Petition for Writ of Certiorari — Green Fire & Marine Insurance Co., Ltd., Fka Kukje Hwajae Insurance Co., Ltd. v. M/v Hyundai Liberty
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fs Supreme Court, U.S.
! V FILED
02 813 Nw 222002
OFFICE OF THE CL&RK
In The
_ SHupreme Court of the Anited States
a
v
GREEN FIRE & MARINE INSURANCE CO., LTD.,
Petitioner,
Vs.
M/V HYUNDAI LIBERTY, in rem,
Respondent.
.-
v
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Ninth Circuit
,
v
PETITION FOR WRIT OF CERTIORARI
,%
vv
MICHAEL W. LODWICK
Counsel of Record
HAIGHT BROWN & BONESTEEL LLP
5 Hutton Centre Drive, Suite 900
Santa Ana, California 92707-0510
(714) 754-1100
Attorneys for Petitioner
———— a EEEEEE———————————————————<—_[_{£—*T?—s>]_{$*—$—$—L—L{££{{$____=_=——=
COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
OR CALL COLLECT (402) 342-2831
QUESTION PRESENTED FOR REVIEW
Under the Shipping Act of 1984, the Federal Maritime
Commission regulates the practices of non-vessel-
__,—operating common carriers (NVOCCs) that furnish ocean
transportation to shippers in the foreign commerce of the
United States. The Commission regulates transactions
between NVOCCs and the shippers to whom they sell
their services, and between NVOCCs and the ocean
common carriers from whom they purchase vessel ser-
vices. Section 3(17XB) of the Shipping Act defines the
NVOCC as “a common carrier that does not operate the
vessels by which the ocean transportation is provided, and
is a shipper in its relationship with an ocean common
carrier.”
Did the court of appeals err in holding that NVOCCs
are not shippers but, as a “commercial norm,” are agents
of the shipper when they contract for regulated transpor-
tation with ocean common carriers?
ii
LIST OF ALL PARTIES
Petitioner Green Fire & Marine Insurance Co., Ltd.
(formerly known as Kukje Hwajae Insurance Co., Ltd.),
Seoul, Korea.
The M/V HYUNDAI LIBERTY, in rem, an oceangoing
vessel, whose claimant in the district court was Hyundai
Merchant Marine Co., Ltd., Seoul, Korea.
CORPORATE DISCLOSURE STATEMENT
On March 25, 2002, petitioner changed its name from
Kukje Hwajae Insurance Co., Ltd. to Green Fire & Marine
Insurance Co., Ltd. Petitioner has no parent corporation.
The only publicly held company that owns 10% or more of
petitioner’s stock is Seyang Construction Industrial Co.,
Ltd.
TABLE OF CONTENTS
Page
QUESTION PRESENTED FOR REVIEW. ................ i
Re ee SRA EE BOP i oie hesicescossindbacensiecenctcindsncsarvens ii
CORPORATE DISCLOSURE STATEMENT............. ii
Tae CINE IBEU LE vnccccsscasessscecescesaccssscccsesecaness iii
SE I IEE PIETER CRIED ccs ncnnnssecncrsseccccsencnsesrseneses iv
OPINIONS AND ORDERS BELOW .......................... 1
STATEMENT OF JURISDICTION ........................000 1
STATUTORY PROVISIONS INVOLVED................... 1
STATEMENT OF THE CASE..................scsccccsseeceeeees 3
REASONS FOR GRANTING THE PETITION ......... 10
1. Statutory Construction.............ccscccesecseeceees 11
Bi NE III ccc nisutebinninatandlshesmnnbiavasinedess 11
1. The role and status of NVOCCs is prescribed
by federal statute, and the decision below
contravenes the statute ....................cesecscseeees 13
2. The circuits conflict in their construction of
a 22
I 9 i, cadunausecuoudunensensacssonsen 29
REST Ae ar ee App. 1
iv
TABLE OF AUTHORITIES
Page
REPORTED CASES
Fireman’s Fund American Ins. Cos .v. Puerto Rican
Forwarding Co., 492 F.2d 1294 (1st Cir. 1974)........ 12, 24
Insurance Co. of North America v. S/S AMERICAN
ARGOSY, 732 F.2d 299 (2d Cir. 1984)...12, 22, 25, 26, 27
Insurance Co. of North America v. M/V OCEAN
LYNX, 901 F.2d 934 (11th Cir. 1990)................. 12, 22, 27
Itel Container Corp. v. M/V “TITAN SCAN,” 139
F.3d 1450 (llth Cir.), cert. denied sub nom.
Mammoet Shipping B.V. Sky Shipping Ltd., 525
U.S. 962 (1998) and cert. denied sub nom. Sky
Shipping Ltd. v. Mammoet Shipping B.V., 525
eT Ne ita itennnisiassscabanidinidimetasateiAininsiesidaninatiamil 22, 23
James N. Kirby Pty, Ltd. v. Norfolk Southern R.
Co., 300 F.3d 1300 (11th Cir.), reh’g & reh’g en
banc denied, __ F.3d ___ (Oct. 7, 2002)...... 12, 23, 26, 27
Jockey Intern., Inc. v. M/V “LEVERKUSEN ExX-
PRESS,” 217 F. Supp. 2d 447 (S.D.N.Y. 2002) .............. 26
Kukje Hwajae Ins. Co. v. M/V HYUNDAI LIB-
ERTY, 294 F.3d 1171 (9th Cir. 2002)......... 8, 9, 12, 26, 27
Kukje Hwajae Ins. Co. v. M/V HYUNDAI LIB-
ERTY, 1999 WL 1293507, 1999 A.M.C. 2199
eee, I SN is SR ssbiniccnsihicienctnctabinnasenniisnineniansed 6, 7
Modern Office System, Inc. v. AIM Caribbean Exp.,
Inc.,.802 F. Supp. 617 (D.P.R. 1992) ............ccccccsssssssssess 25
NLRB v. International Longshoremen’s Ass’n, AFL-
ey Ue Sra MT I winncisdtebacncaccncauctetisbcenininns 13, 25
NLRB v. International Longshoremen’s Ass’n, AFL-
er re Sis TE I vain ctsessnicnipsenvintnalicesnintlaninaianacane 14
a a ee
Vv
TABLE OF AUTHORITIES — Continued
New York Foreign Freight Forwarders & Brokers
Ass’n v. Interstate Commerce Comm’n, 191 U.S.
App. D.C. 173, 589 F.2d 696 (1979) .......eesecsereereeseees
New York Shipping Ass’n v. Federal Maritime
Comm’n, 272 U.S. App. D.C. 129, 854 F.2d 1338
Ce acsiisiistantetndibcinnssvncaesitansieteckiidiataetnmanagnel 12,
Polo Ralph Lauren, L.P. v. Tropical Shipping &
Const. Co., 215 F.3d 1217 (11th Cir. 2000)...............
Project Hope v. M/V IBN SINA, 96 F. Supp. 2d 285
(S.D.N.Y. 2000), aff’d in part, vacated in part on
other grounds, 250 F.3d 67 (2d Cir. 2001)................
Puerto Rico Maritime Shipping Authority v. Valley
Freight Systems, Inc., 856 F.2d 546 (3d Cir. 1988)...
Runyon v. McCrary, 427 U.S. 160 (1976)....................
Ship’s Overseas Service, Inc. v. Federal Maritime
Comm’n, 216 U.S. App. D.C. 146, 670 F.2d 304
United States v. American Union Transport, Inc.,
SE St Be Ce crest cleciilnigabcneiisicwetndligneadeaseaaemiiician
- Vimar Seguros y Reaseguros, S.A. v. M/V SKY
REEFER, 515 U.S. 528 (1995).............scsssssssessccceeees
Yellow Forwarding Co. v. Atlantic Container Line,
668 F.2d 350 (8th Cir.), cert. denied, 456 U.S. 962
CRI wisis i iahiblickscesnscndstonancioniacinadnananeenaetianasaiteaaiana
Page
14, 24
12, 24
vi
TABLE OF AUTHORITIES — Continued
Page
AGENCY DECISIONS
Determination of Common Carrier Status, 6 F.M.B.
PE ed atisannnsncivincaiiigs vi sepiienlaeiaiiahatadaceininddaitinaieii 14, 15
Isbrandtsen Co. v. States Marine, 6 F.M.B. 422
CIA inccsvynmnisciosisnnsnihhdushidelineempbeleh aiemabaliamantnadaa dada 20
Pacific Coast European Conference v. Southern Pac.
Marine Transport, Inc., 20 F.M.C. 166 (1977)............... 14
Possible Violations of Section 18(a) of the Shipping
Act, 1916, 19 FBLC. GE (2B 7G) ...ccsesssccssseserscnsssensooese 15, 20
Prudential Lines, Inc. v. Farrell Lines, Inc., 26
F.M.C. 497 (ALJ), adopted, 26 F.M.C. 496 (1984) ......... 20
STATUTES
26 U.S.C. Pap. BR. Cav. FR BRC iaiscciacetisctnicsntsterrensveins 4
28 U.S.C. FED. R. Civ. P. SUPP. R. C(6)...........:ccccssscceesseeeees 4
46 UBC. § GOUBED......ccsescccscssescscvsccccessszarsasevacsassccctascanesen 13
46 U.S.C. amp. § 120B .......2......0cc0000. sseepsiaamiocaianneoiaamaenae 18
46 US TRA. Cap. BR TI IB isvcsisnsiccscrsscrevridceiniacntboailiesa 28
4B UBS. 20g. § IBD cvsicitinrnitnidiieidiienndiaies, 5
46 UBC. ag. GE TIRE isin 4,13
GB UES. CR Wiest skantinccstedicshctensgiichagenceeieciaa 1,15
46 UBS. agpep. 5 EPG i ciinscisiecinncesnisstnnsietnineniaiiidunuiinin 2
46 UDG. aan. & FI ee ineiiieteeceniarsticiaiaiiaineag es: 2
ME UB. aap. © BFE iesieisinscnsicsiiscsiceibiaiiaa 2, 15, 16, 19
46 UBL. app. § TORT iiiiccdatindaiisiiiind 16
46 USC. amp. 6 THI iissic acticin 4, 16,19
ee ee ee
ee ey ee eae oe ee eee
vii
TABLE OF AUTHORITIES — Continued
Page
BE RT, Bh PGND eis ta sicecescisestssihtenaiesatecsstnninrsercnenance 16
res I ED Giiinists siknca hcihiininntiitins Secainccibicanlinied 3
46 U.S.C. app. § 1702(21)(B)..........0.0.....cccccssssssrscosssscens 16, 17
TI a I iii cece ccectcanns 3,5
a ie Be ilinisitcrhdksaceichot nenensihecancspwiahieiahacediiienal 17
Er ks itt ccbctecdiceiisbitinceatinsctiiationaie 17
I eas NG ae Se iidkicth ed ciphstaianthienbecapiiisiepainitentcannditdeinend 18
ee ilies tnanininthenscsstatnseaitennniiemceas 18
Carriage of Goods by Sea Act, 49 Stat. 1208, 46
er Ge RR so ta ssnciessicnsnininnnsiciemmienipstnneninese 28
Carriage of Goods by Sea Act, 49 Stat. 1208 § 3(3),
ee a is Oe lin elicinticshaipnstnicsblbitansininctaciniiniinnnnicnine 5
Merchant Marine Act, as amended, § 208, 46 U.S.C.
I Da istcthciaiatntcctiarcchbipnitcsahdvibnutcaanbbaacisiwisaiaeiatanwnainsts 18
Non-Vessel Operating Common Carrier Amend-
ments, Pub. L. 101-595, 104 Stat. 2979 (1990).............. 18
Ocean Shipping Reform Act of 1998, 112 Stat. 1902
Pia sijistecsiasicetiticcs hc dasaseidicapdcesheiahopwlasaieaoanncaapsnataniakcegiiek 16, 18
Reorganization Plan No. 7 of 1961, 75 Stat. 840
(CaUITTN i scncsckenbsadeavdases-edsdiidpicheibsivndentamadibabbaacdbtebicbiosibantaiaatiiudbaoniahtnia 15
Reorganization Plan No. 7 of 1961, 75 Stat. 840
ie II ITs cniin di idusemestanndianiekenauuiicciciiiniuiicina shamiunecareege 18
Shipping Act, 1916, 39 Stat. 728, 46 U.S.C. §§ 801-
—___ REESE SRE RAPES ea ee Nee I ORR oo ee OD 13
Shipping Act of 1984, 98 Stat. 67, as amended, 46
Ne BF ii ecncintsenicsiiinstnccnnsathehiddorininienniionies 13, 15
Shipping Act of 1984, 46 U.S.C. app. § 1702...................... 1
viii
TABLE OF AUTHORITIES - Continued
Page
Shipping Act of 1984 § 3(17XB), 46 U.S.C. app.
Se SIE TET oi stinks ncgiinnibntitctesnainengdiceiaanbinatiibadaniidainabanentions 4
Shipping Act of 1984 §3(18), 46 U.S.C. app.
Se Sea TTITED nics hestinniciichaceeabiasibaibabsitbacsiiastabunideisadudiebanéaametiginatnns 16
Shipping Act of 1984 § 3(22), 46 U.S.C. app.
OF isssnichbeikciniihiseananictaiiiasaniaieaiisaiimecadiababbhunatistharton 5
Shipping Act of 1984 § 8, 46 U.S.C. app. § 1707............... 17
Shipping Act of 1984 § 10, 46 U.S.C. app. § 1709 ............. 17
REGULATIONS
I eins snctbeboeninicncnctcaniccscsintnabiins 12, 15, 22, 25
ie nici antcnsniaecaparniiscndntcnacdiacininteiie 15
a a atichiclitiesdileritaittigsiitincnicnnsnscinsetsniinseatnermusanana’ 15
27 Fed. Reg. 1775 (Feb. 24, 1962)..............sssssssssssssssssseesees 19
28 Fed. Reg. 4300 (May 1, 1963).................csssssssessssrseeeesees 15
46 Fed. Reg. 24565 (May 1, 1981)............. ce eeeeesseesseeeees 15
67 Fed. Reg. 66318 (Oct. 31, 2002)............sessesessseseseneesees 21
ADMINISTRATIVE MATERIALS
FMC website (visited Nov. 18, 2002) <http://www.
fmc.gov/fmcfrm 1/scripts/ExtReports.asp?tariff-
CR ii cocistiiiasliticccscascpaicseahisiicascinasisctonaiaainantacsbociiaiwbesse 4
40th Annual Report for: Fiscal Year 2001 (F.M.C.
ey kL Reem even peen nape wore emo HONE Co 18
ix
TABLE OF AUTHORITIES — Continued
SECONDARY SOURCES
REST. CONTRACTS § 19(bb) (1932) .............cccccccccccecccscscsscccees 28
1 SAMUEL WILLISTON, LAW OF CONTRACTS § 18(3)
ERI eid ees apiece Alacer noe Ree A ONT PONE weed
(tas
ee
eke
= 2 a
Ok Vargas cae
ie eed
1
PETITION FOR A WRIT OF CERTIORARI
Petitioner Green Fire & Marine Insurance Co. Ltd.
respectfully petitions for a writ of certiorzri to review the
judgment of the United States Court of Appeals for the
Ninth Circuit.
r
v
OPINIONS AND ORDERS BELOW
The court of appeals’ opinion (per Graber, J., joined by
Beezer & Tashima, JJ.) (Pet. App. 1-16) is reported at 294
F.3d 1171. The court of appeals’ subsequent order denying
the petition for rehearing (id. at 44-45) is not otherwise
published.
y
Vv
STATEMENT OF JURISDICTION
The court of appeals entered its opinion and order on
June 26, 2002, and denied rehearing on August 28, 2002.
Petitioner invokes this Court’s jurisdiction under 28
U.S.C. § 1254(1).
42
vy
STATUTORY PROVISIONS INVOLVED
Shipping Act of 1984 § 3, 46 U.S.C. app. § 1702
§ 1702. Definitions
As used in this chapter —
(6) “common carrier” means a person holding itself
out to the general public to provide transportation by
2
water of passengers or cargo between the United States
and a foreign country for compensation that —
(A) assumes responsibility for the transportation
from the port or point of receipt to the port or point of
destination, and
(B) utilizes, for all or part of that transportation, a
vessel operating on the high seas or the Great Lakes
between a port in the United States and a port in a foreign
country. ... |
(16) “ocean common carrier” means a_ vessel-
operating common carrier.
(17) “ocean transportation intermediary” means an
ocean freight forwarder or a non-vessel-operating common
carrier. For purposes of this paragraph, the term —
(A) “ocean freight forwarder” means a person that —
(i) in the United States, dispatches shipments from
the United States via a common carrier and books or
otherwise arranges space for those shipments on behalf of
shippers; and
(ii) processes the documentation or performs related
activities incident to those shipments; and
(B) “non-vessel-operating common carrier” means a
common carrier that does not operate the vessels by which
the ocean transportation is provided, and is a shipper in
its relationship with an ocean common carrier.
(21) “shipper” means —
(A) acargo owner;
(B) the person for whose account the ocean transpor-
tation is provided;
(C) the person to whom delivery is to be made;
(D) ashippers’ association; or
(E) an ocean transportation intermediary, as defined
in paragraph (17)(B) of this section, that accepts
responsibility for payment of ali charges applicable under
the tariff or service contract.
(22) “shippers’ association” means a group of ship-
pers that consolidates or distributes freight on a nonprofit
basis for the members of the group in order to secure
carload, truckload, or other volume rates or service con-
tracts.
4
Vv
STATEMENT OF THE CASE
1. Petitioner Green Fire & Marine Insurance Co.
Ltd. (formerly Kukje Hwajae Insurance Co. Ltd.) is an
insurance company in Seoul, Korea. Petitioner insured
goods that were sold by Doosan Corporation in Seoul to
Machine Tool Sales in Sterling Heights, Michigan. When
the goods were damaged in transit, petitioner paid the loss
and became subrogated to Doosan’s rights against the
liable parties.
2. Respondent is the M/V HYUNDAI LIBERTY, in
rem, an ocean vessel owned and operated by Hyundai
Merchant Marine Co., Ltd. The goods were damaged
4
during the vessel’s voyage from the Port of Busan, Korea,
to the Port of Long Beach, California. To recover for the
loss, petitioner brought an in rem action against the vessel
under the provisions of Rule C of the Supplemental Rules
for Certain Admiralty and Maritime Claims.’ Hyundai
Merchant Marine filed a claim as owner of the vessel,
under Supplemental Rule C(6), and then answered on the
ship’s behalf.
3. Petitioner’s insured, Doosan, contracted with
Glory Express, Inc., to transport the goods from Busan to
Los Angeles. Glory Express is licensed by the Federal
Maritime Commission as a non-vessel-operating common
carrier (“NVOCC”).’ Under the Shipping Act of 1984,° the
Commission has regulatory authority over NVOCCs
providing transportation in the foreign oceanborne com-
merce of the United States. “Non-vessel-operating common
carrier” is a statutory term of art; in the Shipping Act it
means “a common carrier that does not operate the vessels
by which the ocean transportation is provided, and is a
shipper in its relationship with an ocean common carrier.”
