Amicus Curiae Brief — Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp.

WA vorlalss and Oy | ae

In The =

Supreme Court of the United States

KAWASAKI KISEN KAISHA LTD.

AND K-LINE AMERICA, INC.,

Petitioners,

v.

REGAL-BELOIT CORPORATION, et al.,

Respondents.

5

UNION PACIFIC RAILROAD COMPANY,

Petitioner,

Vv.

REGAL-BELOIT CORPORATION, et al.,

Respondents.

On Writ Of Certiorari To The United States

Court Of Appeals For The Ninth Circuit

&

-

BRIEF OF THE INTERNATIONAL GROUP

OF PROTECTION AND INDEMNITY

(P&I) CLUBS, ET AL., AS AMICI CURIAE

IN SUPPORT OF PETITIONERS

°

CHESTER DOUGLAS HOOPER

Counsel of Record

FRANCESCA MORRIS

HARMONY I. LOUBE

LIssA SCHAUPP

WILLIAM BYRNE

HOLLAND & KNIGHT LLP

195 Broadway

New York, NY 10007

December 30, 2009 (212) 513-3200

Attorneys for Amici Curiae

The International Group

of Protection and

Indemnity (P&I) Clubs

[Additional Amici Listed On Inside Cover]

-—- —

—

a ee -_— — - —_— =

COCKLE LAW BRIEF PRINTING CO (800) 2725-6964

OR CALL COLLECT (402) 342-2831

pe

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AMERICAN STEAMSHIP OWNERS THE SHIPOWNERS’ MUTUAL

MUTUAL PROTECTION AND PROTECTION AND INDEMNITY

INDEMNITY ASSOCIATION, INC. ASSOCIATION (LUXEMBOURG)

ASSURANCEFORENINGEN GARD ‘THE STANDARD STEAMSHIP

(GJENSIDIG) OWNERS’ PROTECTION AND

ASSURANCEFORENINGEN SKULD poo —

(GJENSIDIG)

THE STEAMSHIP MUTUAL

INSURANCE ASSOCLAMON Lp, UNDERWRITING ASSOCIA-

‘TION (BERMUDA) LTD.

THE JAPAN SHIP OWNERS’ SVERIGES ANGFARTYGS

MUTUAL PROTECTION & ASSURANS FORENING

INDEMNITY ASSOCIATION

(SWEDISH CLUB)

THE LONDON STEAM-SHIP

’ . ) 4

OWNERS’ MUTUAL INSURANCE so . chet sont re onda

ASSOCIATION LTD

ASSOCIATION (BERMUDA) LTD.

THE NORTH OF ENGLAND ‘

PROTECTING AND [HE WEST OF ENGLAND

SHiP OWNERS’ MUTUAL

INDEMNITY ASSOCIATION LTD. INSURANCE ASSOCIATION

(LUXEMBOURG)

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .........................0..0008. ill

INTEREST OF THE AMICI CURIAE................. 1

i caobauncanedonensos 6

SUMMARY OF ARGUMENT ..........................004. 10

TT odiniiininhiccniciniicidinnidimaiisnntienmniiuainmieentionens 15

I. MUTUAL INSURANCE BRINGS SECURI-

TY AND STABILITY TO INTERNATION-

AL TRADE. IT DEPENDS ON PREDICTA-

BLE LIABILITY REGIMES GOVERNING

MULTIMODAL TRANSPORTATION .......... 15

Il THE CARMACK AMENDMENT DOES

NOT GOVERN CARRIAGE BETWEEN

A NON-ADJACENT FOREIGN COUN-

TRY AND A PLACE IN THE UNITED

ID cintciaiinnckesdapnctchieheindaiividadihelatesiunbagtaibatine 19

Ill. THE PRACTICAL RESULT OF THE

DECISION OF THE LOWER COURT IN

THIS MATTER IS OPPOSITE TO THE

RESULT ACHIEVED BY THIS COURT

IN NORFOLK SOUTHERN RY. CO. V.

JAMES N. KIRBY PTY LTD....................... 26

ii

TABLE OF CONTENTS ~— Continued

Page

IV. THE RESULT BELOW IS IN TENSION

WITH THE WELL-REASONED POSI-

TION OF THE UNITED STATES IN

RECENTLY COMPLETED TREATY NE-

GOTIATIONS FOR THE ROTTERDAM

RULES, WHICH IS THAT ONLY ONE

LAW SHOULD GOVERN ALL ASPECTS

OF INTERNATIONAL, MULTIMODAL,

DOOR-TO-DOOR CARRIAGE OF GOODS... 29

TE hininidsuatssitdacutiiensigabiiesicednsandsdumiotiniesins 33

ill

TABLE OF AUTHORITIES

Page

CASES

Aaacon Auto Transp., Inc. v. State Farm Mut.

