners, and will allow cargo interests to recover in courts in the United States what they are now forced to travel to foreign courts to recover. COGSA 98 will replace the present United States Carriage of Goods by Sea, 1936, the United States enactment of the Hague Rules, which were drafted in the 1920's. It will form a compromise between the Hague/Visby Rules of 1968, which are in force in nations that represent about 70% of the United States' trade by sea, and the Hamburg Rules, which are in force in nations that represent about 2% of the United States trade by sea.

Carrier interests and insurers have urged the United States to enact the Hague/Visby Rules, while many shippers of cargo have urged the United States to enact the Hamburg Rules. As a result of this stand off, the United States have enacted neither; cargo interests and carrier interests have continued to suffer under the injustices of COGSA 36.

COGSA 36 limits an ocean carrier’s liability to $500 per package and exonerates a carrier from liability if an error of navigation or management of the vessel during the voyage causes loss or damage to cargo. On the other hand, if two or more events combine to damage or destroy cargo, COGSA 36 places an insuperable burden on the carrier to prove the precise damage caused by the event for which the carrier is not liable. In addition, COGSA 36 assumes in many instances that a carrier has received a quantity of cargo set forth by the shipper of the cargo in a bill of lading. The carrier may be bound to the shipper's quantity description even though the carrier did not check and should not have checked the quantity.

COGSA 98 corrects these and other injustices. It eliminates the error of navigation or management defenses. It increases the limitation to the same system used by the Hague/Visby Rules, 666.67 Special Drawing Rights (SDR)' about $893.34 per package or 2 SDR's, about $2.68, per kilogram, whichever is greater. This limitation system also increases the number of packages for limitation purposes by specifying that smaller packages are generally the limitation packages even if they are consolidated into larger packages. It also apportions liability between cargo and carrier interests if two or more events combine to cause damage. In addition, it allows a carrier to clause a bill of lading with language such as “shipper's load and count" to avoid an unjust binding effect of a shipper's quantity description in a bill of lading.

! The Special Drawing Right (SDR) is a fictitious currency used by the International Monetary Fund to temper fluctuations amongst currencies. It is a mixture of United States dollars, British pounds sterling, Japanese yen, German marks and French francs. It's value in various currencies is reported daily. As of April 1, 1998, one SDR was valued at about $1.34.

The Maritime Law Association of the United States (MLA) has worked on this compromise since 1992. In 1992, the MLA Committee on the Carriage of Goods appointed a working group to bring representatives of all aspects of the maritime transportation of goods industry together to attempt to resolve the differences of opinions between the Hague/Visby Rules and the Hamburg Rules. The working group met regularly for three years and issued its final report in the spring of 1995. The MLA Committee on the Carriage of Goods then spent an additional year reviewing the group's conclusions. During this time, the Committee held a series of in-depth meetings in various parts of the country to discuss the project in detail. The final proposal, with a revised final report, was presented to the MLA at its spring meeting in New York on May 3, 1996 and was approved by an overwhelming majority. We now present the compromise for your consideration and, hopefully, for its enactment into law.

2.

A description of the Carriage of Goods by Sea Act 1998.

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