Glory Express was a member of a shippers’ association
calling itself Streamline Shippers Association. As defined
in the Shipping Act, “‘shippers’ association’ means a group
of shippers that consolidates or distributes freight on a
* 28 U.S.C. Feb. R. Crv. P. Supp. R. C.
* According to the Commission’s website, Glory Express is Organi-
zation No. 012406, and its tariff is published at WWW.PARA
MOUNTTARIFF.COM. See FMC website (visited Nov. 18, 2002)
<http://www.fmce.gov/fmcfrm 1/scripts/ExtReports.asp?tariffClass=oti>.
* 46 U.S.C. app. §§ 1701-1719.
* Shipping Act of 1984 § 3(17)B), 46 U.S.C. app. § 1702(17)B).
5
nonprofit basis for the members of the group in order to
secure carload, truckload, or other volume rates or service
contracts.” Streamline Shippers Association hired Hyun-
dai Merchant Marine to carry the goods for its member,
Glory Express, from Busan to Long Beach aboard the M/V
HYUNDAI LIBERTY.
4. When goods are carried by water, for hire, be-
tween a foreign port and a U.S. port, the ocean carrier is
required, upon demand of the shipper, to issue a bill of
lading that recites the marks; number, quantity, or weight;
and apparent order and condition of the goods. See the
Carriage of Goods by Sea Act (““COGSA”), 49 Stat. 1208
§ 3(3), 46 U.S.C. app. § 1303(3). In this case, each carrier —
Glory Express and Hyundai Merchant Marine — issued a
bill of lading. The Glory Express bill memorialized the
contract of carriage between Glory Express and Doosan,
the owner of the goods. The Hyundai Merchant Marine bill
evidenced the contract of carriage between Hyundai and
Streamline Shippers.
5. When petitioner brought an in rem action against
the M/V HYUNDAI LIBERTY to recover for the damage to
the goods during the voyage, the vessel defendant intro- ~~
duced the bill of lading that her owner, Hyundai Merchant
Marine, had issued to Streamline Shippers, and moved the
district court to enforce the bill’s forum-selection clause,
which required that suit be brought in the district court
in Seoul, Korea. The court found that petitioner’s as-
sured, Doosan, had not been a party to the bill issued to
Streamline Shippers, and denied the motion to dismiss.
* Id. § 3(22), 46 U.S.C. app. § 1702(22).
6
Questioning whether petitioner, in its subrogation action,
could pursue its in rem claim against the ship without
eventually “accepting” the bill issued to Streamline Ship-
pers, the court warned that it would dismiss the in rem
action to Seoul if petitioner in future accepted the benefit
of the vessel owner’s bill. See Kukje Hwajae Ins. Co. v.
M/V HYUNDAI LIBERTY, 1999 WL 1293507, 1999
A.M.C. 2199 (C.D. Cal. 1999) (Pet. App. 23-33). The M/V
HYUNDAI LIBERTY moved for reconsideration, and the
district court denied that motion as well (Pet. App. 34-41).
6. Petitioner and the M/V HYUNDAI LIBERTY then
filed cross-motions for summary judgment. To establish
that the vessel had received the goods at Busan in appar-
ent good order and condition, petitioner cited the bill of
lading issued by Hyundai to Streamline Shippers. A
boilerplate provision on the back of that bill stated that
the goods were loaded in apparent good order and condi-
tion unless notations of damage appeared on the front side
of the bill. Based on Hyundai’s claim to ownership of the
M/V HYUNDAI LIBERTY, the absence of any notations on
the face of the bill Hyundai issued constituted an admis-
sion by a party opponent — the vessel defendant, through
her owner — that the goods had been loaded aboard in
apparent good order and condition.
Disregarding the difference between an evidentiary
offer of the terms of a contract as an admission by a party
opponent and a third-party beneficiary’s acceptance of the
benefits of a contract, the district court held that peti-
tioner had “accepted” the Hyundai bill of lading by offering
it as evidence of an admission. The court then enforced the
bill’s forum-selection clause against petitioner by ordering
the in rem action dismissed to Seoul, where it would be
7
time-barred by the one-year statute of limitations set forth
in COGSA and in the bill of lading (Pet. App. 17-21).
| 7. Petitioner filed an appeal from the court's order of
dismissal, and the M/V HYUNDAI LIBERTY filed a cross-
appeal from the earlier order denying its motion to enforce
the forum-selection clause in the Hyundai bill on the
ground that Doosan was not bound by it.
8. The court of appeals’ opinion does not discuss the
issue appealed by petitioner: the lower court’s determina-
tion that petitioner’s evidentiary offer of the contract
between Hyundai and the shippers’ association operated
as an acceptance of that contract by petitioner. The court
of appeals affirmed the result below on an entirely differ-
ent ground, holding that Doosan had been bound, after all,
by the bill the vessel owner issued to Streamline Shippers.
Though denominated as an affirmance on other grounds,
this was, in fact, a reversal of the district court’s earlier
denial of the vessel’s motion to dismiss under the vessel
owner’s forum-selection clause.° Though the opinion does
not acknowledge this, the court of appeals implicitly
granted the M/V HYUNDAI LIBERTY’s cross-appeal from
the denial of that motion.
The district court had found, as a fact, that peti-
tioner’s insured, Doosan, was not a party to the bill Hyun-
dai Merchant Marine issued to the shippers’ association. It
found that the bill of lading which reflected the contract of
carriage entered into by Doosan was the bill issued to
Doosan by Glory Express. The record on appeal contained
* See M/V HYUNDAI LIBERTY, supra, 1999 WL 1293507, 1999
A.M.C. 2199 (Pet. App. 23-33).
no evidence that Doosan had needlessly duplicated its
contract with Glory Express by additionally contracting
with Hyundai Merchant Marine — which would have
obligated Doosan to pay twice for shipping the goods once.
The record also contained no evidence that Glory Express
had acted as Doosan’s agent in procuring a vessel to carry
the goods.
Despite the absence of any record evidence to support
such a finding, the court of appeals held that Doosan had
authorized Glory Express to act as its agent for purposes
of binding Doosan to a contract of carriage with an ocean
common carrier, and that Glory Express had done so by
contracting, on Doosan’s behalf, with Hyundai Merchant
Marine. The court of appeals did not consider whether
Glory Express could bind Doosan to the vessel owner’s bill
without Doosan’s assent. Apparently, the court did not
consider that the putative agent, Glory Express, actually
must have Doosan’s assent either to act as its agent
directly or — another point the court overlooked — to
delegate its alleged authority to Streamline Shippers
Association, the party that contracted with Hyundai
Merchant Marine and appeared as shipper in Hyundai’s
bill of lading. Relying on cases from the Second and
Eleventh Circuits, the court of appeals held that the
NVOCC contracts with the ocean carrier as the agent for
the owner of the goods. See Kukje Hwajae Ins. Co. v. M/V
HYUNDAI LIBERTY, 294 F.3d 1171, 1176 (9th Cir. 2002)
(Pet. App. 8). The court of appeals then noted that
“[njothing in the record suggests that the relationship
between Doosan and Glory Express deviated from that
commercial norm.” Id. (Pet. App. 10) (emphasis added).
The court of appeals raised this agency theory sua
sponte during oral argument; the vessel defendant had not
9
made an agency argument either in opposing petitioner’s
appeal or in bringing its cross-appeal. During oral argu-
ment, the court indicated its intention to rule that the
NVOCC generally acts as the agent of the shipper, and
thus binds the shipper to the bill of lading issued by the
actual ocean carrier. As neither of the cross-appeals raised
the agency issue, the court of appeals reached its decision
without the benefit of briefing. In argument, petitioner’s
counsel asked the court to consider the conflict its agency
theory would create with the statutory definition of “non-
vessel-operating common carrier” set forth in the Shipping
Act. The court’s opinion quoted that definition, but relied
instead on the jurisprudence: “Both commentators and
courts have recognized that an NVOCC generally acts as
the agent of the cargo owner/shipper when it contracts
with the ocean carrier to ship the cargo owner’s goods.” Id.
at 1176 (Pet. App. 8-9).
9. Petitioner filed a timely petition for rehearing.
The petition pointed out that the decision contradicted the
basic rule that an agent cannot be created without the
principal’s consent; agency cannot arise by operation of
law or by any “commercial norm.” The petition also argued
that the court of appeals had contradicted the plain
meaning of the federal statute which defines the NVOCC
and controls its relationship with shippers and with ocean
common carriers. Under the Shipping Act, an NVOCC is
not the agent of the shipper with whom it contracts; it is
instead a carrier, albeit one without a vessel, and stands in
the same relation to the vessel-operating common carrier
as would a shipper who deals directly with that carrier. By
redefining the NVOCC as an agent of the shipper instead
of an independent carrier in a chain of carriers, the court
10
of appeals contravened and rejected the plain meaning of
the statute.
The court of appeals acted on the petition for rehear-
ing by ordering respondent to submit a response (Pet. App.
42-43). In its response, respondent adopted the court’s
theory that Glory Express had been Doosan’s agent and
thereby had bound Doosan to the owner’s bill of lading.
Following the response, the court of appeals issued an
order denying the petition for rehearing (Pet. App. 44-45).
10. This petition for a writ of certiorari followed.
4
Vv
REASONS FOR GRANTING THE PETITION
There are two reasons for granting the writ of certio-
rari. First, by ruling that Second Circuit case law super-
sedes the Shipping Act’s definition of the “non-vessel-
operating common carrier” as a common carrier, the court
of appeals’ decision expands the number of district courts
that will be required to treat NVOCCs as shipper’s agents
rather than common carriers. This widening of the judicial
redefinition of the statutory role and status of these
common carriers has the potential to frustrate the na-
tional maritime policy behind the regulation of NVOCCs’
transactions with shippers and ccean common carriers.
Agency efforts to regulate NVOCCs began in 1961, and
culminated in Congress’ inclusion of a formal definition of
NVOCCs in the Shipping Act of 1984. The Federal Mari-
time Commission is not likely to endorse the judicial
redefinition of NVOCCs as shipper’s agents. Second, the
redefinition of NVOCCs by the Ninth and Second Circuits
creates a conflict in the circuits over whether the NVOCC
is a shipper’s agent or a statutory common carrier.
11
1. Statutory construction. The role and status of non-
vessel-operating common carriers (“NVOCCs”) is pre-
scribed and fixed by statute — the Shipping Act of 1984.
The purpose of fixing their role and status is to enable the
Federal Maritime Commission to regulate the practices of
NVOCCs in furnishing ocean transportation to shippers
such as petitioner’s assured, and to regulate parallel
transactions between NVOCCs and ocean common carri-
ers. The Shipping Act affords a painstakingly tailored
statutory scheme designed to accomplish the regulatory
requirements cof federal maritime policy.
The decision of the court of appeals contradicts the
statutory definition of “non-vessel-operating common
carrier,” altering the NVOCC’s statutory relationship with
shippers on the one hand and with ocean common carriers
on the other. The immediate effect of this decision is to
enable ocean common carriers to enforce tariff and other
contractual provisions against shippers with whom they
are not in privity, simply by recharacterizing the NVOCCs
with whom they contracted as agents of the shippers,
thereby defeating Congress’ definition of NVOCCs as
statutory common carriers. It may be predicted that a
long-term effect of the decision will be to frustrate the
legislative purpose for regulating the practices of NVOCCs
— to the detriment of the comprehensive scheme of federal
maritime regulation of which the Shipping Act, adminis-
tered by the Federal Maritime Commission, forms the
central part.
2. Circuit conflict. The Court of Appeals for the
Ninth Circuit held that the shipper, Doosan, was bound as
a principal to the ocean carrier’s bill of lading on the
theory that the NVOCC, Glory Express, was the shipper’s
agent when it contracted with Hyundai Merchant Marine
12
for vessel transportation. According to the court, it is a
“commercial norm” that the NVOCC is the agent of the
shipper for purposes of contracting with the ocean carrier.’
The Ninth Circuit thus aligned itself with the Second
Circuit’s view that the NVOCC acts as agent of the ship-
per.’ These precedents appear to conflict with decisions of
the First, Third, Eighth, and District of Columbia Circuits
which have treated NVOCCs as shippers in their relation-
ships with ocean common carriers.’ Although the Eleventh
Circuit once followed the Second Circuit’s agency theory,”
it has moved away from that view and now holds that a
freight forwarder assuming the duties of a common carrier
is not the agent of its shipper when it contracts with an
ocean carrier for vessel transportation.” This Court has
” See M/V HYUNDAI LIBERTY, supra, 294 F.3d at 1176 (Pet. App.
10).
* See Insurance Co. of North America v. S/S AMERICAN ARGOSY,
732 F.2d 299, 301 (2d Cir. 1984) (interpreting NVOCC definition as then
codified at 46 C.F.R. § 510.2(1)) (Pet. App. 72).
* See Fireman’s Fund American Ins. Cos. v. Puerto Rican Forward-
ing Co., 492 F.2d 1294, 1295 (1st Cir. 1974); Puerto Rico Maritime
Shipping Authority v. Valley Freight Systems, Inc., 856 F.2d 546, 547
(3d Cir. 1988); New York Shipping Ass’n v. Federal Maritime Comm’n,
272 U.S. App. D.C. 129, 135-36, 854 F.2d 1338, 1344-45 (D.C. Cir. 1988);
New York Foreign Freight Forwarders & Brokers Ass’n v. Interstate
Commerce Comm’n, 191 U.S. App. D.C. 173, 183, 589 F.2d 696, 706
(D.C. Cir. 1979).
* See Insurance Co. of North America v. M/V OCEAN LYNX, 901
F.2d 934, 937 n.2 (11th Cir. 1990) (citing S/S AMERICAN ARGOSY,
732 F.2d at 301). —
" See James N. Kirby Pty, Ltd. v. Norfolk Southern R. Co., 300 F.3d
1300, 1305 (11th Cir.), reh’g & reh’g en banc denied, __ F.3d ____ (Oct. 7,
2002).
13
noted that NVOCCs are regulated by the Federal Mari-
time Commission,” but has never decided whether the
NVOCC is a shipper or, instead, an agent of the shipper
within the meaning of the Shipping Act definition of “non-
vessel-operating common carrier.”
1. The role and status of NVOCCs is prescribed by
federal statute, and the decision below contra-
venes the statute.
Ocean transportation in tae foreign commerce of the
United States has been a subject of federal regulation
since 1916, when Congress — concerned with ensuring a
viable merchant marine in the context of the Great War in
Europe — passed the Shipping Act, 1916, 39 Stat. 728, 46
U.S.C. §§ 801-842, and established the predecessor agency
of the Federal Maritime Commission. Through the 1916
act’s statutory successor, the Shipping Act of 1984, 98 Stat.
67, as amended, 46 U.S.C. §§ 1701-1719, Congress contin-
ues to regulate the foreign waterborne commerce of the
United States and delegates the administration of such
regulation to the Federal Maritime Commission.
Although today the regulation of NVOCCs forms an
integral part of Congress’ overall scheme, the term “non-
vessel-operating common carrier” did not appear in the
original Shipping Act, 1916, 46 U.S.C. §§ 801-842.
NVOCCs did not come into being until the emergence of
” See NLRB v. International Longshoremen’s Ass’n, AFL-CIO, 447
U.S. 490, 496 n.8 (1980).
14
containerization in the 1950s,” which created a demand
for persons who could consolidate several small shipments
in a single container and thereby save individual shippers
the cost of shipping by “traditional, labor-intensive meth-
ods.””*
The first: regulatory definition of the NVOCC was the
product of rulemaking by the Federal Maritime Commis-
sion, and specifies that the NVOCC procures a vessel “in
his own name,” not as an agent of the shipper:
As defined in Commission decisions and regula-
tion, an NVOCC is a person who holds himself out
by the establishment and maintenance of tariffs,
by advertisement and solicitation, and otherwise,
to provide transportation for hire by water in in-
terstate or foreign commerce as defined in the
Shipping Act, 1916; assumes responsibility or has
liability imposed by law for the safe water trans-
portation of the shipments and arranges in his
own name with underlying water carriers for the
performance of such transportation.
Ship’s Overseas Service, Inc. v. Federal Maritime Comm'n,
216 U.S. App. D.C. 146, 149, 670 F.2d 304, 307 (D.C. Cir.
1981) (emphasis added).”
* This Court has noted that the first oceangoing containership was
introduced in the Port of New York in 1957. See NLRB v. International
Longshoremen’s Ass’n, AFL-CIO, 473 U.S. 61, 65 (1985).
“ New York Shipping Ass’n v. Federal Maritime Comm’n, 272 U.S.
App. D.C. 129, 136, 854 F.2d 1338, 1345 (D.C. Cir. 1988).
* The court cited the Federal Maritime Board’s ruling in Determi-
nation of Common Carrier Status, 6 F.M.B. 245, 256-57 (1961); two
Federal Maritime Commission decisions, Pacific Coast European
Conference v. Southern Pac. Marine Transport, Inc., 20 F.M.C. 166, 168
(Continued on following page)
15
In 1962, the Federal Maritime Commission” issued a
notice of proposed rulemaking to define NVOCCs. The
proposed definition closely tracked the language used by
its predecessor agency, the Federal Maritime Board, to
describe NVOCCs in Determination of Common Carrier
Status, supra note 15, 6 F.M.B. at 256. The proposed
definition was adopted as a final rule in 1963. See 28 Fed.
Reg. 4300 (May 1, 1963) (codified at 46 C.F.R. § 510.21(d)).
It was modified in a rulemaking entitled Licensed Inde-
pendent Ocean Freight Forwarders, 46 Fed. Reg. 24565,
24569 (May 1, 1981) (codified at 46 C.F.R. § 510.2(/)) (Pet.
App. 72).”
When Congress substantially revised the federal
regulatory scheme by enacting the Shipping Act of 1984, it
took care to include a statutory definition of the NVOCC:
(17) “non-vessel-operating common carrier”
means a common carrier that does not operate
the vessels by which the ocean transportation is
provided, and is a shipper in its relationship with
an ocean common carrier.
Shipping Act of 1984, 98 Stat. 67 § 3(17), 46 U.S.C. app.
§ 1702(17) (recodified at 46 U.S.C. § 1702(17)B)).
(1977) and Possible Violations of Section 18(a) of the Shipping Act,
1916, 19 F.M.C. 44, 56 (1975); and the definition of NVOCC at 46 C.F.R.
§ 510.21(d)).
** The Federal Maritime Board’s powers were transferred to the
Federal Maritime Commission, with effect from August 12, 1961, by
Reorganization Plan No. 7 of 1961, 75 Stat. 840 (1961).
™ The current definition of NVOCC is codified at 46 C.FR.
§ 515.2(1) (Pet. App. 73).
16 -
In the Ocean Shipping Reform Act of 1998, 112 Stat.
