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Illustration 11. Same facts as Illustration 6, except the consignee is able to show that the carrier failed to weigh the container because the carrier suspected that it weighed less than the shipper asserted and it feared that the consignee would make a claim for short delivery, but it did not wish to lose the shipper's business. If the finder of fact concludes that the carrier was not acting in good faith when it issued the bill of lading, the consignee may rely on the bill of lading as prima facie evidence that the carrier in fact received the weight shown on the bill of lading.
In addition to the requirement regarding marks, number, quantity, or weight information, subsection 3(3) requires a carrier to state the apparent order and condition of the goods - and the proviso to subsection 3(3) does not affect this obligation. Some courts have nevertheless permitted carriers to include standard clauses in their bills of lading that effectively disclaim responsibility for this statement. These clauses have been justified on the ground that the shipper had the option of demanding a different bill of lading that did not contain the offending clause. See, e.g., Tokio Marine & Fire Insurance Co. v. Retla Steamship Co., 426 F.2d 1372 (9th Cir. 1970). The proposed bill overrules such decisions and restores the Act to its original meaning. It amends subsection 3(3) of the 1936 Act to clarify that the shipper has the option whether or not to demand a negotiable bill of lading or other contract of carriage, but that once the document is issued it must contain the information required by subsection 3(3) (qualified, as necessary and appropriate, to the extent permitted by subsection 3(3)). Any clause that undercuts this requirement is invalid under subsection 3(8).
Under traditional principles, a "deviation" was a geographic departure from the contractual voyage, and it resulted in drastic consequences for the carrier — including the loss of unit limitation. In the late-nineteenth and early-twentieth centuries, courts expanded the doctrine and described certain other actions as "quasi-deviations" attracting the same drastic consequences. Although the 1936 Carriage of Goods by Sea Act does not address the consequences of an unreasonable deviation, most courts have carried forward the traditional doctrine.
In recent years, the entire deviation doctrine has been subject to considerable criticism. In England, where the doctrine originated, there is some question whether it retains any vitality at all. In the United States, the courts have cut back on "quasi-deviations" to the point that geographic deviation and unauthorized deck carriage are now the only activities subject to the doctrine. And discussed above — there is widespread recognition that deck carriage is not only routine but also appropriate for some kinds of shipments. See supra page 15.
The principal implication of a finding of deviation is the loss, in most circuits, of the benefit of the package limitation under subsection 4(5). One of the
principal changes in the proposed bill is the move toward unbreakable unit limitation, and thus under proposed subsection 4(5) the carrier can claim the benefit of unit limitation even in cases of deviation unless the deviation amounts to the type of misconduct covered by subsection 4(5)(e)(2). See “ 'Unbreakable' unit limitation," supra page 19.
In recognition of these developments, proposed subsection 4(4) clarifies that an unreasonable deviation is simply a breach of the carrier's obligations under the Act, not an invitation to ignore the Act. Thus if an unreasonable deviation causes cargo loss or damage, the carrier will be liable, but subject to subsection 4(5). In extreme cases, the unreasonable deviation may be so reckless that it will fall within the terms of the proposed subsection 4(5)(e)(2), resulting in the carrier's loss of unit limitation. Courts will resolve these disputes under the proposed Act, however, rather than by reference to outdated decisions that may suggest a per se rule against deck carriage or minor departures from the contractual voyage.
The Hague Rules and the 1936 Carriage of Goods by Sea Act were negotiated on the assumption that there was inequality of bargaining power between carriers and shippers. Shippers were therefore protected by the rule that the bill of lading could increase a carrier's liability, but never decrease liability below the level established by the Rules. See subsection 3(8). In modern practice, it is undeniable that some shippers are able to negotiate with carriers on an even footing. In order to give maximum flexibility to companies in this situation without depriving unsuspecting third parties of their rights, the proposed Act permits the immediate parties to a “service contract” to reduce the carrier's liability below COGSA levels. A service contract is defined in section 3(21) of the Shipping Act of 1984, which is codified at 46 U.S.C. App. $ 1702(21) (1988). The parties have always had the ability to increase the carrier's liability above COGSA levels, and they retain this ability under the proposed Act — with or without a service contract.