Ins. Co., 587 F.2d 648 (2d Cir. 1976) .................2.... 19

Adler v. Dickson, [1955] 1 Q.B. (C.A. 1954)

(reprinted at 2009 AMC 2917)...............c.ccceceeeeeeeeee 11

American Road Service Co. v. Consolidated

Rail Corp., 348 F.3d 565 (6th Cir. 2003) ................ 21

Atchison, Topeka and Santa Fe Railway Co. v.

U.S., 617 F.2d 485 (7th Cir. 1980).............000......000 24

Capital Converting Equip., Inc. v. LEP Transp.,

Inc., 965 F.2d 391 (7th Cir. 1992) ..................... 21, 22

Cudahy Packing Co. v. Munson S.S. Line, 22

EE 25

J.H. Hamlen & Sons Co. v. Illinois C.R. Co.,

BED H. Be Cee. FABUE. BBD)... ..cocccccceccccccccscccescccceess. 25

Keene Corp. v. U.S., 508 U.S. 200 (1993)............. 21, 24

Kossick v. United Fruit Co., 365 U.S. 731

AR SER SRS tae ai yen Rain a vee SE 13, 27

Missouri P. R. Co. v. Elmore and Stahl, 377

ESET ea AO OM os OnE ee i]

Missouri P. R. Co. v. Porter, 273 U.S. 341

ES EE ESSE STEUER irene Oe TO BAAS 25

Neptune Orient Lines, Ltd. v. Burlington N. &

Santa Fe Ry. Co., 213 F.3d 1118 (9th Cir.

Norfolk Southern Ry. Co. v. Kirby Pty Ltd., 543

ee ID in dnciecuinniiduicgenignseasidiiddiactibentsinte passim

iv

TABLE OF AUTHORITIES — Continued

Page

Rankin v. Allstate Ins. Co., 336 F.3d 8 (1st Cir.

Seria icsecicitiincitaanesintetaiesecieeaaitahdaletiniaiasibaacaiiith abel iaeaasisiaa 9

Regal-Beloit Corp. v. Kawasaki Kisen Kaisha

Ltd., 557 F.3d 985 (9th Cir. 2009)...................0.00062. 14

Riduco, S.A. v. A.P. Moller-Maersk A/S, Civ. No.

08-3008, 2009 WL 4680197 (N.D. Ill. Dec. 7,

UIIIIE dis cisctinsdcinnvsiticinninciietihubnmmennmeniientaiiodsaaniaan 21, 22, 23

Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700

SE, BIE ccctncsincussigusccnsdiniiadlcciaiaamiiadpamtabamnidammeiiall 21

Sompo Japan Ins. Co. of America v. Union

Pacific R.R. Co., 456 F.3d 54 (2d Cir. 2006)....... 9, 22

Swift Textiles, Inc. v. Watkins Motor Lines, 799

se fe ee me 22

Toshiba Int'l Corp. v. M/V Sea-Land Express,

841 F. Supp. 123 (S.D.N-Y. 1994) ....000000. ee. 21

U.S. v. Booky, 733 F.2d 1335 (9th Cir. 1984)............. 24

Vimar Seguros Y Reaseguros, S.A. v. M.V. Sky

Reefer, 515 U.S. 528 (1998)...............ccccccccccccseccoceees 29

STATUTES

1978 Recodification, Pub. L. No. 95-473, 49

U.S.C. § 10501 [Carmack], 92 Stat. 1359

SITET ccssrscicitsinesaneneicipeeileignitanishteanieapetinahcgmaaieaiiaainaaae 2, 11, 23

49 U.S.C. § 2OC 11) (1976)..............ccccccceeceoess 2, 11, 19, 25

ae Oe ED vvccccevicsvinncdesessunesesncenmiiammnnina 20

GD UBS. & BGT vcnccvcccececsccsccessvccsecsessenienssoisnenaenaannnal 2

Vv

TABLE OF AUTHORITIES -— Continued

Page

ET a 2,5

rs csipeetbaceininnnniniaiea 2

a cesuicanonnecnins 2

An Act to Regulate Commerce, ch. 3591, 34

ER A ee 25

Interstate Commerce Act, ch. 104, §11, 24

i ssiensieinoconnone 24

Motor Carrier Act of 1935, ch. 498, 49 Stat. 543

a sinsiueeenevocvecs 2

U.S. Carriage of Goods by Sea Act (““COGSA”),

ch. 229, 49 Stat. 1207 (1936), Pub. L. No.