1902, Congress amended the Shipping Act of 1984 but
retained its NVOCC definition, combining NVOCCs with
ocean freight forwarders under the rubric of “ocean trans-
portation intermediaries.” See Shipping Act of 1984, as
amended by the Ocean Shipping Reform Act of 1998 § 17,
“Ocean Transportation Intermediaries,” 46 U.S.C. app.
§ 1702(17) (defining ocean freight forwarders in subsection
(17A) and NVOCCs in subsection 17(B)) (Pet. App. 46-
47).
That Congress meant the NVOCC to be a shipper, not
a shipper’s agent, in contracting with ocean common
carriers is evident from the current definition of “shipper”
“as including —
(E) an ocean transportation intermediary, as de-
fined in paragraph (17)(B) of this section [i.e., an
NVOCC], that accepts responsibility for payment
of all charges applicable under the tariff or ser-
vice contract.
Id. § 3(21)(E), 46 U.S.C. app. § 1702(21)(E) (Pet. App. 47).
Congress included persons acting as shipper’s agents
in its definition of ocean freight forwarders:
“ocean freight forwarder” means a person in the
United States that —
dispatches shipments from the United States via
common carriers and books or otherwise ar-
ranges space for those shipments on behalf of
shippers ....
Id. § 3(18), 46 U.S.C. app. § 1702(18) (emphasis added)
(recodified as amended at 46 U.S.C. app. § 1702(17)A))
(Pet. App. 46-47).
17
By holding as a matter of law that the NVOCC Glory
Express was an agent, not a principal, to the contract with
Hyundai Merchant Marine and that the cargo owner
Doosan was instead the principal, the court of appeals’
opinion purports to shift responsibility for payment of the
ocean carrier from the NVOCC to the cargo owner. This
contradicts the express allocation of such responsibility to
the NVOCC at id. § 3(21)(E), 46 U.S.C. app. § 1702(21)(E)
(Pet. App. 47).
The Shipping Act contemplates two separate transpor-
tation contracts — one ) etween the cargo owner and the
NVOCC; the other between the NVOCC and the ocean
common carrier. The Federal Maritime Commission has
the duty to regulate the carriers represented in each of
these contracts. The act requires both ocean common
carriers and NVOCCs to publish tariffs, and to observe
their tariff provisions. See id. § 8, 46 U.S.C. app. § 1707
(Pet. App. 48-49). The act also authorizes the Commission
to take action against ocean common carriers and
NVOCCs that engage in prohibited acts. See id. § 10, 46
U.S.C; § 1709 (Pet. App. 50).
The court of appeals’ opinion deals a double blow to
this regulatory framework. First, it redefines the shipper-
carrier relationship between the cargo owner and the
NVOCC, thus running afoul of the Commission’s regula-
tion of NVOCCs through their carrier tariffs. Second, the
opinion expressly nullifies the shipper-carrier relationship
between the NVOCC and the ocean common carrier,
contradicting the Commission’s oversight of those transac-
tions as well. Under the rule announced below — that the
NVOCC, as a “commercial norm,” is the agent of the
shipper (i.e., the cargo owner) — NVOCCs would, at a
18
minimum, be relieved of the statutory responsibility to pay
ocean common carriers under applicable tariffs.
In 1990, Congress moved to strengthen the regulation
of NVOCCs by enacting the Non-Vessel Operating Com-
mon Carrier Amendments, Pub. L. 101-595, 104 Stat. 2979
(1990) (formerly codified at 46 U.S.C. app. § 1721; recodi-
fied by Ocean Shipping Reform Act, 112 Stat. 1902, at 46
U.S.C. app. § 1718) (Pet. App. 51-54). These amendments
to the Shipping Act require NVOCCs to post bonds as
security for shippers’ claims arising from transportation-
related activities. As a result of these bonding require-
ments, the Commission now regulates more than 2,700
NVOCCs, both domestic and foreign. For fiscal year 2001,
the Commission reported:
At the end of the fiscal year, 1,331 freight for-
warders, 1,251 U.S. NVOCCs, 844 joint
NVOCC/ocean freight forwarders, and 38 foreign
NVOCCs held active OTI licenses. An additional
599 foreign NVOCCs maintained proof of finan-
cial responsibility on file with the Commission
but chose not to be licensed.
40th Annual Report for Fiscal Year 2001 (F.M.C. Mar. 31,
2002) at 98 (submitted to Congress pursuant to Reorgani-
zation Plan No. 7 of 1961, 75 Stat. 840 § 103(e) and Mer-
chant Marine Act, as amended, § 208, 46 U.S.C. app.
§ 1118).
In the Shipping Act of 1984, the Non-Vessel Operating
Common Carrier Amendments of 1990, and the amend-
ments to the Shipping Act contained in the Ocean Ship-
ping Reform Act of 1998, Congress consistently has
defined the NNVOCC as a shipper in its relationship
with an ocean common carrier. In all three enactments,
19
Congress knew what it was doing. As this Court observed
in construing another term defined in the 1916 Shipping
Act, “[t]he common sense of all this, of course, is that
Congress knew what it was about in both instances. We
cannot ignore its repeated demonstrations of that fact. To
do so would be to rewrite the statute... .” United States v.
American Union Transport, Inc., 327 U.S. 437, 456 (1946).
The Commission’s determination to define and regu-
late NVOCCs” — culminating in the inclusion of NVOCCs
in the Shipping Act of 1984” — is based on the experience
recounted in the following excerpt from a decision which
reveals that the Commission expressly rejects the view —
adopted by the court of appeals — that an NVOCC is a
“shipper’s agent”:
In other contexts, carriers attempt to find their
operations exempt from regulation by calling
themselves by other names. For example, non-
vessel operating common carriers by water have
designated themselves as shippers’ “agents”
rather than carriers and have even disavowed
cargo liability for cargo loss or damage or they
have called themselves some other thing rather
than what they truly are. The reason for these
erroneous self-designations is usually to avoid
* The final rule that first defined the NVOCC was proposed early
in 1962, just six months after the transfer of authority from the Federal
Maritime Board to the Federal Maritime Commission. See Practices of
Licensed Independent Ocean Freight Forwarders, Ocean Freight
Brokers, and Oceangoing Common Carriers — Notice of Proposed
Rulemaking, 27 Fed. Reg. 1775 (Feb. 24, 1962).
*” 98 Stat. 67 § 3(17), 46 U.S.C. app. § 1702(17) (recodified at 46
U.S.C. app. § 1702(17\B)) (Pet. App. 47).
20
some requirement of law, e.g., tariff-filing, avoid-
ance of liability as a carrier or amenability to
suit under section 22 of the 1916 Act, or avoid-
ance of section 15 consequences. Thus, in Possi-
ble Violations of Section 18(a) of the Shipping
Act, 1916, 19 FM.C. 44 (1975), respondent
claimed that it was not a carrier but a “shipper’s
agent” not subject to tariff-filing requirements.
However, respondent was found to be a carrier by
virtue of what it actually did, not what it named
itself, and liability as a carrier was found to be
imposed on respondent as a matter of law. . . . [I]t
has long been recognized that a non-vessel oper-
ating common carrier by water and sometimes
a vessel-operating carrier may take the position
of shipper vis a vis another carrier, although
maintaining its basic nature as a common carrier
towards its own shippers.... [Slee also Is-
brandtsen Co. v. States Marine, 6 F.M.B. 422
(1961), a case illustrating how a vessel-operating
carrier needing space to carry out its carrier obli-
gations to its own shippers, can become a shipper
itself when it books cargo on another carrier’s
vessels. The fact that a carrier may be shown as
shipper or consignee on another carrier’s bill of
lading may determine the relationship between
the two carriers but does not change the first
carrier’s status as a common carrier vis a vis the
first carrier’s shippers.
Prudential Lines, Inc. v. Farrell Lines, Inc., 26 F.M.C. 497,
515-16 (ALJ), adopted, 26 F.M.C. 496 (1984).
The Shipping Act definition of “non-vessel-operating
common carrier” is important not only for the regulatory
policy expressed in the act itself, but also because of the
critical position NVOCCs — by consolidating small ship-
ments into a single container — occupy in the movement of
21
oceangoing cargo containers into the United States from
foreign ports. In the aftermath of 9/11, NVOCCs licensed
by the Federal Maritime Commission figure prominently
in rulemaking aimed at preventing the smuggling into this
country of weapons of mass destruction. On October 31,
2002, in furtherance of the national security, the Depart-
ment of the Treasury promulgated a final rule “to require
the advance and accurate presentation of certain manifest
information prior to lading at the foreign port and to
encourage the presentation of this information electroni-
cally.” 67 Fed. Reg. 66318 (Oct. 31, 2002) (Pet. App. 60-71).
The purpose of the rule is to enable the Customs Service
“to evaluate the risk of smuggling weapons of mass de-
struction through the use of oceangoing cargo containers
before goods are loaded on vessels for importation into the
United States,” with a minimum of delay in the Customs
processing of legitimate cargo. See id. (Pet. App. 60). The
rule permits non-vessel-operating common carriers cur-
rently licensed by the Federal Maritime Commission to
submit manifests electronically (Pet. App. 68-69), and
imposes liquidated damages on any NVOCC whose elec-
tronic filing does not comply with the rule. See id. at 66320
(Pet. App. 67-68). The Treasury rule states that, as “a
common carrier that does not operate the vessels by which
the ocean transportation is provided,” the NVOCC “would
be considered a shipper in its relationship with the ocean
common carrier.” Jd. (emphasis added) (Pet. App. 67).
The court of appeals’ determination that NVOCCs are
not shippers in their relationships with ocean common
carriers, but instead are shipper’s agents, contravenes the
plain meaning of “non-vessel-operating common carrier,”
and throws a wrench into the statutory works by contra-
dicting the system of tariffs created by the Shipping Act
and enforced by the Federal Maritime Commission. It may
22
also confuse the Customs Service’s reliance on Commis-
sion-licensed NVOCCs to help monitor imports and ferret
out containerized weapons of mass destruction before they
reach their intended recipients in this country.
2. The circuits conflict in their construction of
the statute.
The courts of appeals differ in their construction of the
Shipping Act definition of “non-vessel-operating common
carrier.” In the present case, the Ninth Circuit followed
decisions of the Second” and Eleventh” Circuits in holding
that the NVOCC, as a matter of law, is the “agent” of the
shipper with whom it contracts.
Although the Eleventh Circuit, in The M/V OCEAN
LYNX,” observed that the shipper could treat the NVOCC
as a common carrier but underlying ocean common carri-
ers treat the NVOCC as the shipper’s agent,” the court
has departed from that view in subsequent decisions. More
recent Eleventh Circuit opinions characterize the NVOCC
not as a shipper’s agent, but as a carrier in relation to the
shipper and a shipper in relation to the ocean common
carrier. In The M/V “TITAN SCAN™ the Eleventh Circuit
*® See S/S AMERICAN ARGOSY, supra, 732 F.2d at 301 (inter-
preting NVOCC definition then codified at 46 C.F.R. § 510.2(2)) (Pet.
App. 72).
* M/V OCEAN LYNX, 901 F.2d 934.
~
* Id. at 937 n.2 (citing S/S AMERICAN ARGOSY, 732 F.2d at
301).
* See Itel Container Corp. v. M/V “TITAN SCAN,” 139 F.3d 1450
(11th Cir.), cert. denied sub nom. Mammoet Shipping B.V. v. Sky
(Continued on following page)
23
held that the bill of lading contract between the shipper
and NVOCC and the bill of lading contract between the
NVOCC and ocean common carrier reflected two separate
transactions.” In Polo Ralph Lauren,” the Eleventh
Circuit reversed a dismissal of the shipper’s cargo claim
against the ocean common carrier, rejecting the lower
court’s ruling that the shipper had no standing because it
was not a party to the ocean carrier’s bill of lading issued
to the NVOCC.” The Eleventh Circuit did not rule, how-
ever, that the shipper was a party to the ocean carrier’s
bill — the holding in the present case; it concluded there
was an issue of whether the shipper was a third-party
beneficiary of the ocean carrier’s bill.” Most recently, the
Eleventh Circuit has held that a freight forwarder which,
by issuing its own bill of lading, assumed the duties of a
non-vessel-operating common carrier, was not the ship-
per’s agent, and did not bind the shipper to the bill of
lading issued by the ocean common carrier.”
Other courts of appeals — although not called upon to
interpret the Shipping Act definition of “non-vessel-
operating common carrier” — have treated NVOCCs ax
Shipping Ltd., 525 U.S. 962 (1998) and cert. denied sub nom. Sky
Shipping Ltd. v. Mammoet Shipping B.V., 525 U.S. 962 (1998).
* See id. at 1453.
* Polo Ralph Lauren, L.P. v. Tropical Shipping & Const. Co., 215
F.3d 1217 (11th Cir. 2000).
*” Id. at 1221-23. The shipper argued that the NVOCC was its
agent for purposes of contracting with the ocean common carrier, but
the court of appeals declined to consider the argument because it had
not been raised in the district court. See id. at 1223-24.
* Id. at 1222-23.
* James N. Kirby Pty, supra, 300 F.3d at 1305.
24
shippers in relation to ocean common carriers. These
include the First,” Third,” and Eighth” Circuits.
Decisions of the District of Columbia Circuit also
appear consistent with the plain meaning of the statutory
definition. The principal service provided by NVOCCs —
consolidating the shipments of two or more shippers into a
single container, thereby reducing each shipper’s cost
below what it would have to pay an ocean carrier for the
same shipment — was described in detail by the District of
Columbia Circuit in New York Shipping, supra, 272 U.S.
App. D.C. at 135-36, 854 F.2d at 1344-45. Earlier, the D.C.
Circuit upheld a determination by the Interstate Com-
merce Commission to treat NVOCCs as the equivalent of
surface freight forwarders when they bring themselves
within ICC jurisdiction by offering through rates for
combined water-motor service. See New York Foreign
Freight Forwarders, supra, 191 U.S. App. D.C. at 183, 589
F.2d at 706 (“NVO’s resemble domestic freight forwarders
in that they hold themselves out to assume responsibility
for the total shipment, and contract with underlying
vessel-owning carriers for the actual transportation by
water in foreign commerce.”).
” See Fireman’s Fund, supra, 492 F.2d at 1295 (explaining that
NVOCC is carrier in relation to its shipper and shipper in relation to
actual water carrier).
* See PRMSA, supra, 856 F.2d at 547 (“Valley is a non-vessel-
operating common carrier and stood as a shipper in relation to Author-
ity in the transactions at issue here.”).
* See Yellow Forwarding Co. v. Atlantic Container Line, 668 F.2d
350, 351 (8th Cir.), cert. denied, 456 U.S. 962 (1982) (explaining that
NVO[CC] employs services of ocean carriers and makes profit by
charging shipper more than it pays ocean carriers).
25
In reviewing a ruling by the National Labor Relations
Board, this Court described the services performed by
NVOCCs in consolidating small shipments into single
containers for carriage by truckers and steamship lines,
and noted that NVOCCs are regulated by the Federal
Maritime Commission. See iVLRB v. International Long-
shoremen’s Ass’n, supra, 447 U.S. at 496 n.8. This Court
has never ruled upon the statutory definition of “non-
vessel-operating common carrier,” and has never deter-
mined whether the NVOCC is an agent of the shipper as a
matter of law. By granting certiorari, the Court can resolve
the conflict in the circuits over whether the NVOCC binds
itself or its shipper as principal to the contract of carriage
with the ocean common carrier.
With this opinion, the Ninth Circuit joins the Second
in contradicting the statutory definition of “non-vessel-
operating common carrier” as “a shipper in its relationship
with an ocean common carrier,” as section 3(17)(B) of the
Shipping Act provides. The Second Circuit came to this
conclusion in The S/S AMERICAN ARGOSY, supra, 732
F.2d 299. Decided in the year the Shipping Act of 1984 was
enacted, The S/S AMERICAN ARGOSY construed the
definition of non-vessel-operating common carrier as it
was then defined in the Commission’s regulations. See 732
F.2d at 301 n.2 (quoting 46 C.F.R. § 510.2(/)) (Pet. App. 72).
District courts have continued to apply the Second Cir-
cuit’s interpretation to NVOCCs under the statutory
definition in the Shipping Act of 1984. See, e.g., Project
Hope v. M/V IBN SINA, 96 F. Supp. 2d 285, 296 (S.D.N.Y.
2000), aff’d in part, vacated in part on other grounds, 250
F.3d 67 (2d Cir. 2001) (“Under federal regulations, an
NVOCC ... is an agent of the shipper ... in its relation-
ship with an ocean common carrier.”); Modern Office
26
System, Inc. v. AIM Caribbean Exp., Inc., 802 F. Supp. 617,
623 (D.P.R. 1992) (“With respect to the vessel and her owner,
however, the NVOCC is an agent of the shipper. . . . ”)
Although derivative of The S/S AMERICAN AR-
GOSY, the court of appeals’ misinterpretation of the
relationship between NVOCC and ocean common carrier
in this case already has grown its own legs. The decision
below served as authority for the result reached in Jockey
Intern., Inc. v. M/V “LEVERKUSEN EXPRESS,” 217
F. Supp. 2d 447, 457 (S.D.N.Y. 2002) (quoting The M/V
HYUNDAI LIBERTY, 294 F.3d at 1177) (“As the Ninth
Circuit explained, ‘because an NVOCC is considered, in
, general, to act as an agent for the cargo’s owner when it
contracts for carriage on a vessel, and because in this case
[the NVOCC] was acting as [the cargo owner’s] agent
when it accepted the [shipper’s] bill of lading, [the cargo
owner’s subrogated insurer] is bound by that bill.’”).
Shortly after the opinion below was issued, the Elev-
enth Circuit decided a similar case involving a freight
forwarder that had performed the functions of an NVOCC
by issuing a bill of lading in which it assumed carrier
responsibility for the goods. In James N. Kirby Pty, supra,
300 F.3d 1300, the court of appeals reviewed the district
court’s determination that the appellee railroad, a subcon-
tractor of the ocean common carrier whose ship had
transported the appellant’s goods, could enforce the ocean
carrier’s bill of lading against the shipper, even though the
shipper had contracted not with the ocean carrier, but
with an intermediary freight forwarder. Based on the fact
that the freight forwarder issued its own bill of lading in
which it undertook carrier responsibility for the goods, the
Eleventh Circuit concluded that the shipper’s contract of
carriage was with the freight forwarder, not with the
27
ocean common carrier by whom the railroad had been
employed. The court rejected the railroad’s contention that
the freight forwarder had functioned as the agent of the
shipper and, as such, had bound the shipper directly to the
ocean common carrier. The court found that the freight
forwarder was itself the other principal to the ocean
carrier’s contract, and had bound only itself, not the
shipper, to its terms. See id. at 1305-07.
