IDENTITY CLAUSE SIMPLIFIES DETERMINATION OF COGSA CARRIER STATUS

The recently reported M/V KAMTIM case (1995 A.M.C. 151) in the U.S. District Court of Northern Florida focuses on a point of importance to those engaged in ocean trade with the United States and who are concerned about liability claims for cargo damage. The case analyses the meaning of the word “carrier” in the Carriage of Goods by Sea Act, or COGSA. To appreciate the significance of the word “carrier” as it relates to liability, it is necessary to examine this federal statute.

UCOGSA provides that every bill of lading contract for the carriage of goods by sea to or from the United States, in foreign trade, shall be subject to the Act. This statute mandates that the ocean carrier, in order to avoid liability for cargo damage, must properly load, stow, carry, care for, and discharge the goods it carries. Cargo interests can recover damages under COGSA only against the ship and the cargo carrier.

COGSA defines “carrier” as the owner or charterer who enters into a contract of carriage with a shipper. Although this definition is hallowed by long usage, its meaning is often unclear when bills of lading are issued on chartered ships. As a result, courts have struggled with the term for years when assessing liability for damaged cargo in admiralty cases.

Bills of lading are often used on chartered vessels because masters must issue bills upon request. Between shipowners and charterers, bills are merely receipts that do not modify a charter party contract. However, when bills are negotiated to third parties, they become contracts of carriage. COGSA then requires “the carrier, or the master or agent for the carrier” to issue the bill to the shipper upon demand. Again, COGSA fails to clearly define “carrier.”

To determine carrier status, some courts find both the shipowner and the charterer carriers if they in any way contributed to the cargo loss. However, most courts utilize cumbersome agency principles to resolve this issue. Such an analysis generally considers four factors: 1) the type of charter; 2) who signed the bill of lading; 3) whose bill of lading form was used; and 4) under whose authority was the bill issued.

If the bill is issued by the shipowner or by the master for the shipowner, the shipowner is the carrier. Where the bill is signed by the charterer on its own behalf or for the master or shipowner without authorization, the charterer will be considered the carrier.

The Court in the M/V KAMTIM case utilized agency principles to determine that the owner of a time chartered vessel was a COGSA carrier and potentially liable for damages sustained to a shipment of steel plate carried from Germany to the United States. By considering the four above mentioned factors, the court found the charter party expressly authorized the time charterer and the master acting as agent for the time charterer to bind the shipowner to the bill of lading contract.

The Court in the M/V KAMTIM case utilized agency principles to determine that the owner of a time chartered vessel was a COGSA carrier and potentially liable for damages sustained to a shipment of steel plate carried from Germany to the United States. By considering the four above mentioned factors, the court found the charter party expressly authorized the time charterer and the master acting as agent for the time charterer to bind the shipowner to the bill of lading contract.

The cargo owner successfully argued that the only party whom it believed it could rely on for performance of the contract of carriage was the carrier as identified in the “identity of carrier” clause in the bill of lading.

Although the KAMTIM case confirms that agency principles may be utilized to resolve COGSA carrier issues, the decision also illustrates that “identity of carrier” clauses found in many bills of lading may simplify this process.


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