STEVEDORES CAN BE PROTECTED FROM CARGO LOSS LIABILITY

Stevedores historically have occupied a special relationship with ocean carriers. Their services in loading ships fulfill one of the carrier’s responsibilities to cargo shippers.

The unique status of stevedores provides a novel theory in admiralty law for extending certain bill of lading protections to stevedores that are not parties to the contract of carriage. These protections limit a carrier’s liability for loss or damage to cargo in its possession.

The primary protections afforded stevedores are the $500 package limitation and the one-year suit time limit found in the Carriage of Goods Act, also known as Cogsa.

The issue of whether stevedores may benefit from exculpatory provisions in ocean carriers’ bills of lading has been the subject of considerable litigation.

In 1959, the U.S. Supreme Court in the Herd case considered the issue of extending carrier Cogsa limitations to stevedores. The court found nothing in the legislative history of Cogsa that indicated any intention of Congress to regulate stevedores or to limit their liability.

The Supreme Court held that the negligent stevedore in the Herd case was neither a party to, nor a beneficiary of, the contract of carriage between the shipper and the ocean carrier. Therefore, the stevedore could not claim the benefits of the limitation provisions in the bill of lading.

Numerous courts have interpreted the Herd case to mean that a bill of lading provision can extend Cogsa protections to stevedores, who are agents of the carrier, if the provision is clearly expressed.

Such a provision is known in admiralty law as a “Himalaya clause.” The term is derived from a 1955 English case involving the vessel Himalaya.

Himalaya causes reduce the liability of the beneficiary (i.e. stevedore), despite the beneficiary’s negligence against an innocent shipper whose goods have been damaged. Such clauses are not favored by the law and are given effect only when the intent to do so is clearly expressed in the bill of lading. Furthermore, any ambiguity in the bill of lading will be construed against the party claiming the benefit of the clause.

The recent Florida case of Ram Metals (1989 A.M.C. 2215) illustrates how courts scrutinize bills of lading when interpreting Himalaya clauses.

The plaintiff shipped a cargo to Miami aboard the Zim Miami. The carrier issued a bill of lading that specified that the plaintiff’s cargo was to be carried f.i.o.s.t., which means “free in and out stowage and trim.” Under this term, the discharging stevedore was to bill the plaintiff directly for its stevedore services.

The stevedore negligently unloaded the plaintiff’s cargo and the plaintiff sued the stevedore more than a year after discharge for cargo damage. The stevedore attempted to dismiss the suit because under the Himalaya clause it was an agent of the carrier entitled to the one-year time limit of Cogsa.

The stevedore routinely had performed a stevedoring services for the ocean carrier and was regularly engaged by the carrier to discharge cargo from all of its vessels in Miami. The plaintiff argued that the stevedore was not beneficiary of the bill of lading provisions because of f.i.o.s.t. term identifies the stevedore as an agent for the carrier. The stevedore argued that the f.i.o.s.t. term was simply a cost-shifting device. The court scrutinized the Himalaya clause and found that a stevedore engaged to discharge cargo as an agent of the carrier generally would be protected by the clause. However, the court held that in this case the f.i.o.s.t. provision shifted the risk and the stevedore was not acting as an agent of the carrier in unloading the cargo. Accordingly, the stevedore did not fall within the protection of the Himalaya clause.

Over the past 30 years the benefits of the Himalaya clauses have been extended on a case by case factual basis to include terminal operators, a crane operator, a dry dock company and a pier guard service. However, the clause has not been extended to cover inland truckers, freight forwarders and marine carpentry firms.

In each case where the Himalaya clause was upheld the courts followed the Supreme Court’s mandate in the Herd case. Any contract purporting to grant immunity from liability must be strictly construed and limited to the intended beneficiaries.


[Back]