Kirby implicitly operates on the principle that a
person cannot be held to the terms of a contract to which
he has not assented. In the present case, the court of
appeals located the required meeting of the minds not in
any evidence of assent by petitioner’s assured (there was
none), but in what it described as the “commercial norm”
that NVOCCs are shipper’s agents: “Nothing in the record
suggests that the relationship between Doosan and Glory
Express deviated from that commercial norm.” M/V
HYUNDAI LIBERTY, supra, 294 F.3d at 1176 (citing M/V
OCEAN LYNX, supra, 901 F.2d at 937 n.2; S/S AMERI-
CAN ARGOSY, 732 F.2d at 301). Treating the NVOCC as
the shipper’s agent, the court of appeals imposed the
terms of the ocean carrier’s bill of lading on a shipper that
had contracted with the NVOCC, not with the ocean
carrier. Based on this agency theory, the court of appeals
enforced the ocean carrier’s Korean forum-selection clause
and dismissed the case. Petitioner’s claim was thus dis-
missed under a forum clause in a bill of lading to which its
assured had given neither assent nor acceptance. In order
to enforce the forum-selection clause in the Hyundai bill,
the court of appeals — lacking evidence of an agency
agreement — concluded that the NVOCC was the agent of
the shipper by operation of a “commercial norm.”
28
When this Court, in Vimar Seguros y Reaseguros, S.A.
v. M/V SKY REEFER,” enforced a foreign arbitration
clause against the insurer of a shipper who sought the
exclusive remedy provided by COGSA,™ surely it was not
intended that the lower courts, thereafter, would enforce
forum-selection clauses against nonparties to ocean-carrier
bills of lading. By holding that NVOCCs, as a matter of
law or commercial norm, are shipper’s agents, the court of
appeals below joins the Second Circuit in negating both a
basic rule of contract law — assent to be bound” — and the
statutory definition of NVOCC. Petitioner respectfully
asks this Court to resolve this conflict in the circuits by
overruling the Ninth and Second Circuits’ “agency” defini-
tion of NVOCC.
* 515 U.S. 528 (1995).
“ Carriage of Goods by Sea Act, 49 Stat. 1208, 46 U.S.C. app.
§§ 1300-1313.
* See, e.g., Runyon v. McCrary, 427 U.S. 160, 194 (1976) (citing
REST. CONTRACTS § 19(b) (1932); 1 SAMUEL WILLISTON, LAW OF CON.
TRACTS § 18(3) (3d ed. 1957)).
29
CONCLUSION
For the foregoing reasons, the petition for a writ of
certiorari should be granted.
Respectfully submitted,
MICHAEL W. LODWICK
Counsel of Record
HAIGHT BROWN & BONESTEEL LLP
5 Hutton Centre Drive, Suite 900
Santa Ana, California 92707-0510
(714) 754-1100
Attorneys for Petitioner
Dated: November 22, 2002.
4
APPENDIX TABLE OF CONTENTS
Opinion of the United States Court of Appeals
for the Ninth Circuit, filed June 26, 2002......... App.
Judgment of the United States District Court,
Central District of California, filed October 10,
2000; entered October 12, 2000......................0 App.
Order of the United States District Court,
Central District of California, dated May 24,
1999; entered May 26, 1999..................cccceceeeeees App.
Amended Order of the United States District
Court, Central District of California, filed Au-
gust 3, 1999; entered August 4, 1999.0... App.
Order of the United States Court of Appeals for
the Ninth Circuit, filed July 22, 2002 ............... App.
Order of the United States Court of Appeals for
the Ninth Circuit, filed August 28, 2002........... App.
Shipping Act of 1984 §3, 46 U.S.C. app.
A se laitictintteanascansiensescsavncsacsctsaveveses App.
Ee eet inaldeniniaaceseavsbesstanane’neberzoonniace App.
NS siniadsl Vacniineadsbocscesacteidensisecavsexcoucsene App.
tein sicccedincsnsentnsbssvssesenssoseess App.
S. Rep. No. 420, 101st Cong., 2d Sess. 1990,
1990 WL 201672 (Leg. Hist.), reporting on P.L.
101-595, Non-Vessel Operating Common Car-
rier Amendment of 1990 .................ccccccceeceeeeeeees App.
67 Fed. Reg. 66318 (Oct. 31, 2002).................... App.
46 C.F.R. § 510.2(1) (repealed) ..................eceeeeees App.
i cnacsicansapsnsonsserccenanonessees App.
17
23
34
42
44
46
48
50
51
55
60
72
73
App. 1
APPENDIX A
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KUKJE HWAJAE INSURANCE Co., LTD.,
a corporation,
Plaintiff-Appellant /
Cross-Appellee,
Vv.
The “M/V HYUNDAI LIBERTY,” her
Engines, Boilers, Tackle, etc., in rem,
Defendant-Appellee /
Cross-Appellant,
and
GLORY EXPRESS, INC., a business entity,
in personam,
Defendant-Appellee,
GLORY EXPRESS, INC., a California
Corporation,
Third-party plaintiff-Appellee,
v.
STREAMLINE SHIPPERS ASSOCIATION,
a California Corporation,
Third-party defendant,
and
HYUNDAI MERCHANT MARINE CoO., LTD.,
a business entity, DOES 1-10 inclusive,
Third-party defendants-
Appellees.
Nos. 00-56970
00-57049
D.C. No.
CV-98-09217-ABC
OPINION
App. 2
Appeals from the United States District Court
for the Central District of California
Audrey B. Collins, District Judge, Presiding
Argued and Submitted
February 13, 2002 — Pasadena, California
Filed June 26, 2002
Before: Robert R. Beezer, A. Wallace Tashima, and
Susan P. Graber, Circuit Judges.
Opinion by Judge Graber
COUNSEL
Michael W. Lodwick, Haight Brown & Bonesteel LLP,
Santa Ana, California, for the plaintiff-appellant/cross-
appellee.
Christina L. Owen and Robert E. Coppola, Cogswell
Nakazawa & Chang, Long Beach, California, for the
defendant-appellee/cross-appellant.
Simon H. Langer, Beverly Hills, California, for the
defendant/third-party plaintiff-appellee.
OPINION
GRABER, Circuit Judge:
This case requires us to answer two questions: (1)
whether the owner of cargo, who contracted with an
intermediary non-vessel operating common carrier
(NVOCC) to arrange for the carriage of cargo on a ship,
was bound by the forum-selection clause in the bill of
lading issued by the ship’s owner to the NVOCC, and (2)
whether the NVOCC was entitled to take advantage of a
statutory limitation of liability by having given the cargo’s
owner a “fair opportunity” to opt for higher limits by
App. 3
paying a greater charge. We hold that the cargo’s owner
was bound by the forum-selection clause and that the
statutory limitation of liability applies. Accordingly, we
affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Kukje Hwajae Insurance Company is the
subrogated insurer of the Doosan Corporation, a Korean
manufacturer of machinery. Doosan contracted with Glory
Express, Inc., an NVOCC, to ship a “Doosan Brand Verti-
cal Twin Spindle CNC Lathe” from Busan, Korea, to Los
Angeles, California, on the vessel the Hyundai Liberty.
Glory Express issued three bills of lading to cover the
shipment. Each one identifies Doosan as the shipper and
the “Hyundai Liberty” as the “Exporting Carrier.” The
Glory Express bills of lading contain a forum-selection
clause requiring that all suits relating to the carriage of
goods covered by the bills of lading be brought in the
federal courts in New York, although Glory Express has
not sought to enforce that clause here.
Glory Express, in turn, contracted with Hyundai
Merchant Marine Company to ship the lathe on its vessel,
the Hyundai Liberty. It did so by acting through Stream-
line Shippers Association, a nonprofit organization of
shippers (Streamline)." Hyundai Merchant Marine issued
a bill of lading identifying Streamline as the shipper. That
bill of lading provided:
* Streamline acted as the agent of Glory Express; for the practical
purpose of this appeal, they are indistinguishable.
App. 4
The claims arising from or in connection
with or relating to this Bill of Lading shall be
exclusively governed by the law of Korea except
otherwise provided in this Bill of Lading. Any
and all action concerning custody or carriage un-
der this Bill of Lading whether based on breach
of contract, tort or otherwise shall be brought be-
fore the Seoul Civil District Court in Korea.
(Emphasis added.)
According to Plaintiff’s complaint, the lathe was
damaged during the course of the sea voyage, resulting in
more than $200,000 in damages. Plaintiff paid Doosan’s
claim and then initiated this action. The complaint as-
serted claims for damage to cargo, breach of contract,
negligence, breach of duty to care for property in bailment,
and unseaworthiness. Plaintiff brought the action in
personam against Defendant Glory Express and in rem
against the Hyundai Liberty (Hyundai).’
Hyundai moved to dismiss Plaintiff’s complaint as to
the vessel, seeking to enforce the forum-selection clause in
its bill of lading. The district court denied the motion, in
part because it found that Hyundai had not properly
authenticated the copy of the bill of lading that it had
attached to its motion.’ Additionally, the court denied the
* Pursuant to Federal Rule of Civil Procedure C(6) (Supplemental
Rules for Certain Admiralty and Maritime Claims), the Hyundai
Liberty is represented in this action by its owner, Hyundai Merchant
Marine Company.
* That defect was cured at a later date, and neither party argues
that the initial lack of authentication has any bearing on our resolution
of the legal issues presented here.
App. 5
motion because Plaintiff’s subrogor, Doosan, had not
“accepted” the bill of lading and it was, therefore, not
enforceable against Plaintiff. The court stated further
that, if Plaintiff “accepted” the bill during the litigation by
relying on it to establish an element of one of its claims,
the court would entertain again Hyundai’s motion to
enforce the forum-selection clause.
Hyundai filed a motion for partial summary judgment
on the ground that the Carriage of Goods by Sea Act
(COGSA) - specifically 46 U.S.C. app. § 13804(5) — limited
the ship’s in rem liability. Over Plaintiff’s opposition, the
court granted the motion.
Plaintiff then moved for summary judgment against
Glory Express. The court granted the motion in part,
holding that Glory Express was liable to Plaintiff for
damage to the lathe, but that its liability was limited by
the terms of the Glory Express bills of lading and by
COGSA. At that time, the court did not calculate the total
amount of damages for which Glory Express was liable,
because Plaintiff had not established how many “pack-
ages” had been shipped for purposes of COGSA. Glory
Express then moved for summary judgment on the ground
that the total number of packages shipped was six. The
court granted the motion.
Plaintiff and Hyundai filed cross-motions for sum-
mary judgment on the issue of the vessel’s in rem liability.
Each party opposed the other’s motion. The court denied
both parties’ motions and, instead, dismissed the case. The
court reasoned that Plaintiff’s use of a part of the Hyun-
dai bill of lading to establish that the goods were delivered
on board the Hyundai Liberty in good condition consti-
tuted “acceptance” of the bill of lading. The court also held
App. 6
that “any claim that Kukje has against the Hyundai
Liberty must be brought pursuant to the Hyundai’s Bills of
J.ading.” The court dismissed the action with respect to the
ryundai “without prejudice to Plaintiff’s right to bring a
claim that complies with the forum selection clause of the
Hyundai’s Bills of Lading.”
Plaintiff and Hyundai timely appealed.
STANDARDS OF REVIEW
We review for abuse of discretion the district court’s
decision whether to enforce a forum-selection clause.
Fireman’s Fund Ins. Co. v. M.V. DSR Atl., 131 F.3d 1336,
1338 (9th Cir. 1998). A motion to enforce a forum-selection
clause is treated as a motion pursuant to Federal Rule of
Civil Procedure 12(b)(3). Argueta v. Banco Mexicano, S.A.,
87 F.3d 320, 324 (9th Cir. 1996). Consequently, the plead-
ings need not be accepted as true, and facts outside the
pleadings properly may be considered. Jd.
We review de novo the district court’s grant of sum-
mary judgment. Balint v. Carson City, 180 F.3d 1047, 1050
(9th Cir. 1999) (en banc).
DISCUSSION
A. Whether Plaintiff is bound by the forum-selection
clause in the Hyundai bill of lading.
Plaintiff argues that the district court erred by
dismissing the in rem action because of the forum-
selection clause. Plaintiff contends that the clause does not
bind it because Plaintiff’s subrogor, Doosan, never
accepted the Hyundai bill of lading and, therefore, is not a
party to the contract. Plaintiff argues that its evidentiary
App. 7
use of the bill of lading did not operate as “acceptance” of
the contractual terms of the bill. Because Plaintiff does not
seek to enforce the contractual terms of the bill of lading,
but has brought a tort claim for cargo damage, and
because neither Plaintiff nor its subrogor is a party to the
bill of lading, Plaintiff reasons that the forum-selection
clause is not enforceable against it.
Hyundai, by contrast, argues that the court erred by
not enforcing the forum-selection clause at the outset of
the litigation. Hyundai asserts that the clause is enforce-
able against Plaintiff because Plaintiff’s subrogor is a
party to the bill of lading or, in the alternative, is so
“closely related” to the transaction that the clause is
enforceable. We agree with Hyundai that the in rem action
should have been dismissed at the outset for want of
jurisdiction.
As an initial matter, it is clear that Plaintiff’s in rem
action for cargo damage, characterized by Plaintiff as a
tort,’ is within the scope of the forum-selection clause. The
text of the clause provides: “Any and all action concerning
custody or carriage under this Bill of Lading whether
based on breach of contract, tort or otherwise shall be
brought before the Seoul Civil District Court in Korea.”
Plaintiff’s action concerns damage to the lathe that
occurred during “carriage under this Bill of Lading” on
board the Hyundai Liberty.
* But see Polo Ralph Lauren, L.P. v. Tropical Shipping & Constr.
Co., 215 F.3d 1217, 1220-21 (11th Cir. 2000) (holding that, when
COGSA applies, it provides the exclusive remedy for cargo damage
claims, which are “hybrid” contract-and-tort claims).
App. 8
It also is clear that enforcement of the clause does not
contravene COGSA. In Fireman’s Fund, we approved a
similar forum-selection clause requiring that a claim for
cargo damage be brought in Korea. 131 F.3d at 1338-40. In
that case, the plaintiff (the consignee of the cargo covered
by the bill of lading at issue) brought claims for cargo
damage in both an in rem action against the vessel and an
in personam action against the vessel’s charterer. Id. at
1339. We rejected the plaintiff’s argument, which posited
that COGSA barred enforcement of the forum-selection
clause because in rem proceedings are not available under
Korean law, and we held that the district court abused its
discretion when it declined to enforce the clause. Id. at
1338-40. We remanded the case to district court to dismiss
the in rem and in personam proceedings for “want of
jurisdiction.” Id. at 1340.
Therefore, we can, consistent with both precedent and
the terms of the bill of lading, apply the Korean forum-
selection clause to Plaintiff’s in rem action. The question
is whether the clause can be enforced against Plaintiff: We
conclude that it can. That is because the commercial role
of an NVOCC, as well as the facts of this case, lead to the
conclusion that Glory Express was acting as Doosan’s
agent when it accepted the Hyundai bill of lading. As a
result, Doosan — and thus Plaintiff, as Doosan’s subrogee —
are bound by the forum-selection clause in the Hyundai
bill of lading.
As defined by federal statute, an NVOCC is “a com-
mon carrier that does not operate the vessels by which the
ocean transportation is provided, and is a shipper in its
relationship with an ocean common carrier.” 46 U.S.C.
app. § 1702(17)(B). Both commentators and courts have
recognized that an NVOCC generally acts as the agent of
App. 9
the cargo owner/shipper when it contracts with the ocean
carrier to ship the cargo owner’s goods.
A non-vessel operating common carrier, or
NVOCC, contracts with its customers as princi-
pal, agreeing to transport their goods on a voyage
that includes an ocean leg. An NVOCC commonly
issues bills of lading to its customers in its own
name, even though it does not operate the ship
that will carry the goods on the ocean voyage. It
buys space on the carrying ship like any other
customer, receiving a bill of lading from the
owner or charterer of that ship when the goods
are loaded on board. It commonly consolidates
goods from several different shippers into a sin-
gle container, receiving a bill of lading from the
ocean carrier in relation to the container as a
whole. The NVOCC is not authorized by the
owner or master of the carrying ship to issue bills
of lading that will bind the ship; indeed, the
ocean carrier may have no idea that the party to
whom it issues its bill is in fact an NVOCC that
has issued bills of lading itself. The relationship
between ocean carrier and NVOCC is therefore
not one of agency, but is a contractual one em-
bodied in the ocean carrier’s bill of lading, under
which the NVOCC is the shipper. The NVOCC
does not contract with the owners of the goods as aan
agent for the ship. Quite the reverse, it contracts
with the ocean carrier as agent for the owners of
the goods.
Martin Davies, In Defense of Unpopular Virtues: Personifi-
cation and Ratification, 75 Tul. L. Rev. 337, 395-96 (2000)
(footnote citations omitted) (emphasis added); see also Ins.
Co. of N. Am. v. M/V Ocean Lynx, 901 F.2d 934, 937 n.2
(1lth Cir. 1990) (“[The cargo owner] may treat [the
NVOCC] as a common carrier for purposes of COGSA, but
App. 10
underlying carriers ... treat [the NVOCC] as [the cargo
owner’s] agent.” (emphasis added)); Ins. Co. of N. Am. v.
S/S Am. Argosy, 732 F.2d 299, 301 (2d Cir. 1984) (“With
respect to the vessel and her owner, however, the NVOCC
is an agent of the shipper. ...”); Orion Ins. Co. v. M/V
“Humacao”, 851 F. Supp. 575, 577-78 & 577 n.4 (S.D.N_Y.
1994) (concluding that an NVOCC acts as the agent of the
cargo owner when it agrees to the terms of the bill of
lading issued by the vessel’s owner).
Nothing in the record suggests that the relationship
between Doosan and Glory Express deviated from that
commercial norm. To the contrary, the record shows that
Doosan intended Glory Express to act as its agent for the
purpose of shipping the lathe.* The bills expressly provide
that Doosan and Glory Express agree that Glory Express
will arrange for the carriage of the lathe on board the
Hyundai Liberty. Moreover, by the terms of the bills, Glory
Express had authority to use whatever form of transporta-
tion it thought was necessary to transport the goods: “The
Carrier shall have the right at its sole discretion to use
feederships, ferries, lighters, trucks, trains or planes, in
* By recognizing that Glory Express acted as Doosan’s agent when
it accepted the Hyundai bill of lading, we do not mean to suggest that
the relationship between Glory Express and Doosan was one of agent
and principal for all purposes. It is clear from the Glory Express bills of
lading, for example, that the parties intended that Glory Express would
be independently liable, to some extent, for loss or damage to the lathe
that occurred during shipping. See, e.g., Harold Gill Reuschlein &
William A. Gregory, The Law of Agency and Partnership § 7 (2d ed.
1990) (distinguishing between general agents and special agents; the
latter is authorized to conduct a single transaction or series of transac-
tions not involving continuity of service).
App. 11
addition to the Ocean Vessel or its substitute to accom-
plish said carriage.” Cf. Morrow Crane Co. v. Affiliated FM
Ins. Co., 885 F.2d 612, 613 (9th Cir. 1989) (concluding that
the independent freight forwarder with whom the cargo
owner contracted to arrange for the shipping of a crane
was cargo owner’s agent vis-a-vis the vessel’s operator).