Any agreement to increase (as explicitly permitted in proposed subsection 45)(b)(2)) or decrease a carrier's liability through the use of a service contract is binding only on the immediate parties to that agreement. A stevedore, terminal operator, or other person performing any of the carrier's functions or undertaking any of the responsibilities under the contract of carriage is also entitled to rely on the statutory protections found in COGSA. Similarly, a subsequent holder of the bill of lading is entitled to rely on the statutory protections found in COGSA, and need not examine every bill of lading to see if they have been modified by agreement.
Forum Selection Clauses
Until recently, most U.S. courts (following the lead of Indussa Corp. v. S.S. Ranborg, 377 F.2d 200 (2d Cir. 1967) (en banc)) have held that subsection 3(8) of COGSA prohibits foreign forum selection clauses. Some lower courts also held that foreign arbitration clauses were “null and void and of no effect" under this provision. See, e.g., State Establishment for Agricultural Product Trading v. MIV Wesermunde, 838 F.2d 1576 (11th Cir. 1988), cert. denied, 488 U.S. 916 (1988). In Vimar Seguros y Reaseguros, S.A. v. MIV Sky Reefer, 115 S. Ct. 2322 (1995), however, the Supreme Court overruled these cases and held that subsection 3(8) does not apply to forum selection clauses. The court instead applied the general rule that forum selection clauses are presumptively enforceable. See Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991); The Bremen v. Zapata OffShore Co., 407 U.S. 1 (1972).
Although COGSA's legislative history supports the view that subsection 3(8) was never intended to cover forum selection clauses, it is equally clear that the international convention does not require the enforcement of forum selection clauses. The delegates simply left the issue to national law. Some nations responded to this situation by enacting an explicit statute to prohibit forum selection clauses in bills of lading; other nations left the issue to be determined by general principles. Either course is consistent with the Hague Rules.
As part of the commercial compromise between carrier and cargo interests, subsection 3(8)(b) of the Study Group's proposed bill specifically addresses the issue and recommends greater protection for cargo interests than current law provides. If the goods are loaded or discharged in a U.S. port, or if the carrier receives or delivers the goods in the United States, or if any of these events were intended to occur in the United States, then a foreign forum selection clause or a foreign arbitration clause would be invalid in cases where the proposed Act applies. But if a claimant brings an action in the United States solely because it is able to obtain jurisdiction over the ship in this country, then the validity of a foreign forum selection clause or a foreign arbitration clause would be govemed by the general maritime law and not by proposed subsection 3(8)(b). The parties are also free to agree on foreign litigation or arbitration after the claim has arisen.
If a bill of lading provides for foreign arbitration, the clause would generally be unenforceable to the extent that it requires arbitration to proceed overseas. But there is no reason why a party should not be permitted to rely on the agreement to resolve disputes through arbitration. A proviso to proposed subsection 3(8)(b) therefore requires a court in these circumstances to order arbitration in the United States if a party requests such a ruling in timely fashion. (If neither party seeks U.S. arbitration, however, the court shall proceed with the case as if there had been no arbitration clause.) This provision may force a party into U.S.
arbitration who would not have agreed to U.S. arbitration, but the alternative is to deprive parties of arbitration entirely. In any event, a party who is willing to consent to arbitration only in a foreign venue can draft an appropriate arbitration clause.
The Pomerene Act
Subsection 3(4) of the 1936 COGSA included a proviso clarifying that the Pomerene Act, 49 U.S.C. $$ 81-124 (1988), remained in full force, and had not been repealed by implication. Indeed, the Pomerene Act, as recodified in July 1994, 49 U.S.C. 88 80101-80116, remains in force today.
Some of the proposed changes to COGSA, however, require minor changes and updating to the Pomerene Act. (The Pomerene Act dates from 1916, so some updating was desirable in any event. In particular, it is necessary to reconcile the Pomerene Act, at least insofar as it govers international ocean shipments, with the latest versions of the International Chamber of Commerce's Uniform Customs and Practices for Documentary Credits and INCOTERMS.) Because a direct amendment of the Pomerene Act would have had implications in domestic shipments that did not involve ocean carriage, the Study Group thought it would be better to incorporate the affected provisions into the proposed COGSA and make the necessary changes there. The Group also thought that it would be convenient to incorporate these updated provisions into the proposed COGSA for ease of reference, particularly when cases are tried in foreign courts that are aware of COGSA but less familiar with the Pomerene Act.