109-304, 120 Stat. 1485 (2006), reprinted in

note following 46 U.S.C. § 30701.................... passim

OTHER AUTHORITIES

Appendix B to the Convention Concerning

International Carriage by Rail (COTIF) of

May 9, 1980, Uniform Rules Concerning the

Contract for International Carriage of Goods

by Rail (CIM), 2 International Transport

Treaties, V-213 (Wolters Kluwer, Supp. 1-10

a ssetsinipuobunnsasscecvenss 31

William C. Baldwin, Land Versus Sea;

Carmack Versus COGSA: Why the Carmack

Amendment Should Not Apply to infand

Portions of Multimodal Shipments, 82 Tui. L.

ee wa ee 24

vi

TABLE OF AUTHORITIES — Continued

Page

Convention on the Contract for the Inter-

national Carriage of Goods By Road (CMR),

May 19, 1956, 399 U.N.T.S. 189 00.0.0... 31

Grant Gilmore & Charles L. Black, Jr., The

Law of Admiralty 76 (2d ed. 1975)................2.... 3, 15

H.R. Rep. No. 95-1395, reprinted at 1978

I a adnaelaeiigtanelie 23

Harvard Law Review, Foreign Commerce and

the Interstate Commerce Act, 40 Harv. L. Rev.

ESE Se RRS aR ier oa i Oe ay eae 25

International Convention for the Unification of

Certain Rules Relating to Bills of Lading,

signed at Brussels, Aug. 25, 1924, 51 Stat.

233, 247, 120 L.N.T.S. 155 (“Hague Rules”),

reprinted in 6 Benedict on Admiralty, Doc.

No. lel (7th rev. e@. BO07).......ccccccccccosccccescesees 4,5

Marc Levinson, The Box (2006).................0.0.cccccceceeee

Protocol to Amend the International Con-

vention for the Unification of Certain Rules

of Law Relating to Bills of Lading, signed at

Brussels on Aug. 25, 1924, Feb. 23, 1968,

1412 U.N.T.S. 128 (“Hague/Visby Rules”),

reprinted in 6 Benedict on Admiralty, Doc.

Bee, Be Cie BOR, GUE, TRG Peccccecccccocecevccecessecceses 4,5,

Thomas J. Schoenbaum, Admiralty and Mari-

EE ay Gee te ED Rcertcsnccnsevinescscsttninnscrioncesens

Vil

TABLE OF AUTHORITIES — Continued

Page

Michael F. Sturley, Maritime Cases About

Train Wrecks: Applying Maritime Law to the

Inland Damage of Ocean Cargo, 40 J. Mar. L.

I, aa 1 adiaibdanssansensonsene 20

Michael F. Sturley, “Reflections on the Recodi-

fication of Title 46”, 2 Benedict’s Maritime

ESET a RRP MO NR 20

Mark Tilley, The Origin and Development of the

Mutual Shipowners’ Protection & Indemnity

Association, 17 J. Mar. L. & Com. 261 (1986)....3, 15

Henry A. Tombari, Trends in Oceanborne Con-

tainerization and its Implications for the

U.S. Liner Industry, 10 J. Mar. L. & Com.

ER REE ERE ernco i: Se ea a 9

U.S. Dep’t of Transp., Bureau of Transp.

Statistics, America’s Container Ports:

Freight Hubs That Connect Our Nation to

Global Markets 3 (2009) ...0.............ccccceececceeeeeeeeeeeeees 7

UN Convention on Contracts for the Inter-

national Carriage of Goods Wholly or Partly

by Sea (“the Rotterdam Rules”) Dec. 11, 2008

General Assembly Resolution 63/122, Annex,

U.N. Doc. ASEBVGS/EDZ........000.cccscccesscesccccseess passim

UNCITRAL, 12th Sess., Working Group III

at 3, A/CN.9/WG.ITI/WP34 (Aug. 7, 2003)

available at _ http://daccessdds.un.org/doc/

UNDOC/LTD/V03/869/05/PDF/V0386905. pdf?