Glory Express thus had both the express duty and the
express authority to ship the lathe on the Hyundai Liberty
and to do, within reason, whatever it needed to do in order
to fulfill that obligation. Accepting the Hyundai bill of
lading was a necessary — and reasonable — step for Glory
Express to fulfill its obligation to Doosan. Therefore,
Doosan and Plaintiff are bound by Glory Express’ accep-
tance of the Hyundai bill of lading. Lux Art Van Serv., Inc.
v. Pollard, 344 F.2d 883, 887 (9th Cir. 1965) (“‘A principal
is bound by the acts of his agent within the authority he
has actually given him, which includes not only the precise
act which he expressly authorized him to do, but also
whatever usually belong to the doing of it or is necessary
to its performance.’” (quoting Law v. Stokes, 90 Am. Dec.
655, 656-57 (N.J. 1867))).
In short, because an NVOCC is considered, in general,
to act as an agent for the cargo’s owner when it contracts
for carriage on a vessel, and because in this case Glory
Express, consistent with that commercial norm, was
acting as Doosan’s agent when it accepted the Hyundai bill
of lading, Plaintiff is bound by that bill. Consequently, the
district court abused its discretion when it failed to enforce
the forum-selection clause at the outset of the litigation on
the ground that Doosan had not accepted the Hyundai bill
App. 12
of lading. Nonetheless, we affirm. The district court
properly dismissed Plaintiff’s in rem action against the
Hyundai Liberty (albeit for the wrong reason).°
B. Whether the liability limitations contained in the
Glory Express bills of lading meet the COGSA “fair
opportunity requirement.”
In some instances, 46 U.S.C. app. § 1304(5) limits a
carrier's potentjal liability for loss or damage related to
the carriage of goods. It provides in pertinent part:
Neither the carrier nor the ship shall in any
event be or become liable for any loss or damage
to or in connection with the transportation of
goods in an amount exceeding $500 per package
lawful money of the United States, or in case of
goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in
other currency, unless the nature and value of
such goods have been declared by the shipper be-
fore shipment and inserted in the bill of lading.
Previously, we have identified the circumstances
under which a carrier is entitled to the benefit of that
limitation of liability:
A carrier may limit its liability under
COGSA only if the shipper is given a “fair oppor-
tunity” to opt for a higher liability by paying a
correspondingly greater charge. The carrier has
* Because the action should have been dismissed at the outset for
want of jurisdiction, we do not reach the question whether the COGSA
limitations of liability apply to Plaintiffs action against the Hyundai
Liberty.
App. 13
the initial burden of producing prima facie evi-
dence showing that it provided notice to the
shipper that it could pay a higher rate and opt
for higher liability. The carrier satisfies this ini-
tial burden by legibly reciting the terms of 46
U.S.C. App. § 1304(5) or language to the same ef-
fect in the bill of lading. The burden then shifts
to the shipper to prove it was denied such an
opportunity.
Vision Air Flight Serv., Inc. v. M/V Nat'l Pride, 155 F.3d
1165, 1168-69 (9th Cir. 1998) (citations and internal
quotation marks omitted).
Plaintiff does not contest the applicability of COGSA
to the Glory Express bills of lading. It argues, instead, that
Glory Express cannot avail itself of the COGSA limitations
on liability because the Glory Express bills do not comply
with the “fair opportunity” requirement.
The Glory Express bills of lading contain the following
provision:
In case of any loss or damage to or in connec-
tion with goods exceeding in actual value the
equivalent of $500 lawful money of the United
States per package, or in case of goods not
shipped in package, per shipping unit, the value
of the goods shall be deemed to be $500 per
package or per shipping unit. The Carrier’s li-
ability, if any, shall be determined on the basis of
a value of $500 per package or per shipping unit
or pro rata in case of partial loss or damage,
unless the nature of the goods and a valuation
higher than $500 per package or shipping unit
shall have been declared in writing by the Ship-
per upon delivery to the Carrier and inserted in
this bill of lading and extra charge paid. In such
App. 14
case, if the actual value of the goods per package
or per shipping unit shall exceed such declared
value shall nevertheless be deemed to be de-
clared value and the Carrier’s liability, if any,
shall not exceed the declared value and any par-
tial loss or damage shall be adjusted pro rata on
the basis of such declared value. The words
“shipping unit” shall mean each physical unit or
piece of cargo not shipped in a package, including
articles or things of any description whatsoever,
except goods shippeci in bulk, and irrespective of
weight or measurement unit employed in calcu-
lating freight charges.
(Emphasis added.)
That provision meets the requirements of COGSA. Its
text tracks that of 46 U.S.C. app. § 1304(5). The above-
quoted passage explicitly limits Glory Express’ liability
and informs the shipper — in this case, Doosan — that it
can opt for higher liability by declaring the value of the
goods and paying an extra charge. See Vision Air, 155 F.3d
at 1169 (approving a similar provision).
Plaintiff argues that the provision’s reference to a
“shipping unit” invalidates the clause, because it does not
echo the statutory phrase “customary freight unit” and
therefore operates to reduce Glory Express’ liability below
the level permitted by COGSA. We rejected an identical
argument in Vision Air, 155 F.3d at 1169-70. There, the
plaintiff argued that the carrier’s attempt to limit liability
to $500 per “container,” as distinct from “package” or
“customary freight unit,” invalidated the liability limita-
tion. We disagreed:
When faced with a carrier’s attempt to re-
duce liability through enterprising definitions of
App. 15
“package,” other courts have simply redefined
“package” or “customary freight unit” according
to the dictates of COGSA. Other courts have not,
as [the plaintiff] urges this court to do, held the
limitation of liability provision void altogether.
Whether or not the bill of lading “misla-
beled” or “misbundled” freight units, it nonethe-
less gave [the plaintiff] notice that [the carrier]’s
liability was limited, and invited [the plaintiff] to
opt for a higher liability by paying a correspond-
ingly greater freight charge. This is all COGSA
requires.
Id. at 1170 (citations omitted).
Under the standard articulated in Vision Air, Glory
Express established a prima facie case of compliance with
the “fair opportunity” requirement. Because Plaintiff
argues only that Glory Express failed to establish its
prima facie case, and does not attempt to show that
Doosan actually was denied the opportunity to declare a
higher vlue, we affirm the district court’s holding that the
Glory Express bills of lading comply with the “fair oppor-
tunity” requirement of COGSA.
CONCLUSION
With respect to the in rem action: The forum-selection
clause in the Hyundai bill of lading is enforceable against
Plaintiff. As a result, the district court lacked jurisdiction
over Plaintiff’s in rem action against the Hyundai Liberty
and properly dismissed that action.
With respect to the in personam action: The Glory
Express bills of lading comply with the COGSA “fair
opportunity” requirement. Therefore, Glory Express is
App. 16
entitled to the limitations on liability provided in 46
U.S.C. app. § 1304(5), and the district court properly
granted summary judgment. -
AFFIRMED.
App. 17
APPENDIX B
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
KUKJE HWAJAE
INSURANCE CO., LTD.,
Plaintiff,
Vv.
THE M/V HYUNDAI
LIBERTY and GLORY
EXPRESS, INC.,
Defendants.
GLORY EXPRESS, INC.,
Third-Party Plaintiff,
v.
STREAMLINE SHIPPERS
ASSOC. and HYUNDAI
MERCHANT MARINE CoO.,
LTD.,
Third-Party Defendants.
CV 98-9217-ABC (RZx)
ORDER DENYING
CROSS-MOTIONS
FOR SUMMARY
JUDGMENT, DISMISS-
ING CLAIMS AGAINST
THE M/V HYUNDAI
LIBERTY, AND
TERMINATING CASE
Plaintiff Kukje Hwajae Insurance Company and
Defendant the Hyundai Liberty filed cross-motions for
summary judgment on the issue of the Hyundai Lib-
erty’s liability. On review of the materials submitted by
the parties, the Court finds the motions appropriate for
submission without oral argument. Fed. R. Civ. P. 78;
Local Rule 7.11. The noticed hearing date of October 16,
2000 is VACATED.
App. 18
After considering the materials submitted by the
parties and the case file, the Court DENIES the cross-
motions. However, the Court DISMISSES the case based
on the Hyundai Liberty’s forum selection clause.
I. Background
This is the fourth and fifth in a series of summary
judgment motions that this Court has considered in this
case. In the first one, the Court found that Defendant the
Hyundai Liberty’s liability on Plaintiffs claim was limited
to $3,000. In the second motion, the Court found that
Plaintiff was entitled to judgment against Glory Express.
In the third motion, the Court found that Glory Express
was liable in the amount of $3,000.
In these cross-motions, the parties seek to establish
the liability of the Hyundai Liberty. The Hyundai Liberty
asserts that Kukje has no evidence to support its claims.
Kukje counters that the Hyundai Liberty is liable because
(1) the Court has found that Glory Express is liable, and
(2) the Hyundai Liberty’s Bills of Lading establish that the
Hyundai Liberty received the shipment in good condition.
II. Analysis
A. The Liability of the Glory Express.
The Court finds that the Hyundai Liberty cannot be
held liable based on the finding that Glory Express is
liable. The Glory Express is a non-vessel operating com-
mon carrier (“NVOCC”). “NVOCCs operate as middlemen:
they arrange for relatively small shipments to be picked
up from shippers, consolidate the smaller parcels, and ship
them via a carrier or several carriers. They do not,
App. 19
however, own or charter the ships that actually carry the
cargo.” Insurance Co. of North America v. S/S American
Argosy, 732 F.2d 299, 301 (2d Cir. 1984). An NVOCC is a
common carrier with respect to the shipper who uses its
services. Jd. “With respect to the vessel and her owner,
however, the NVOCC is an agent of the shipper, and thus
merely a customer — indeed, only one customer among
hundreds on any given voyage.” Id. Accordingly, a vessel
cannot be held liable under the bill of lading issued by an
NVOCC. Id. at 304.
Here, Glory Express is liable to Kukje under the bills
of lading issued by Glory Express. Thus, the liability of
Glory Express, an NVOCC, cannot be extended to the
Hyundai Liberty, which is the vessel that carried the
shipment.
B. The Hyundai Liberty’s Bills of Lading.
Alternatively, Kukje points to the Hyundai’s Bills of
Lading as proof of its claims. Specifically, Kukje asserts
that the Bills of Lading show that the Hyundai Liberty
received the shipment in good condition. Because the
Hyundai Liberty returned the goods in damaged condi-
tioned [sic], Kukje claims that it has established a prima
facie case of liability.
The Hyundai Liberty asserts that Kukje’s reliance on
the Hyundai’s Bills of Lading entitles it to invoke the
forum selection clause in the Bills of Lading. As support,
the Hyundai Liberty points to this Court’s previous order,
in which the Court stated: “if during the course of this
litigation Kukje ‘accepts’ the Hyundai Bill of Lading by, for
example relying on its terms to establish an element of its
claims, the Court would entertain a renewed motion to
App. 20
enforce the forum selection clause contained therein.”
(5/24/99 Order at 9.) Kukje, however, counters that it is
not relying on the Bills of Lading but merely using the
Bills as evidence.
The Court believes that Kukje’s use of the bills of
Lading constitutes an acceptance of the Hyundai’s Bills of
Lading. Thus, the Court finds that the Hyundai Liberty
can invoke the forum selection clause.
Additionally, the Court notes that in its May 24, 1999
Order, the Court reserved the question of “[wJhether
Kukje neefed] [sic] to accept the contract to maintain its
claims against the M/V Hyundai Liberty.” (Id. at 9:16-18.)
The Court now finds that any claim that Kukje has
against the Hyundai Liberty must be brought pursuant to
the Hyundai’s Bills of Lading. Various other courts have
held the liability of a carrier is determined by its own bill
of lading even where the actual owner and the shipper
deal through the intermediary of a NVOCC. See Insurance
Co. of North America, 732 F.2d at 304; SPM Corp. v. M/V
Ming Moon, 965 F.2d 1297, -1305 n.9 (3d Cir. 1992);
Nippon Fire & Marine Ins. Co., Ltd. v. Skyway Freight
Systems, Inc., 45 F. Supp. 2d 288, 293-94 (S.D.N.Y. 1999).
The rationale for this holding is described in Nippon
Fire & Marine:
As a general matter, a common carrier can as-
sume that one presenting goods for shipment ei-
ther owns them or has authority to ship
them. ... This must be, since nothing in the du-
ties of a common carrier by the remotest implica-
tion can be held to imply the power to sit in
judgment on the title of the prospective shipper
who has tendered the goods for transporta-
tion.... [A] common carrier should be able,
App. 21
absent special circumstances, to assume that the
individual who proffers the goods for shipment
can accept a bill of lading under the terms and
conditions of shipment stated therein. Absent
special circumstances, the risk that the individ-
ual presenting the goods for shipment is unau-
thorized is better borne by the actual owners of
the goods than a common carrier.... Based on
these principles, .. . it would be unreasonable to
hold a carrier liable beyond the terms of its bill of
lading even where it had no dealing with the
shipper.
45 F. Supp. 2d at 293-94 (internal citations and quotations
omitted.) Kukje does not point to any unusual circum-
stances. Thus, Kukje cannot establish liability outside of
the terms of the Hyundai’s Bills of Lading.’
III. Conclusion
Accordingly, the Court DENIES the cross-motions for
summary judgment.
The Court DISMISSES the claims against the Hyun-
dai Liberty. The dismissal is without prejudice to Plain-
tiffs right to bring a claim that complies with the forum
selection clause of the Hyundai’s Bills of Lading.
SO ORDERED.
* At the same time, the Court notes that the Bills of Lading
preclude the Court from granting summary judgment in favor of the
Hyundai Liberty.
App. 22
DATED: Oct. 10, 2000
/s/ Audrey B. Collins
AUDREY B. COLLINS
UNITED STATES
DISTRICT JUDGE
App. 23
APPENDIX C
THIS CONSTITUTES NOTICE OF ENTRY
AS REQUIRED BY FRCP, RULE 77(d).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
KUKJE HWAJAE ) CASE NO.: CV 98-9217
INSURANCE COMPANY, ) ABC (RZx)
Plaintiff, DEFENDANT M/V
3 HYUNDAI LIBERTY'S
MOTION TO DISMISS
THE M/V HYUNDAI
LIBERTY (in rem), ae
GLORY EXPRESS, INC. ee
(tn personam), MERCHANT MARINE
Defendants. COMPANY, LTD.’S
MOTION TO DISMISS
GLORY EXPRESS, INC.
Third-Party Plaintiff,
v.
STREAMLINE SHIPPERS
ASSOCIATION, HYUNDAI
MERCHANT MARINE
COMPANY, LTD.,
Third-Party
Defendants.
(Filed May 24, 1999)
i i ae a a a a a a a a a a a a a a
Defendant the M/V Hyundai Liberty’s Motion to
Dismiss, and Third-Party Defendant Hyundai Merchant
Marine Company, Ltd.’s Motion to Dismiss, came on
regularly for hearing before this Court on May 24, 1999.
After reviewing the materials submitted by the parties,
App. 24
argument of counsel, and the case file, it is hereby OR-
DERED that (1) the M/V Hyundai Liberty’s Motion is
DENIED, and (2) Hyundai Merchant Marine Company,
Ltd.’s Motion is GRANTED.
I. FACTUAL BACKGROUND
This action arises from the ocean carriage of cargo
from Busan, Korea to Long Beach, California aboard the
defendant vessel, the M/V Hyundai Liberty. The cargo was
ultimately delivered in a “severely damaged condition.”
Compl. q 8.
The cargo at issued [sic] was originally consigned to
Doosan Corporation, Doosan America Corporation, and
Doosan Machinary [sic] USA Inc. (collectively “Doosan”).
Compl. 9 2. Plaintiff Kukje Hwaje [sic] Insurance Co.
(“Kukje”) is Doosan’s subrogated insurer. Kukje alleges
that it reimbursed Doosan for damage to the cargo, and
that therefore Kukje has been subrogated to Doosan’s
right to recover from third-parties.
Doosan contracted with Defendant and Third-Party
Plaintiff Glory Express, Inc. (“Glory Express”) to transport
the cargo from Korea to California. Although it is not clear
from either the pleadings or the motion papers, it appears
that Glory Express subsequently contracted with Third-
Party Defendant Streamline Shippers Association, Inc.
(“Streamline”), a California based non-vessel-operating
common carrier, which-in turn contracted with Third-
Party Defendant Hyundai Merchant Marine Co., Ltd.
(“Hyundai”), the owners and operators of in rem Defen-
dant the M/V Hyundai Liberty. The cargo was eventually
shiped [sic] pursuant to a Hyundai bill of lading that lists
Streamline as the “shipper,” “consignee,” and “notify
iia iil
PARAS IDET NIE Dy end
te tee ena
App. 25
party.” (the “Hyundai Bill of Lading”). See Mot., Exh. A.
The Hyundai Bill of Lading does not, however, expressly
name either Doosan, Kukje, or Glory Express as a named
party. The bill of lading contains a forum selection clause,
pursuant to which “all actions concerning custody or
carriage under the Bill of Lading whether based on breach
of contract, tort or otherwise shall be brought in [Korea].”
II. PROCEDURAL BACKGROUND
On November 16, 1998, Kukje filed a complaint, in
admiralty, asserting causes of action for (1) damage to
cargo; (2) breach of contract; (3) negligence; (4) breach of
duty to care for property in bailment; and (5) unseawor-
thiness. The action was brought in rem against Defendant
the M/V Hyundai Liberty, and in personam against Glory
Express. On February 26, 1999, Glory Express filed a
Third Party Complaint for Indemnification against
Streamline and Hyundai.
On April 30, 1999, the M/V Hyundai Liberty filed a
Motion to Dismiss for improper venue; i.e., seeking to
enforce the forum selection clause. Kukje filed its opposi-
tion on May 10, 1999. On May 17, 1999, the M/V Hyundai
Liberty filed its Reply. Co-defendant Glory Express has
neither joined, nor opposed, the M/V Hyundai Liberty’s
motion.
In addition, on April 30, 1999, Hyundai brought a
Motion to Dismiss the Glory Express Third Party Com-
plaint for Indemnification, also seeking to enforce the
forum selection clause in the Hyundai Bill of Lading.
Glory Express has not opposed this motion.
App. 26
II. [sic] DISCUSSION
A. Kukje’s Argument That “A Motion to Dismiss
for Improper Venue Will Not Lie in Admiralty”
Kukje devotes nearly eight pages of its opposition to
the argument that (1) in the absence of a binding, contrac-
tual forum selection clause, venue would be proper in the
Central District of California, and (2) the instant motion
should be strictly construed as a motion to enforce a
contractual forum selection clause, rather than a motion to
transfer venue “[fJor the convenience of parties and
witnesses” and “in the interest of justice,” as provided by
28 U.S.C. § 1404(a). Neither the Court, nor the M/V
Hyundai Liberty, appear to have any quarrel with these
contentions. See Df.’s Reply at 2:10-21.
