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Compliments of the Law Offices of Brusanowski & Veigel Vol. 2 issue 3
Copyright © 1996, Charles H. Veigel, All Rights Reserved Summer 1996
NVOCC's and marine cargo claims - by Charles VeigelDue to the proliferation of NVOCC's or Non-Vessel Operating Common Carriers in today's intermodal transportation environment, we have received many requests for information on NVOCC liability for loss or damage claims.
As many of you know, the NVOCC stands as a carrier to the shipper and often issues its own bills of lading. However, the NVOCC is not the primary carrier of the freight. The ocean carrier issues its own bills of lading to the NVOCC, with respect to the ocean bound movement of the freight. The interesting question is when a consignee or shipper experiences cargo loss or damage, who do they claim or file suit against - the actual ocean carrier or the NVOCC?
A 9th circuit decision (the federal circuit that includes the State of Washington) held that the shipper had a direct cause of action against the actual carrier of the goods under the carrier's bill of lading issued to the NVOCC. All Pacific Trading v. Hanjin Container Line, Inc. 7 F3d 1427, 1994 AMC 365 (9th Cir. 1993). This is an interesting case and worth a few comments. Shippers delivered freight to an NVOCC for consolidation. The shippers freight was consolidated into a Hanjin container and delivered to the Hanjin vessel. The goods suffered water damage and the shippers (subrogated insurers as well) sought recovery directly from Hanjin. Hanjin raised various defenses, one that the shippers contracted with the NVOCC and not Hanjin and could not recover under Hanjin's bill of lading. Interestingly, the court held that the shippers were actual parties to the Hanjin bill of lading based on the definition of the word "Merchant." Although the Hanjin B/L did not mention any individual parties as the "Merchant" a definitional section of the B/L defined a merchant to include shippers. Therefore, the shippers did have a contractual relationship with Hanjin.
Obviously, this decision does not state that the shipper cannot file a claim and litigate against the NVOCC per the terms of the NVO's B/L. Be aware that the terms and conditions of the NVOCC's bill of lading may differ from the terms of the actual ocean carrier's bills of ladings. The NVOCC could raise many defenses as well.
If a judgment is entered against the NVOCC, the NVO may have an indemnity action against the actual carrier. Note that NVO's must carry a surety bond as required by the FMC's regulations.
Trucking Transportation Agreements by Charles H. VeigelLawyers are mostly asked to review motor carrier transportation agreements after the shipper has been presented with the agreement by the trucking company. The most important point for a shipper to keep in mind is that you should not sign any document unless the contract covers all of your concerns and does not exclude something you are not aware of or have heard about.
Having been counsel for shippers defending undercharge transportation claims, I would suggest that the transportation agreement may be one area to avoid this costly litigation. The time and expense in reviewing a motor carrier transportation agreement will save a shipper in the long run if an undercharge claim can be avoided.
Under the I.C.C. Termination Act, a motor carrier may enter into a contract with a shipper (other than a household goods carrier) to provide specified services under specified rates and conditions. The ICC termination Act also expressly provides that if the parties waive the rights and remedies of the ICC Termination Act, the contract cannot subsequently be challenged on the basis that the rights and remedies were waived. Shippers should carefully keep this in mind.
When a shipper is confronted with a transportation agreement, the shipper should be concerned about liability insurance coverage, rates, a proper description of the shipment and the potential for undercharge litigation. Please note that these concerns are not meant to be inclusive. I will pose some questions and remarks below:
There are many clauses that prudent counsel should incorporate into any agreement. With some careful planning and consideration, shippers can work towards an untroubled relationship with a carrier of freight.
- Liability: What liability should the carrier incur?
- Insurance Coverage: The shipper of goods should be concerned that the goods are insured to the maximum amount.
- Rates: What is being charged? The contract should control between the parties and not any tariff. This should be made clear in the agreement and may avoid potential undercharge claims. Also, if a tariff rate is used, make sure that the tariff itself does not provide for any exclusions or limitation of liability. Requesting a full copy of the carrier's tariff may be the only way to determine whether such a provision exists.
- Description of shipment: All shipment should be covered including those made currently and in the future.
U.S. Customs Update: Shipper's Export DeclarationU.S. Customs is stepping up enforcement of shipper's export declarations. The census and U.S. Customs is concerned that many export declaration are deficient omitting information, etc. If the deficiencies are not corrected in a timely fashion, U.S. Custom may delay your shipment. If any of you want specific regulations to assist in preparing proper export declaration please E-Mail us or drop us a line and we will give you the citations.
Harbor Maintenance Fee - Update
U.S. Customs activated a 24-hour hotline to answers questions regarding the Harbor Maintenance Fee. U.S. Customs confirms that it intends to collect the fee pending the outcome of the U.S. Shoe appeal. The 24 hour hotline number is (317) 298-1250.
Update: Superior Fast Freight Litigation
For those of you who are following the Superior Fast Freight Litigation, Judge Dwyer of the Federal Court of the Western District in Seattle signed an order recently transferring those cases pending before his court to the U.S. Bankruptcy Court in the Central District of California. Those defendants that did not move to avoid this transfer now must defend their claims in the California jurisdiction. The Superior Fast Freight undercharge litigation will now be heard by the Honorable Judge Robles who requested that many of the Superior Fast Freight cases pending in other jurisdictions also be transferred to his court.
Thinking about opening a web site on the World Wide Web?
Many transportation companies find a web site useful in providing their sailing schedules and service information to a world wide audience. You should begin by choosing a domain name and registering that domain name with INTERNIC. Your web page designer/server may do that for you. You should also have an agreement with your server. A prospective web site owner should be concerned that the server is both reputable and that the server will be operational at all times.
The Legal Transportation News is not engaged in the practice of law. It also does not dispense legal advice. Rather, it provides general advise for general legal situations. If you have a legal problem, contact a competent attorney as soon as possible.
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