Proposed subsection 3(4)(b) incorporates sixteen amended sections of the original Pomerene Act. (The Study Group thought it preferable to start with the original Act, which better corresponds to the usages of international ocean carriage, instead of the 1994 recodification. In any event, the recodification was not intended to affect the substance of the original Act.) Each section has been updated to reflect the application of the proposed COGSA not only to bills of lading but to all "contracts of carriage." (The "bill of lading" terminology is retained in situations where it is important to distinguish non-negotiable or straight bills of lading from negotiable or order bills of lading.) In addition, proposed COGSA subsection 3(4)(b)(8), which corresponds to section 13 of the Pomerene Act, and which was recodified in 1994 as 49 U.S.C. $ 80108, reflects the expanded coverage of the proposed COGSA (from receipt to delivery, rather than tackle-to-tackle). A complete list of the corresponding provisions is included in the following table:
Table of Corresponding Provisions Subsection
Corresponding section(s) of the Pomerene of the
Act (as enacted) and of Title 49, Proposed COGSA
U.S. Code (as recodified in 1994) § 3(4)(b)(1)
Pomerene Act § 2; 49 U.S.C. § 80103 $ 3(4)(b)(2)
Pomerene Act $$ 3, 7; 49 U.S.C. § 80103 § 3(4)(b)(3)
Pomerene Act § 8; 49 U.S.C. $ 80110 $ 3(4)(b)(4)
Pomerene Act § 9; 49 U.S.C. $ 80110 $ 3(4)(b)(5)
Pomerene Act § 10; 49 U.S.C. $ 80111 $ 3(4)(b)(6)
Pomerene Act § 11; 49 U.S.C. § 80111 § 3(4)(b)(7)
Pomerene Act § 12; 49 U.S.C. § 80111 $ 3(4)(b)(8)
Pomerene Act § 13; 49 U.S.C. § 80108 $ 3(4)(b)(9)
Pomerene Act § 14; 49 U.S.C. § 80114 $ 3(4)(b)(10)
Pomerene Act § 17; 49 U.S.C. § 80110 § 3(4)(b)(11)
Pomerene Act § 18; 49 U.S.C. § 80110 $ 3(4)(b)(12)
Pomerene Act § 19; 49 U.S.C. § 80110 $ 3(4)(b)(13)
Pomerene Act § 22; 49 U.S.C. § 80113 § 3(4)(b)(14)
Pomerene Act § 25; 49 U.S.C. § 80109 $ 3(4)(b)(15)
Pomerene Act § 26; 49 U.S.C. § 80111 The proposed Act eliminates the explicit proviso saving the Pomerene Act from implied repeal. Some parts of the proposed COGSA, particularly in subsection 3(3), are inconsistent with the Pomerene Act, and to the extent there is an inconsistency COGSA's provisions shall govern when the proposed COGSA applies. Of course, to the extent that the proposed COGSA is consistent with the Pomerene Act there is no implied repeal of it. Thus the Pomerene Act remains in full force except to the extent that proposed subsection 3(4)(b) makes explicit changes to it, or other provisions in the proposed COGSA are inconsistent with it. Similarly, in cases outside the scope of the proposed COGSA (i.e., cases that do not involve the carriage of goods by sea) the Pomerene Act is unaffected by the proposed bill.
Technical Modifications Section numbering. Paragraph letters were added to certain subsections, such as subsections 3(6) and 4(5), for ease of reference. In general, however, the 1936 COGSA section numbers are retained to the extent possible.
Updating. Certain provisions of the 1936 Act required up-dating. References to the Shipping Act of 1916 in sections 8 and 9 were changed to include the Shipping Act of 1984. The effective date in section 15 and the short title in section 16 are both updated to reflect the amendments of the proposed bill.