B. Kukje’s Evidentiary Objection to the Admissi-
bility of the Hyundai Bill of Lading
As a threshold matter, the Court sustains Kukje’s
objection to the lack of authentication of the Hyundai Bill
of Lading. Federal Rule of Evidence 901 (“Requirement of
Authentication or Identification”) provides as follows:
(a) General provision. — The requirement of au-
thentication . . . is satisfied by evidence sufficient
to support a finding that the matter in question
is what its proponent claims.
“When a witness was present at the signing of a document,
for example, or when the witness actually signed the
document, he or she can testify to the authenticity of a
writing purporting to be that which he or she witnessed or
signed.” 5 Weinstein’s Federal Evidence § 901.03[1] (2d ed.
1999) (citing United States v. Knigge, 832 F.2d 1100, 1108
(9th Cir. 1987)).
App. 27
Here, the M/V Hyundai Liberty offers the declaration
of Masoud Barzin, Hyundai’s General Counsel, who
purports to have “personal knowledge” of the following
fact:
Attached hereto as Exhibit A is a true and cor- —
rect copy of Hyundai Bill of Lading No. HDMU
BUCA222928 dated November 28, 1997. The
original will be available to the Court on the day
this Motion is heard.
Masoud Decl. {{ 1-2. Although Barzin may testify that
Exhibit A is a copy of a document in his possession, which
he refers to as the “original,” he has no personal knowl-
edge that the “original” in his possession is the same
document signed in Korea. Barzin does not state that he is
a signatory to the original or that he was present when the
original was signed. Nor does he even attempt to describe
the chain of custody that resulted in his possession of the
original. In sustaining Kukje’s objection, the Court is not
implying that the only way to authenticate the bill of
lading is through the declaration of one who was present
when the bill was signed. In the absence of evidence
raising an issue as to authenticity, a lesser showing could
potentially “suffic[e] to support a finding” that the “origi-
nal” is the same document signed and issued in Korea.
However, the conclusory declaration of a party’s current
in-house counsel is insufficient to satsify [sic] the M/V
Hyundai Liberty’s burden of authentication.
App. 28
C. Although Doosan Is a “Merchant” for Purposes
of the Bill of Lading, Neither Doosan Nor
Kukje Have “Accepted” the Bill of Lading, and
Therefore It Does Not Bind Kukje
1. Doosan Is a “Merchant” For Purposes of the
Hyundai Bill of Lading
Even assuming the Hyundai Bill of Lading had been
properly authenticated, the M/V Hyundai Liberty has not
established that Kukje is bound by its provisions, includ-
ing the forum selection clause. Notably, the terms and
definitions of the Hyundai Bill of Lading are virtually
identical to those in the bill of lading at issue in All Pacific
Trading Co. v. M/V Hanjin Yosu, 7 F.3d 1427 (9th Cir.
1993). Both the Hyundai Bill of Lading and the one at
issue in All Pacific define “Merchant” to include, inter alia,
the “owner ... of the Goods”; i.e., Doosan. Moreover, the
Ninth Circuit’s description of the bill of lading at issue in
All Pacific is equally applicable here:
The ... bills of lading do not name any individ-
ual parties as the Merchant. The bills of lading
include blanks for the names of the shipper, the
exporter, the consignee, the “notify parties,” the
forwarding agent references, and the vessel, but
no blank for either the Merchant or for the owner
of the goods. Thus, the only definition of Mer-
chant included on the bills of lading is the con-
tract definition quoted above. The failure to
specifically identify a particular party as Mer-
chant is particularly noteworthy given the fact
that the bill of lading goes on to use the term
Merchant approximately seventy-seven times.
Id. at 1432. The Ninth Circuit emphasized that “because
the bills of lading [did] not name any particular parties as
Merchants,” the “contract definition of Merchant on the
ches
emt eS CLT ear tan
App. 29
reverse of the bills of lading” was controlling, and that
therefore “the owners of the goods [were] parties to the
bills of lading as Merchants.” Jd.
This reasoning applies equally well to the instant
action. Because the Hyundai Bill of Lading fails to identify
a particular party as “Merchant,” the contract definition of
“Merchant,” which includes the “owner ... of the Goods,”
controls. Therefore, Doosan is a named party to the Hyun-
dai Bill of Lading.
The Court acknowledges that the instant action
differs from All Pacific in one material respect. In All
Pacific, the plaintiff-owner argued that it was a named
party to the bill of lading issued by the defendant-carrier.
Here, in contrast, Kukje is arguing that Doosan is not a
named party to the Hyundai Bill of Lading because Kukje
wants to avoid the forum selection clause. The distinction
is relevant because, as noted in Aili Pacific, “[blills of
lading are contracts of adhesion, usually drafted by the
carrier, and are therefore ‘strictly construed against th
carrier.’” Id. at 1431 (quotation omitted). Therefore, “[aJny
ambiguity in the bill of lading must be construed in favor
of the shipper and against the carrier.” Jd. (quotation
omitted). In All Pacific, the Ninth Circuit’s conclusion that
the vlaintiff-owner was a “Merchant” was a construction
favorable to the shipper. In contrast, the same construc-
tion applied herein would inure to the benefit of the
carrier, Hyundai, which presumably drafted the bill of
lading at issue. However, the rule that contracts of adhe-
sion must be construed against the drafter only applies if,
in fact, there is an ambiguity in the contract language. See
id. The All Pacific opinion emphasized, however, that the
“plain language of the . . . bills of lading establish that the
[ ] cargo owners were Merchants.” Jd. at 1432-33. Although
App. 30 -
the Ninth Circuit went on to comment that “[e]ven were
we to view the definition of Merchant as an ambiguous
term, we would construe this ambiguity against the
carrier,” this statement is dictum in light of the court’s
initial conclusion that the definition of Merchant was not
ambiguous, but rather flowed from the “plain language” of
the bill of lading. Because the definition of “Merchant” is
not ambiguous, the rule of construction governing con-
tracts of adhesion does not mandate a departure from the
holding in All Pacific.
2. Although Doosan Is a “Merchant,” and
Therefore a Named Party to the Hyundai Bill
of Lading, Neither Doosan nor Kukje Has
“Accepted” the Contract
As discussed in All Pacific, the fact that Doosan is a
“Merchant” for purposes of the Hyundai Bill of Lading
does not bind Doosan to the contract unless either Doosan
or Kukje has taken “action demonstrating acceptance of
the bill{) of lading.” Id. at 1432; see Mitsui O.S.K. Lines,
Ltd. v. Dynasea Corp., __. Cal. App. 4th __, 1999 WL
312401, at *5 (April 19, 1999) (definition of “Merchant” in
bill of lading cannot bind non-signatory unless that party
“accepts” the obligation). In All Pacific, the Ninth Circuit
held that the plaintiffs therein “accepted” the bill of lading
by filing suit for a direct breach of its terms. As noted
above, the posture of the instant action is reversed. Here,
Kukje contends it is not bringing suit “under the Hyundai
(Bill of [Ljading.” Opp. at 17:15-19. As support for this
contention, Kukje argues that
[t]he complaint does not mention the Hyundai
bill of lading, nor does it mention Hyundai, far
less join Hyundai as a defendant... . [Kukje] has
App. 31
not filed suit on the Hyundai bill of lading, and
Hyundai’s bill can not be enforced against
[Kukje].
Opp. at 17:19-28. As noted above, Kukje’s Complaint
alleges the following causes of action against the M/V
Hyundai Liberty (in rem) and Glory Express (in per-
sonam): (1) damage to cargo; (2) breach of contract; (3)
negligence; (4) breach of duty to care for property in
bailment; and (5) unseaworthiness. The allegations of the
first cause of action, which are incorporated by reference
into the remaining causes of action, state that
on or about November 25, 1997, at Busan, South
Korea, defendants, and each of them, entered into
contracts of affreightment, which are evidenced
by a number of bills of lading, including, but not
necessarily limited to, bills of lading numbers
NAMS97-11117; NAMS97-11118; and NAMS97-
11119; and thereafter received cargo consisting of
Doosan [merchandise] ... for carriage on board
the M/V HYUNDAI LIBERTY, Voyage 015E, from
Busan, South Korea, to Los Angeles, California.
[Kukje] alleges that defendants, and each of
them, failed and neglected to discharge and de-
liver the Cargo pursuant to the applicable bills of
lading, contracts of affreightment, and/or freight
Mice”
Compl. 7 6, 8. In its opposition, Kukje does not describe
the nature of the “NAMS” bills of lading referenced in the
Complaint. Presumably, these are either the bills Stream-
line issued to Glory Express, or the bills Glory Express
issued to Doosan. In any event, Kukje contends that the
reference to the “NAMS” bills is not a reference to the
App. 32
Hyundai Bill of Lading, and that Kukje is not suing under
that bill. As “master of its own complaint” a plaintiff is
entitled to decide under which contracts it brings suit.
Because Kukje’s Complaint does not on its face purport to
bring suit under the Hyundai Bill of Lading, and Kukje
argues herein that it “has not filed suit on the Hyundai
bill of lading,” the Court will defer to Kukje on this issue.
See Opp. at 17:26-28.
However, it is not obvious to the Court that Kukje can
state a viable cause of action against the M/V Hyundai
Liberty without affirming and accepting the terms of the
Hyundai Bill of Lading. In All Pacific, for example, it
appeared that the plaintiff-shipper needed to accept the
bill of lading at issue in order to state a breach of contract
action against the defendant-carrier. See id. at 1431-32. As
a general proposition, the Court is skeptical that Kukje
can “avoid” the forum selection clause by attempting to
transform a conventional breach of contract action into a
non-contractual action in tort, or by contending that the
M/V Hyundai Liberty breached a contract other than the
Hyundai Bill of Lading. Whether Kukje needs to accept the
contract to maintain its claims against the M/V Hyundai
Liberty is, of course, not an issue before the Court today.
However, if during the course of this litigation Kukje
“accepts” the Hyundai Bill of Lading by, for example,
relying on its terms to establish an element of its claims,
the Court would entertain a renewed motion to enforce the
forum selection clause contained therein.’
* In its Reply brief, the M/V Hyundai Liberty quotes Carmen [sic]
Tool & Abrassives, [sic] Inc. v. Evergreen Lines, 871 F.2d 897, 901 (9th
Cir. 1989) for the proposition that “[pJarties who do not deal with the
(Continued on following page)
3 OP NG A LER Sr ti RA, IS "
App. 33
D. Hyundai’s Motion to Dismiss Third-Party
Complaint
The Court has received no opposition to Hyundai's
motion to be dismissed from the Glory Express Third-
Party Complaint. Accordingly, it is hereby ORDERED that
Hyundai’s Motion to Dismiss is GRANTED.
SO ORDERED.
DATED: May 24, 1999
AUDREY COLLINS
AUDREY B. COLLINS
UNITED STATES DISTRICT JUDGE
carrier directly have a responsibility to obtain a copy of the bill of
lading if they have an interest in knowing its terms. We decline to place
on the carrier the burden of tracking down these remote parties. .. .” As
in All Pacific, the plaintiff-shipper in Carmen [sic] Tools “accepted” the
bill of lading at issue by suing directly for breach of the bill. See id. at
899. Accordingly, Carmen [sic] Tools is consistent with the Court’s
holding herein.
App. 34
APPENDIX D
THIS CONSTITUTES NOTICE OF ENTRY
AS REQUIRED BY FRCP, RULE 77(d).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
KUKJE HWAJAE ) CASE NO.:
INSURANCE COMPANY, ) CV 98-9217 ABC (RZx)
LTD., ) AMENDED ORDER RE:
Plaintiff, ) "DEFENDANT M/V
3 ) HYUNDAI LIBERTY'S
MOTION TO
THE M/V HYUNDAI RECONSIDER
LIBERTY (in rem), GLORY
44 [Reissued on August 3,
meni e's INC. (in 1999, to correct typo-
ee graphical errors only]
Defendants.
(Filed Aug. 3, 1999)
GLORY EXPRESS, INC.,
Third-Party Plaintiff,
Vv.
STREAMLINE SHIPPERS
ASSOCIATION, HYUNDAI
MERCHANT MARINE
COMPANY, LTD.,
Third-Party Defendants.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
After reviewing the materials submitted by the
parties and the case file, it is hereby ORDERED that
Defendant the M/V Hyundai Liberty’s Motion to Recon-
sider, and application for certificate of appealability, are
DENIED. :
App. 35
I. FACTUAL BACKGROUND
This action arises from the ocean carriage of cargo
from Busan, Korea to Long Beach, California aboard the
defendant vessel, the M/V Hyundai Liberty (“Defendant”).
The cargo was ultimately delivered in a “severely damaged
condition.” Compl. q 8.
The cargo at issue was originally consigned to Doosan
Corporation, Doosan America Corporation, and Doosan
Machinery USA Inc. (collectively “Doosan”). Compl. { 2.
Plaintiff Kukje Hwaje [sic] Insurance Co. (“Kukje”) is
Doosan’s subrogated insurer. Kukje alleges that it reim-
bursed Doosan for damage to the cargo, and that therefore
Kukje ha: been subrogated to Doosan’s right to recover
from third parties.
Doosan contracted with Defendant and Third-Party
Plaintiff Glory Express, Inc. (“Glory Express”) to transport
the cargo from Korea to California. Although it is not clear
from either the pleadings or the motion papers, it appears
that Glory Express subsequently contracted with Third-
Party Defendant Streamline Shippers Association Inc.
(“Streamline”), a California based non-vessel-operating
common carrier, which in turn contracted with Third-
Party Defendant Hyundai Merchant Marine Co., Ltd.
(“Hyundai”), the owners and operators of in rem Defen-
dant the M/V Hyundai Liberty. The cargo was eventually
shipped pursuant to a Hyundai bill of lading that lists
Streamline as the “shipper,” “consignee,” and “notify
party.” (the “Hyundai Bill of Lading”). See Mot., Exh. A.
The Hyundai Bill of Lading does not, however, specifically
name either Doosan, Kukje, or Glory Express as a named
party. The bill of lading contains a forum selection clause,
pursuant to which “all actions concerning custody or
App. 36
carriage under the Bill of Lading whether based on breach
of contract, tort or otherwise shall be brought in [Korea].”
II. PROCEDURAL BACKGROUND
On November 16, 1998, Kukje filed a complaint, in
admiralty, asserting causes of action for (1) damage to
cargo; (2) breach of contract; (3) negligence; (4) breach of
duty to care for property in bailment; and (5) unseawor-
thiness. The action was brought in rem against Defendant
the M/V Hyundai Liberty, and in personam against Glory
Express. On February 26, 1999, Glory Express filed a
Third Party Complaint for Indemnification against
Streamline and Hyundai.
On April 30, 1999, the M/V Hyundai Liberty filed a
Motion to Dismiss for improper venue; i.e., seeking to
enforce the forum selection clause.’ By Order signed May
24, 1999, the Court denied this motion. Specifically, the
Court: (1) sustained Kukje’s evidentiary objection to the
admissibility of the Hyundai Bill of Lading on the grounds
that the declaration of Hyundai’s general counsel was
insufficient to authenticate the document as a true and
correct copy of the original; (2) concluded that Doosan (and
by subrogation, Kukje), fell within the definition of the
term “Merchawt,” as used in the Bill of Lading; and (3)
concluded that neither Doosan nor Kukje were bound by
the forum selection clause in the Hyundai Bill of Lading
because neither had taken “action demonstrating accep-
tance” of the bill. As to the absence of “acceptance,” the
* Co-defendant Glory Express neither joined, nor opposed, the M/V
Hyundai Liberty's motion.
App. 37
Court noted that a party can accept a contract by suing to
enforce its provisions, but that Kukje’s complaint did not
refer to the Hyundai Bill of Lading, and that Kukje ex-
pressly denies that it is suing to enforce it. Although the
Court expressed skepticism that Kukje could prevail on its
lawsuit without accepting the Hyundai Bill of Lading, the
Court nevertheless concluded that Kukje had not, as yet,
“accepted” the bill.
On May 28, 1999, the M/V Hyundai Liberty filed the
instant Motion for Reconsideration of the Court’s May 24,
1999 Order. Kukje filed an opposition on June 7, 1999. On
June 14, 1999, the M/V Hyundai Liberty filed its reply.
Il. [sic] DISCUSSION
A. Standard
Motions for Reconsideration are governed by Rule
7.16 of the Local Civil Rules of the Central District of
California. Local Rule 7.16 provides:
A motion for reconsideration of the decision on
any motion may be made only on the grounds of
(a) a material difference in fact or law from that
presented to the Court before such decision that
in the exercise of reasonable diligence could not
have been known to the party moving for recon-
sideration at the time of such decision, or (b) the
emergence of new material facts or a change of
law occurring after the time of such decision, or
(c) a manifest showing of a failure to consider
material facts presented to the Court before such
decision. No motion for reconsideration shall in
any matter repeat any oral or written argument
App. 38
made in support of or in opposition to the origi-
nal motion.
Local Rule 7.16.
B. Analysis
Defendant’s motion for reconsideration fails on three
grounds. First, Defendants motion fails to address the
evidentiary issue — authentication — which was an inde-
pendent grounds [sic] for the denial of the motion to
dismiss. The failure to address this issue alone constitutes
grounds to deny the motion to reconsider.’
Second, Defendant’s motion is based on the identical
legal precedent raised and argued in the prior motion to
dismiss. In violation of the local rules, Defendant’s motion
simply “repeat[s] ... argument made in support of... the
original motion.”
Even assuming, arguendo, that Defendant’s argu-
ments regarding “acceptance” had not been previously
raised, the Court remains unpersuaded that its prior
ruling was erroneous. Defendant erroneously concludes
that the “only case relied upon by the court for its holding
* However, the Court acknowledges that this evidentiary deficiency
can be readily cured in the future, and that therefore Defendant has a
meaningful interest in the Court’s substantive ruling regarding
“acceptance.” Therefore, the Court will address this aspect of the
motion to reconsider.
* The Court finds that Defendant’s motion is in clear violation of
Local Rule 7.16. Although Kukje has not requested sanctions, the Court
warns Defendant that any future violation of the Local Rules may
result in court-imposed sanctions.
App. 39
that [Doosan] never ‘accepted’ the terms of the Hyundai
Bill of Lading is a state court case,” Mitsui O.S.K. Lines,
Ltd. v. DYNASEA Corp., __ Cal. App. 4th __, 1999 WL
312401 (Apr. 19, 1999), a copy of which Kukje’s counsel
delivered to chambers on May 21, 1999, the Friday before
oral argument.‘ Defendant suggests that by citing to
Mitsui, the Court erroneously applied state law rather
than federal maritime law. However, Defendant’s argu-
ment ignores the language in All Pacific Trading Co. v.
Vessel M/V Hanjin Yosu, 7 F.3d 1427, 1433 (9th Cir.
1993), which the Court discussed at length in its prior
order. All Pacific, a federal decision applying federal
maritime law, expressly held that “like all contracts,....
bills of lading require some form of acceptance.” Id. at
1432. The Ninth Circuit went on to hold that, by bringing
suit to enforce the bill’s provisions, the plaintiffs had
“accepted” it for purposes of creating a binding contract.
