Statutes of limitations are enacted to protect defendants from suits brought after memories have faded, witnesses have died or disappeared, and evidence has been lost. These statutes set time limits within which actions must be commenced.

Under United States general maritime law there are no statutes of limitations. To fill this void, admiralty law uses the equitable doctrine of “laches” to terminate stale claims. Laches is defined as the failure to enforce a right at a proper time (i.e., inexcusable delay in presenting claims).

Unlike the absolute timebar provision of a statute of limitations, laches requires considering the prejudice to the defendant resulting from delays and circumstances that may excuse a claimant for not bringing suit promptly.

Factors considered are the duration of the delay, whether evidence has been lost as a result of the delay, the sufficiency of the excuse, and whether any disadvantage or hardship has resulted to the defendant..

Only Congress has the power to modify the general maritime law to prescribe time limits for suits in admiralty.

However, few such time limits have been enacted. The most notable is found in the Carriage of Goods by Sea Act (Cogsa), which applies to every bill of lading contract for the common carriage of goods by sea to or from the United States in foreign trade.

The Cogsa one-year time period for commencing cargo actions was designed to accelerate the settlement of cargo claims and to prevent ocean carriers from inserting shorter time limits in bills of lading. The recently reported M/V TAY case (1996 A.M.C. 210) from the Federal Court for the Western District of Louisiana suggested that the Cogsa one-year statute of limitations is not absolute, nor universally applied.

In the TAY case, the United States, acting through the Commodity Credit Corp. (CCC), a government agency, under Title II, Public Law 480, donated food to two private relief organizations for shipment from the United States to Africa. Portions of the cargo discharged from the vessel were damaged.

Within one year from the time of discharge, both relief organizations assigned their cargo claims to CCC without notifying the vessel owner of the assignment. The CCC then brought suit against the vessel owner after the Cogsa statute of limitations had expired. The vessel owner moved to dismiss the action as time-barred.

The vessel owner argued that the bills of lading covering the shipments contained the Cogsa one-year time limit provision for bringing suit. Furthermore, the CCC, as assignee, was bound by the bill’s terms because an assignee can obtain no greater rights than its assignor (the relief organizations).

The CCC successfully argued that when an assignment of claim from a private organization to CCC occurs within the one-year period of Cogsa, the six-year statute of limitations contained in The General Powers of The CCC, 15 U.S.C. 714b© (1988), applied.

5th Circuit Court decides on extension
The court, relying on a 5th Circuit decision (U.S. v. Central Gulf Lines, 1993 A.M.C. 2622), adopted CCC’s argument and held that a suit was timely and subject to the six-year statute of limitations applicable to all actions initiated by the CCC.

To date, the 5th Circuit is the only federal circuit to decide that the one-year Cogsa statute of limitations can be automatically extended to six years by assigning a claim to the CCC. It now appears that a vessel owner who has closed its file on a cargo claim after the expiration of the Cogsa limitation period may be surprised when it receives a timely summons and complaint five years later, after memories have faded, witnesses have disappeared, and evidence has been lost.