Id. (“as a basic rule of contract interpretation, a party may
accept a contract by filing suit on the contract”) (citing 17A
Am.Jur.2d Contracts § 456). Thus, Defendant is simply
incorrect in concluding that the Court relied “solely” on
state law.
Similarly unpersuasive is Defendant’s citation to
Fireman’s Fund Ins. Co. v. M/V DSR Atlantic, 131 F.3d
1336 (9th Cir. 1998), a case Defendant describes as “seem-
ingly identical” to the facts of the instant action. Df.’s Mot.
at 5:1-2. In contrast to the case at bar, the forum selection
* Notably, the Court had drafted its tentative order prior to May
21, 1999, the date the Mitsui opinion was delivered to chambers. Upon
reviewing Mitsui, and concluding that it supported the Court’s tenta-
tive, the Court added a citation to the case.
App. 40
clause at issue in Fireman’s Fund was enforced against
the plaintiff, a non-signatory to the bill of lading, who
brought “suit on [the] bill of lading.” See Fireman’s Fund,
1995 WL 871840, at *1 n.1 (N.D.Cal. Dec. 1, 1995), rev’d
on other grounds, 131 F.3d 1336 (9th Cir. 1995 [1998]). In
contrast, Kukje contends it is not bringing suit on the bill
of lading. Rather than being “identical” to the instant
action, Fireman’s Fund is distinguishable for the very
reason discussed in the Court’s prior order.
C. Defendant’s Request for Clarification
Defendant seeks clarification of what it perceives as
an “apparent inconsisten[cy]” in the Court’s prior Order, in
which the Court concluded that “Doosan is a named party
to the Hyundai Bill of Lading,” but that Doosan (and by
subrogation, Kukje) was not bound by the bill of lading
because Doosan had never accepted it. As Kukje recog-
nizes in its opposition brief, the Court’s prior holding with
regard to this issue was for the purpose of clarifying that
Doosan was a “party named in the Hyundai Bill of Lading”
in the sense that Doosan fell within the definition of
“Merchant,” as that term was defined in the Bill. By
referring to Doosan as a “party,” however, the Court did
not intend to infer that Doosan was contractually bound to
the provisions of the bill of lading. Although Hyundai
could conceivably define the term “Merchant” to include
entire classes of business entities, those entities are not
bound by the bill of lading until they somehow manifest
“acceptance” of the bill, whether by bringing suit or other-
wise. Thus, the Court is unpersuaded that its prior Order
is inconsistent.
App. 41
D. Defendant’s Request for Certification of
Appealability Pursuant to 28 U.S.C.
§ 1292(b)
In light of the foregoing discussion, the Court is not
persuaded that Defendant has raised an issue of law “as to
which there is substantial ground for difference of opin-
ion.” See 28 U.S.C. § 1292(b). Defendant’s application for a
certificate of appealability is DENIED.
IV. CONCLUSION
For the reasons articulated above, Defendant the M/V
Hyundai Liberty’s Motion to Reconsider, and application
for certificate of appealability, are DENIED.
SO ORDERED.
DATED: Aug. 3, 1999
AUDREY COLLINS
AUDREY B. COLLINS
UNITED STATES DISTRICT JUDGE
App. 42
APPENDIX E
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KUKJE HWAJAE INSURANCE
CO., LTD., a corporation,
Plaintiff-Appellant/
Cross-Appellee,
V.
The “M/V HYUNDAI LIBERTY,” her
Engines, Boilers, Tackle, etc., in rem,
Defendant-Appellee/
Cross-Appellant,
and
GLORY EXPRESS, INC.., a busi-
ness entity, in personam,
Defendant-Appellee.
G ORY EXPRESS, INC., a Cali-
fornia Corporation,
Third-party plaintiff-
Appellee,
v. —
STREAMLINE SHIPPERS ASSO-
CIATION, a California Corporation,
Third-party defendant,
and
HYUNDAI MERCHANT MARINE
CO., LTD., a business entity,
DOES 1-10, inclusive,
Third-party defendants-
Appellees.
Nos. 00-56970
00-57049
D.C. No.
CV-98-09217-ABC
ORDER
(Filed Jul. 22, 2002)
App. 43
Before: GRABER, Circuit Judge.
Appellees are directed to file a response to Appellant’s
petition for rehearing filed July 10, 2002. The response
shall not exceed 15 pages and shall be filed within 21 days
of the filing date of this order.
App. 44
APPENDIX F
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KUKJE HWAJAE INSURANCE | Nos. 00-56970
CO., LTD., a corporation, 00-57049
Plaintiff-Appellant/ D.C. No.
Cross-Appellee, CV-98-09217-ABC
v. ORDER
The “M/V HYUNDAI LIBERTY,” her
Engines, Boilers, Tackle, etc., in rem,
Defendant-Appellee/
Cross-Appellant,
and
GLORY EXPRESS, INC., a busi-
ness entity, in personam,
Defendant-Appellee.
GLORY EXPRESS, INC., a Cali-
fornia Corporation,
Third-party plaintiff-
Appellee,
v.
STREAMLINE SHIPPERS ASSO-
CIATION, a California Corporation,
Third-party defendant,
and
HYUNDAI MERCHANT MARINE
CO., LTD., a business entity,
DOES 1-10, inclusive,
Third-party defendants-
Appellees.
(Filed Aug. 28, 2002)
App. 45
Before: BEEZER, TASHIMA, and GRABER, Circuit
Judges.
The petition for rehearing is DENIED.
App. 46
APPENDIX G
Shipping Act of 1984 § 3,
46 U.S.C. app. § 1702
§ 1702. Definitions
As used in this chapter —
(6) “common carrier” means a person holding itself
out to the general public to provide transportation by
water of passengers or cargo between the United States
and a foreign country for compensation that —
(A) assumes responsibility for the transportation
from the port or point of receipt to the port or point of
destination, and
(B) utilizes, for all or part of that transportation, a
vessel operating on the high seas or the Great Lakes
between a port in the United States and a port in a foreign
country. ...
(16) “ocean common carrier” means a_ vessel-
operating common carrier.
(17) “ocean transportation intermediary” means an
ocean freight forwarder or a non-vessel-operating common
carrier. For purposes of this paragraph, the term —
(A) “ocean freight forwarder” means a person that —
(i) in the United States, dispatches shipments from
the United States via a common carrier and books or
otherwise arranges space for those shipments on behalf of
shippers; and |
App. 47
(ii) pocesses the documentation or performs related
activities incident to those shipments; and
(B) “non-vessel-operating common carrier” means a
common carrier that does not operate the vessels by which
the ocean transportation is provided, and is a shipper in
its relationship ygjth an ocean common carrier.
(21) “shipper” means —
(A) a cargo owner;
(B) the person for whose account the ocean
transportation is provided;
(C) the person to whom delivery is to be made;
(D) a shippers’ association; or
(E) an ocean transportation intermediary, as defined
in paragraph (i7XB) of this section, that accepts
responsibility for payment of all charges applicable under
the tariff or service contract.
(22) “shippers’ association” means a group of shippers
that consolidates or distributes freight on a nonprofit basis
for the members of the group in order to secure carload,
truckload, or other volume rates or service contracts.
App. 48
APPENDIX H
Shipping Act of 1984 § 8, 46 U.S.C. app. § 1707
§ 1707. Tariffs
(a) In general
(1) Except with regard to bulk cargo, forest products,
recycled metal scrap, new assembled motor vehicles, waste
paper, and paper waste, each common carrier and confer-
ence shall keep open to public inspection in an automated
tariff system, tariffs showing all its rates, charges, classifi-
cations, rules, and practices between all points or ports on
its own route and on any through transportation route that
has been established. However, common carriers shall not
be required to state separately or otherwise reveal in tariffs
the inland divisions of a through rate. Tariffs shall —
(A) state the places between which cargo will be
carried;
(B) list each classification of cargo in use;
(C) state the level of ocean transportation intermedi-
ary, as defined in section 1702(17\A) of this Appendix,
compensation, if any, by a carrier or conference;
(D) state separately each terminal or other charge,
privilege, or facility under the control of the carrier or
conference and any rules or regulations that in any way
change, affect, or determine any part or the aggregate of
the rates or charges;
(E) include sample copies of any bill of lading, con-
tract of affreightment, or other document evidencing the
transportation agreement; and
App. 49
(F) include copies of any loyalty contract, omitting
the shipper’s name.
(2) Tariffs shall be made available electronically to
any person, without time, quantity, or other limitation,
through appropriate access from remote locations, and a
reasonable charge may be assessed for such access. No
charge may be assessed a Federal agency for such access.
App. 50
APPENDIX I
Shipping Act of 1984 § 10, 46 U.S.C. app. § 17098
§ 1709. Prohibited acts
(b) Common carriers
No common carrier, either alone or in conjunction with any
other person, directly or indirectly, may —
(11) knowingly and willfully accept cargo from or
transport cargo for the account of an ocean transportation
intermediary that does not have a tariff and a bond,
insurance, or other surety as required by sections 1707
and 1718 of this Appendix;
(12) knowingly and willfully enter into a service
contract with an ocean transportation intermediary that
does not have a tariff and a bond, insurance, or other
surety as required by sections 1707 and 1718 of this
Appendix, or with an affiliate of such ocean transportation
intermediary;
(d) Common carriers, ocean transportation interme-
diaries, and marine terminal operators
(1) No common carrier, ocean transportation inter-
mediary, or marine terminal operator may fail to establish,
observe, and enforce just and reasonable regulations and
practices relating to or connected with receiving, handling,
storing, or delivering property.
App. 51
APPENDIX J
Shipping Act of 1984 § 19, 46 U.S.C. app. § 1718
§ 1718. Ocean transportation intermediaries
(a) License
No person in the United States may act as an ocean
transportation intermediary unless that person holds a
license issued by the Commission. The Commission shall
issue an intermediary's license to any person that the
Commission determines to be qualified by experience and
character to act as an ocean transportation intermediary.
(b) Financial responsibility
(1) No person may act as an ocean transportation
intermediary unless that person furnishes a bond, proof of
insurance, or other surety in a form and amount deter-
mined by the Commission to insure financial responsibil-
ity that is issued by a surety company found acceptable by
the Secretary of the Treasury.
(2) A bond, insurance, or other surety obtained
pursuant to this section —
(A) shall be available to pay any order for reparation
issued pursuant to section 1710 or 1713 of this Appendix,
or any penalty assessed pursuant to section 1712 of this
Appendix;
(B) may be available to pay any claim against an
ocean transportation intermediary arising from its
transportation-related activities described in section
1702(17) of this Appendix with the consent of the insured
ocean transportation intermediary and subject to review
by the surety company, or when the claim is deemed valid
App. 52
by the surety company after the ocean transportation
intermediary has failed to respond to adequate notice to
address the validity of the claim; and
(C) shall be available to pay any judgment for dam-
ages against an ocean transportation intermediary arising
from its transportation-related activities under section
1702(17) of this Appendix, provided the claimant has first
attempted to resolve the claim pursuant to subparagraph
(B) of this paragraph and the claim has not been resolved
within a reasonable period of time.
(3) The Commission shall prescribe regulations for
the purpose of protecting the interests of claimants, ocean
transportation intermediaries, and surety companies with
respect to the process of pursuing claims against ocean
transportation intermediary bonds, insurance, or sureties
through court judgments. The regulations shall provide
that a judgment for monetary damages may not be en-
forced except to the extent that the damages claimed arise
from the transportation-related activities of the insured
ocean transportation intermediary, as defined by the
Commission.
(4) An ocean transportation intermediary not domi-
ciled in the United States shall designate a resident agent
in the United States for receipt of service of judicial and
administrative process, including subpoenas.
a as a
App. 53
(c) Suspension or revocation
The Commission shall, after notice and hearing, suspend
of’ revoke a license if it finds that the ocean transporta-
tion intermediary is not qualified to render intermediary
services or that it willfully failed to comply with a provi-
sion of this chapter or with a lawful order, rule, or regula-
tion of the Commission. The Commission may also revoke
an intermediary's license for failure to maintain a bond,
proof of insurance, or other surety in accordance with
subsection (b)(1) of this section.
(d) Exception
A person whose primary business is the sale of merchan-
dise may forward shipments of the merchandise for its
own account without a license.
(e) Compensation of intermediaries by carriers
(1) A common carrier may compensate an ocean
transportation intermediary, as defined in_ section
1702(17)(A) of this Appendix, in connection with a ship-
ment dispatched on behalf of others only when the ocean
transportation intermediary has certified in writing that it
holds a valid license, if required by subsection (a) of this
section, and has performed the following services:
(A) Engaged, booked, secured, reserved, or contracted
directly with the carrier or its agent for space aboard a
vessel or confirmed the availability of that space.
(B) Prepared and processed the ocean bill of lading,
dock receipt, or other similar document with respect to the
shipment.
* So in original. Probably should be “or”.
App. 54
(2) No common carrier may pay compensation for
services described in paragraph (1) more than once on the
same shipment.
(3) No ocean transportation intermediary may receive
compensation from a common carrier with respect to a
shipment in which the intermediary has a direct or indi-
rect beneficial interest nor shall a common carrier know-
ingly pay compensation on that shipment.
(4) No conference or group of 2 or more ocean com-
mon carriers in the foreign commerce of the United States
that is authorized to agree upon the level of compensation
paid to an ocean transportation intermediary, as defined in
section 1702(17)(A) of this Appendix, may —
(A) deny to any member of the conference or group
the right, upon notice of not more than 5 calendar days, to
take independent action on any level of compensation paid
to an ocean transportation intermediary, as so defined; or
(B) agree to limit the payment of compensation to ar
ocean transportation intermediary, as so defined, to less
than 1.25 percent of the aggregate of all rates and charges
which are applicable under a tariff and which are assessed
against the cargo on which the intermediary services are
provided.
App. 55
APPENDIX K
S. Rep. No. 420, 101st Cong., 2nd Sess. 1990, 1990 WL
201672 (Leg.Hist.)
P.L. 101-595, FEDERAL MARITIME
COMMISSION AUTHORIZATION
SENATE REPORT NO. 101-420
August 2, 1990
[To accompany S. 2759]
The Committee on Commerce, Science, and Transporta-
tion, to which was referred the bill (S. 27 59) to authorize
appropriations for fiscal year 1991 for the Federal Mari-
time Commission, and for other purposes, having consid-
ered the same, reports favorably thereon with an
amendment in the nature of a substitute and recommends
that the bill as amended do pass.
PURPOSE OF THE LEGISLATION
This bill authorizes appropriations for the continuation of
programs administered by the Federal Maritime Commis-
sion (FMC) for fiscal year (FY) 1991; extends the date of
filing the final report of the Advisory Commission on
Conferences in Ocean Shipping; and strengthens the
FMC’s authority to correct unfair trade practices in our
waterborne foreign commerce. The bill also authorizes
issuance of certificates of documentation for the vessels
Cherokee V, Ernestina, and Salisa M.
BACKGROUND AND NEEDS
FMC AUTHORIZATION AND RESPONSIBILITIES
The bill, as reported, authorizes the appropriation for
FY 1991 of $15,894,000 for the FMC. The FMC is an
App. 56 ens
independent regulatory agency that administers: the
Shipping Act, 1916; the Merchant Marine Act, 1920; the
Intercoastal Shipping Act, 1933; the Shipping Act of 1984;
the Foreign Shipping Practices Act of 1988; and related
shipping statutes. The FMC’s major responsibilities
include: the review of tariff filings and service contracts;
“investigation and adjudication of penalties fur discrimina-
tory rates or practices among shippers, carriers, and
terminal operators operating in the U.S. ocean commerce;
licensing of independent ocean freight forwarders; passen-
ger vessel certification; and countering against the actions
of foreign carriers or governments that create unfavorable
conditions in U.S. foreign ocean trades. The FMC does not
regulate international ocean transportation rates, but does
apppove rates for waterborne transportation between
domestic ports and domestic offshore ports such as Hawaii
and Puerto Rico. Since 1975, the FMC has been limited
within its authorization to $1,500 for official reception and
representation expenses. The bill, as reported, increases
this allowable expenditure to $2,000.
THE ADVISORY COMMISSION ON
CONFERENCES IN OCEAN SHIPPING
The Shipping Act of 1984.established the Advisory Com-
mission on Conferences in Ocean Shipping, effective
October 20, 1989. It further required that the final report
of the Advisory Commission be submitted to the President
and Congress within one year after its establishment.
Since the fuil membership of the Advisory Commission has
not been appointed, it is necessary to extend the date for
the submission of the Advisory Commission’s final report.
The bill, as amended, extends the time period within
App. 57
which the Advisory Commission is to issue its report to the
President and Congress on its findings.
FMC AUTHORITY WITH RESPECT
TO UNFAIR TRADE PRACTICES
Section 19 of the Merchant Marine Act, 1920, empowers
the FMC to make rules to meet general or special condi-
tions unfavorable to shipping when those conditions result
either from foreign laws, rules, or regulations or from the
actions of a foreign shipping line or its agent. The FMC is
also authorized to request the head of any department,
board, or agency of the U.S. Government to suspend,
modify, or [sic] annual rules that affect shipping in the
foreign trade.
The FMC uses this authority to investigate unfair mari-
time trade practices. If the FMC finds a_ practice of a
foreign government, foreign operator, or group of foreign
operators harmful to U.S. shipping, it can suspend the
tariffs of the carrier flying the flag of the nation engaged
in the harmful action.
On various occasions these statutory provisions have been
inadequate to eliminate unfair practices. The two principal
problems hindering the FMC in section 19 proceedings are
the absence of (1) specific authority to obtain information
for a complete investigation, and (2) sanctions (other than
tariff suspension) that can be imposed on offending opera-
tors. More efficient and effective enforcement under
section 19 can be accomplished by clarification that the
section applies to bulk as well as liner operators; the
granting of authority for shippers, third-flag carriers,
and others to seek commencement of a section 19 investi-
gation; and clarification that the FMC may examine
App. 58
intermodal movements, terminal operations, and other
shipping-related activities. The bill, as reported, specifi-
cally includes intermodal movements and certain land-
based activities within the scope of section 19 of the
Merchant Marine Act, 1920; specifies those persons or
entities who may seek section 19 relief; empowers the
FMC to use compulsory process in section 19 investiga-
tions; and authorizes a broader range of remedies to
correct unfair foreign practices.
LEGISLATIVE HISTORY
The Merchant Marine Subcommittee held a hearing on
June 20, 1990, to consider H.R. 4009, the FMC authoriza-
tion bill approved by the House of Representatives on
April 3, 1990, and referred to the Committee. S. 2759 was
introduced by Senator Breaux on June 27, 1990 and is
cosponsored by Senator Lott. On June 27, 1990, in open
executive session the Committee considered and, without
objection, ordered reported [sic] favorably an amendment
in the nature of a substitute to S. 2759.
SUMMARY OF MAJOR PROVISIONS
The legislation authorizes $15,894,000 for the FMC in FY
1991. It also increases the allowable expenditure for
official reception and representation expenses for the FMC
to $2000. In addition, the legislation extends the time
period within which the Advisory Commission on Confer-
ences in Ocean Shipping is to issue its report to the Presi-
dent and Congress on its findings to one year from the
date that all of the members of the Advisory Commission
have been appointed.
App. 59
With respect to unfair trade practices, the legislation
amends section 19 of the Merchant Marine Act, 1920 (46
App. U.S.C. 876), to strengthen the FMC’s authority to
address and correct unfair conditions and practices unfa-
vorable to shipping in our foreign commerce. The bill
clarifies who may petition the FMC for relief against
unfair trade practices and codifies existing FMC regula-
tions providing that any person, including a common
carrier, tramp operator, bulk operator, shipper, shippers’
association, ocean freight forwarder, marine terminal
operator, or any component of the government of the
United States, may file a petition for relief.
The bill also strengthens the FMC’s authority in a rule-
making investigation to obtain needed information by
compulsory process, including written reports, subpoena,
or other judicial procedures. The bill provides additional
remedies for the FMC to use if it finds evidence of unfa-
vorable shipping conditions._ The legislation also clarifies
that the FMC’s current rulemaking and investigating
powers include intermodal movements, terminal opera-
tions, cargo solicitation, forwarding and agency services,
non-vessel_ operating common carrier operations, and all
other activities integral to total transportation systems.
Finally, the legislation grants a legislative waiver to
permit the Coast Guard to issue appropriate coastwise
trading and U.S. fisheries documents for the vessels
Cherokee V, Ernestina, and Salisa M. Waivers for these
vessels were passed by the House as part of H.R. 4009. ...
App. 60
APPENDIX L
67 Fed. Reg. 66318
RULES and REGULATIONS
DEPARTMENT OF THE TREASURY
Customs Service
19 CFR Parts 4, 113 and 178
[T.D. 02-62]
RIN 1515-AD11
Presentation of Vessel Cargo Declaration to Customs
Before Cargo Is Laden Aboard Vessel at Foreign Port
for Transport to the United States
Thursday, October 31, 2002
AGENCY: Customs Service, Department of the Treasury.
ACTION: Final rule.
SUMMARY: This document amends the Customs Regula-
tions to require the advance and accurate presentation of
certain manifest information prior to lading at the foreign
port and to encourage the presentation of this information
electronically. The document also allows a non-vessel
operating common carrier (NVOCC) having an Interna-
tional Carrier Bond to electronically present cargo mani-
fest information to Customs. This information is required
in advance and is urgently needed in order to enable
Customs to evaluate the risk of smuggling weapons of
mass destruction through the use of oceangoing cargo
containers before goods are loaded on vessels for importa-
tion into the United States, while, at the same time,
enabling Customs to facilitate the prompt release of
legitimate cargo following its arrival in the United States.
Failure to provide the required information in the time
App. 61
period prescribed may result in the delay of a permit to
unlade and/or the assessment of civil monetary penalties
or claims for liquidated damages.
EFFECTIVE DATE: December 2, 2002.
SUPPLEMENTARY INFORMATION:
Background
The Customs laws impose certain requirements upon
vessels that will arrive in the United States to discharge
their cargo. In particular, vessels destined for the United
States must comply with 19 U.S.C. 1431, which requires
that every vessel bound for the United States and required
to make entry under 19 U.S.C. 1434 have a manifest that
meets the requirements that are prescribed by regulation.
To this end, under 19 U.S.C. 1431(d), Customs may by
regulation specify the form for, and the information and
data that must be contained in, the vessel manifest, as
well as the manner of production for, and the delivery or
electronic transmittal of, the vessel manifest.
Currently, § 4.7, Customs Regulations (19 CFR 4.7),
requires: That the master of every vessel arriving in the
United States and required to make entry have on board
the vessel a manifest in accordance with 19 U.S.C. 1431
and § 4.7; and that an original and one copy of the mani-
fest must be ready for production upon demand and must
be delivered to the first Customs officer who demands the
manifest. Sections 4.7(a) and 4.7a, Customs Regulations
(19 CFR 4.7(a) and 4.7a), set forth the documentary and
informational requirements that constitute the vessel
manifest.
App. 62
Pursuant to § 4.7(a), the cargo declaration (Customs Form
1302 or its electronic equivalent) is one of the documents
that comprises a vessel manifest. The cargo declaration
must list all the inward foreign cargo on board the vessel
regardless of the intended U.S. port of discharge of the
cargo (§ 4.7a(c)(1)). Furthermore, 19 U.S.C. 1448 provides,
in pertinent part, that no merchandise may be unladen
from a vessel which is required to make entry under
section 1434 until Customs has issued a permit for its
unlading. In addition, under section 1448, Customs pos-
sesses a reasonable measure of regulatory discretion as to
whether, and under what circumstances and conditions, to
issue a permit to unlade incoming cargo from a vessel
arriving in the United States. Section 4.30, Customs
Regulations (19 CFR 4.30), lists the requirements and
conditions under which Customs may issue a permit to
unlade foreign merchandise from a vessel arriving in the
United States.
In addition, 19 U.S.C. 1436(a)(1) and (a)(4) provide that it
is unlawful to fail to comply with sections 1431, 1433 or
1434 or any regulation prescribed under any of those
statutory authorities. Moreover, 19 U.S.C. 1436(a)(2)
states that it is unlawful to present or transmit, electroni-
cally or otherwise, any forged, altered or false document,
paper, data or manifest to the Customs Service under 19
U.S.C. 1431, 1433(d) or 1434. Under section 1436(b), the
master of a vessel who commits any such violation is liable
for a civil penalty of $5,000 for the first violation and
$10,000 for each subsequent violation and any conveyance
used in connection with any such violation is subject to
seizure and forfeiture.
App. 63
Proposed Rulemaking; Advance Presentation of Vessel
Cargo Manifest to Customs; Required Information
By a document published in the Federal Register (67 FR
51519) on August 8, 2002, Customs proposed to amend
§ 4.7 to provide that, pursuant to 19 U.S.C. 1431(d), for
any vessel subject to entry under 19 U.S.C. 1434 upon its
arrival in the United States, Customs must receive the
vessel’s cargo manifest (declaration) from the carrier 24
hours before the related cargo is laden aboard the vessel at
the foreign port. The proposed rule also enumerated the
specific informational elements that would need to be
included in the submitted cargo manifest.
Necessity for Advance Presentation of Vessel Cargo
Manifest to Customs
As explained in the preamble of the Notice of Proposed
Rulemaking (67 FR at 51520), the United States Customs
Service recently launched the Container Security Initia-
tive (“CSI”). CSI will secwre an indispensable, but vulner-
able link in the chain of global trade: Containerized
shipping. Approximately 90% of world cargo moves by
container; 200 million cargo containers are transported
between the world’s seaports each year, constituting the
most critical component of global trade. Nearly half of all
incoming trade to the United States (by value) arrives by
ship; and most of that is in sea containers. Annually,
nearly 6 million cargo containers are offloaded at U.S.
seaports. There is, however, virtually no security for this
critical global trading system. And the consequences of a
terrorist incident using a container would be profound. As
experts like Dr. Stephen E. Flynn, Senior Fellow, Council
on Foreign Relations, have pointed out repeatedly, if
terrorists used a sea container to conceal a weapon of mass
App. 64
destruction — a nuclear device, for example — and deto-
nated it on arrival at a port, the impact on global trade
and the global economy would be immediate and devastat-
ing. All nations would be affected because there would be
no mechanism for identifying weapons of mass destruction
before they reached our shores and before they posed a
threat to the global economy.
Al Qaeda and other terrorist organizations pose an imme-
diate and substantial threat. And the threat is not just to
harm and kill American citizens, it is a threat to damage
and destroy the U.S. and the world economy.
To address the threat terrorists pose to containerized
shipping, Customs developed CSI. Under CSI, U.S. Cus-
toms is working with other governments to identify high-
risk cargo containers and pre-screen those containers at
the foreign ports before they are shipped to the U.S. CSI
has four core elements: ?
(1) Identify “high-risk” containers. In connection with its
domestic targeting efforts, Customs has already estab-
lished criteria and automated targeting tools for identify-
ing “high risk” shipments. Indeed, every one of the
shipments that arrives in the United States by sea con-
tainer is currently assessed for risk using these tools and
advance manifest data. If this data were provided earlier,
Customs could use these same tools to detect high risk
shipments before they were carried to the United States.
Accordingly, to enhance domestic targeting and to enable
overseas targeting and screening of containers, Customs
has proposed a rule requiring accurate and detailed
information to be transmitted before shipments are laden
on vessels destined for the United States.
App. 65
(2) Pre-screen containers before they are shipped. As
discussed above, to protect the United States and global
trade from the risks posed by international terrorists,
security screening should be done at the port of departure
rather than the port of arrival.
(3) Use technology to screen high-risk containers. Tech-
nology enables screening to be done rapidly without
slowing down the movement of trade. This technology
includes large-scale x-ray and gamma machines and
radiation detection devices.
(4) Use more secure containers to ensure the integrity of
containers screened overseas. CSI thus offers real protec-
tion, on a day-to-day basis, for the primary system of
international trade — a system on which all economies
depend. Given the security afforded by CSI, the invest-
ments made by ports and members of the trade to imple-
ment CSI represent relatively inexpensive forms of
insurance against the terrorist threat. In the event of an
attack using a cargo container, the CSI network of ports
will be able to remain operational because those ports will
already have an effective security system in place — one
that will deter and prevent terrorists from using it. With-
out such a network, the damage to global trade caused by
a terrorist attack involving international shipping would
be staggering.
In addition to protecting global trade, CSI should facilitate
the flow of that trade. When a container has been pre-
screened and sealed under CSI, U.S. Customs will not,
absent additional information affecting its risk analysis,
need to inspect it for security purposes when it reaches the
U.S. Moreover, this system could reduce the processing
time for certain shipments because the screening at a CSI
App. 66
port will in most cases take place during “down time.”
Most containers sit on a terminal for an average of several
days prior to lading. This window of “down time” will be
used to screen containers for security purposes. On arrival
at the U.S. seaport, the CSI-screened container should be
released immediately by U.S. Customs, which could shave
hours, if not days, off of the shipping cycle. In this manner,
CSI should increase the speed and predictability for the
movement of cargo containers shipped to the U.S.
For these reasons, CSI is a critical component of the
President’s Homeland Security Strategy. It has also been
endorsed by the G-8 as well as the World Customs Organi-
zation.
As a result of this broad support, CSI has been expanding
rapidly. When Customs launched CSI this past January,
the first step was to implement CSI as quickly as possible
in Canada and the top 20 ports (by volume) that ship to
the United States. When fully implemented in these
locations, CSI will substantially increase the security of
the United States and the global trading system because
the top 20 ports alone account for nearly 70% of all the
containers shipped to U.S. seaports. To date, Canada, the
Netherlands, Belgium, France, Germany, Singapore, Hong
Kong, and Japan have agreed to implement CSI. These
countries represent 11 of the top 20 ports. Customs antici-
pates that several other nations will agree to implement
CSI in the near term, and that CSI will expand beyond the
top 20 ports during the next year.
CSI is already operational in Canada and the Nether-
lands. It will be implemented at several additional ports
within the next 90 days. Given this explosive growth, it is
critical that the information necessary to implement CSI
App. 67
fully be provided to Customs in the near term. For this
reason, Customs proposed this rulemaking on August 8,
2002 and, following the comment period, is issuing this
final rule today.
Non-Vessel Operating Common Carriers (NVOCCs)
Under the proposed rule, the conditions of the Interna-
tional Carrier Bond (19 CFR 113.64) were proposed to be
amended to recognize the status of a Non-Vessel Operating
Common Carrier (NVOCC) as a manifesting party and to
obligate any NVOCC having such a bond and electing to
provide cargo manifest information to Customs electroni-
cally under § 4.7 and 4.7a to accurately transmit such
information to Customs 24 or more hours before the
related cargo is laden aboard the vessel at the foreign port.
Breach of these obligations would result in liquidated
damages against the NVOCC. For purposes of the pro-
posed rule, a non-vessel operating common carrier
(NVOCC) as a common carrier that does not operate the
vessels by which the ocean transportation is provided,
would be considered a shipper in its relationship with an
ocean common carrier.
Penalties or Liquidated Damages for False or Untimely
Filing of Manifest Data
If the master of a vessel failed to present or transmit
accurate manifest data in the required time period or
presented or transmitted any false, forged or altered
document, paper, manifest or data to Customs, the pro-
posed regulations specified that monetary penalties could
be assessed under the provisions of 19 U.S.C. 1436(b).
Likewise, if an NVOCC having an International Carrier
App. 68
Bond elected to transmit such data electronically to
Customs and failed to do so in the required time period or
transmitted any false, forged or altered document, paper,
manifest or data to Customs, the NVOCC could be liable
for the payment of liquidated damages for breach of the
conditions of the International Carrier Bond, in addition to
any other applicable penalties.
Issuance of Permit To Unlade Cargo
The proposed rule also provided that if the carrier did not
present cargo declaration information to Customs prior to
the lading of the cargo aboard the vessel at the foreign
port, Customs could, in addition to assessment of civil
monetary penalties, delay issuance of a permit to unlade
the entire vessel or a portion thereof until all required
information was received.
Preliminary Entry
Finally, it was proposed that § 4.8 be amended to make
clear that the granting of preliminary entry by Customs
would be conditioned upon the electronic submission of the
Cargo Declaration (Customs Form (CF) 1302), as well as
the provision to Customs either electronically or in paper
form of all other forms required by § 4.7.
(67 Fed. Reg. 66322]
Non Vessel Operating Common Carriers Eligible to Par-
ticipate
Comment: In the August 8, 2002, proposed rule, Customs
stated that Non Vessel Operating Common Carriers
App. 69
(NVOCC) licensed by the Federal Maritime Commission
(FMC) would be eligible to become bonded with Customs
and to electronically transmit manifest information
directly to Customs. Several commenters [sic] pointed out
that a separate category of NVOCC is not licensed by the
FMC, but rather is registered with the agency. This latter
group, unless identified by Customs as eligible to partici-
pate, would be unable to transmit information directly to
Customs prior to foreign lading. It is requested that
Customs allow registered NVOCCs to participate. In
addition, one commenter [sic] advocated that shippers’
associations, like NVOCCs, should be authorized to
present the required manifest information electronically to
Customs.
Customs Response: Customs agrees that to the extent that
members of the NVOCC community registered with the
FMC become bonded with Customs, they should be in-
cluded in the electronic filing program. Customs in this
final rule has amended the proposed regulatory language
in this regard to reflect this change. However, shippers’
associations may not participate in the electronic filing
program. Such associations of shippers are membership-
only groups that are not currently regulated under U.S.
law, and they are not licensed or registered with the FMC.
Bonds for Non Vessel Operating Common Carriers
(NVOCCs)
Comment: One commenter [sic] stated that the proposal to
amend provisions of the Customs International Carrier
Bond as presently set forth in § 113.64 (19 CFR 113.64)
would be inappropriate since an NVOCC did not actually
transport merchandise. Concern was also expressed that
App. 70
an NVOCC could be held accountable by Customs for
delivery of cargo to an incorrect port of unlading by a
carrier. Likewise, there was concern that an NVOCC could
incur manifest violation penalties in instances where data
was relayed to Customs by the NVOCC at least 24 hours
in advance of scheduled vessel sailing time, but the vessel
then loaded and departed earlier than scheduled.
Customs Response: It is the current practice that vessel
agents in the United States carry continuous International
Carrier Bond coverage (19 CFR 113.1). They, likewise, do
not transport cargoes. They are bonded in order that
Customs may be assured that the revenue is protected and
that prompt satisfaction of any liabilities incurred in the
course of their dealings with Customs may occur. Like-
wise, the NVOCC community will be dealing with Cus-
toms and will be required to provide the same level of
assurance with respect to the correctness of the informa-
tion they submit. Provided the NVOCC adequately dem-
onstrates that cargo declaration information was timely
submitted to Customs and the carrier then loaded the
containers prematurely, the NVOCC will not be liable.
Customs Response: Customs may initiate penalty actions
against any party responsible for providing the required
information. For example, if a non-vessel operating com-
mon carrier (NVOCC) elects to participate in the vessel
Automated Manifest System (AMS) and transmits its
information directly to Customs, the NVOCC is the re-
sponsible party and will be held liable for any manifest
information found to be untimely presented and/or con-
taining errors or omissions. This would also be the case if
the NVOCC manifested cargo and the cargo is left behind.
App. 71
Timely communication between the vessel carrier and the
NVOCC is required in order for the NVOCC to amend its
manifest information to accurately list the cargo that is on
board the vessel. Likewise, effective communication
between the vessel carrier and the NVOCC is essential for
changes to the ports of call and diversions of the vessel.
If an NVOCC is a participant in the vessel AMS program,
the NVOCC will be treated as a carrier for Customs
_ purposes. Vessel operators who currently slot charter to
other vessel AMS carriers will utilize the same procedures
for notification that the slot charterer has used in provid-
ing its manifest to Customs. A slot charterer is a carrier
leasing space on a vessel owned or operated by another
carrier on a space available basis. The vessel operator is
only responsible for ensuring that the NVOCC’s Standard
Carrier Alpha Code (SCAC), as described in 19 CFR
4.7a(c\2Xiii), is included on the Customs Form (CF) 3171
that is presented to Customs. Failure to present the SCAC
of all NVOCCs and slot charterers on board the vessel will
result in a penalty against the vessel carrier, under 19
U.S.C. 1436. ...
App. 72
APPENDIX M
46 C.F.R. § 510.2(1) (repealed)
“Nonvessel operating common carrier by water” is a
common carrier by water as defined in section 1 of the Act,
which does not operate the vessels by which its ocean
transportation is provided but which holds itself out, by
the establishment and maintenance of tariffs, by adver-
tisement, solicitation, or otherwise, to provide transporta-
tion of property for hire by water in commerce from the
United States; which assumes responsibility or has liabil-
ity imposed by law for the safe transportation of such
property; and which arranges in its own name for the
performance of such transportation by underlying water
carriers.
App. 73
APPENDIX N
46 C.F.R. § 515.2(0)
(1) Non-vessel-operating common carrier services refers to
the provision of transportation by water of cargo between
the United States and a foreign county for compensation
without operating the vessels by which the transportation
is provided, and may include, but are not limited to, the
following:
(1) purchasing transportation services from a VOCC and
offering such services for resale to other persons;
(2) payment of port-to-port or multimodal transportation
charges;
(3) entering into affreightment agreements with underly-
ing shippers;
(4) issuing bills of lading or equivalent documents;
(5) arranging for inland transportation and paying for
inland freight charges on through transportation move-
ments;
(6) paying lawful compensation to ocean freight forward-
ers;
(7) leasing containers; or
(8) entering into arrangements with origin or destination
agents.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.