IIIIINENT cuss cunpuidsidondcputsccmenmasenmacanianice aes ae

1

INTEREST OF THE AMICI CURIAE'

The decision of the lower court in this case, if

allowed to stand, would introduce _ substantial

uncertainty into the law governing loss of or damage

to cargo carried within the United States as part of a

multimodal carriage between a place in a non-

adjacent foreign country and a place in the United

States. The uncertainty would adversely affect the

cost to shipowner, ship operator, and charterer

members of the mutual Protection and Indemnity

Associations (“Clubs”) comprising the International

Group of P&I Clubs (“Group”). The mutual liability

insurance provided by the Clubs rests to a great

extent on all insured members being exposed to risks

common to the use and operation of ships and to

liabilities defined and limited by the same or similar

laws. It is for this reason that the Clubs strongly

support and rely on regulation by way of interna-

tional rather than regional or domestic legislation.

That reliance would be damaged in respect of cargo

liabilities by the uncertainty introduced by the pos-

sibility that the Carmack Amendment (“Carmack”)

‘ No counsel for any party authored this brief in whole or in

part, and no person other than the amici curiae represented in

this brief made any monetary contribution to its preparation or

submission. Written consents from the parties to the filing of

this brief are on file with the Clerk of the Court. The parties

were notified ten days prior to the due date of this brief of the

intention to file.

* In 1906, Congress amended the Interstate Commerce Act

by passing the Hepburn Act. The portions of the Hepburn Act

(Continued on following page)

2

would govern the U.S. inland part of multimodal

carriage. Even if we assume arguendo that Carmack

would apply consistently, Carmack itself is not

consistent.

The Group is comprised of thirteen principal

Clubs located worldwide including the United States,

namely: The American Steamship Owners Mutual

Protection and Indemnity Association, Inc.;

Assuranceforeningen Gard (Gjensidig); Assurance-

foreningen Skuld (Gjensidig); The Britannia Steam

Ship Insurance Association Ltd.; The Japan Ship

Owners’ Mutual Protection & Indemnity Association;

The London Steam-Ship Owners’ Mutual Insurance

Association Ltd.; The North of England Protecting

and Indemnity Association Ltd.; The Shipowners’

Mutual Protection and Indemnity Association

(Luxembourg); The Standard Steamship Owners’

Protection and Indemnity Association (Bermuda)

Ltd.; The Steamship Mutual Underwriting Associa-

tion Ltd.; The Steamship Mutual Underwriting

dealing with interstate carrier liability, commonly known as the

Carmack Amendment, were originally codified at 49 U.S.C.

§ 20(11) (1976). The Carmack Amendment was later extended to

motor carriers by the Motor Carrier Act of 1935, ch. 498, 49 Stat.

543 (1935). The Carmack Amendment was recodified in 1978

(1978 Recodification, Pub. L. No. 95-473, 49 U.S.C. § 10501

[Carmack] 92 Stat. 1359 (1978), 49 U.S.C. §§ 10730 and 11707)

and again in 1996. The Carmack Amendment is now found at 49

U.S.C. § 11706 (rail carriers) and 49 U.S.C. § 14706 (motor

carriers). This brief shall refer to this legislation as the

“Carmack Amendment” or as “Carmack.” See K-Line Pet. App.

62a-9 la.

3

Association (Bermuda) Ltd.; Sveriges Angfartygs

Assurans Férening (Swedish Club); United Kingdom

Mutual Steam Ship Assurance Association (Bermuda)

Ltd.; and The West of England Ship Owners’ Mutual

Insurance Association (Luxembourg) respectfully sub-

mit this brief as amici curiae in support of Peti-

tioners.

Amici Clubs are thirteen principal mutual

marine liability insurance associations. The Clubs are

“associations of shipowners banded together to spread

and absorb mutual liabilities falling on their mem-

bers.” Grant Gilmore & Charles L. Black, Jr., The

Law of Admiralty 76 (2d ed. 1975). The members of

the Clubs are owners, operators, and charterers of

ships of practically all maritime nations. The thirteen

Clubs represented here insure approximately ninety-

two percent (92%) of the world’s ocean-going ship

tonnage carrying approximately 90% of world trade.

The individual Clubs as amici curiae here are

members of the International Group of P&I Clubs,

which, inter alia, places reinsurance for its member

Clubs. The Clubs compete with one another. Above

each Club’s individual retention, currently $7 million

each and every occurrence, they do pool, that is share,

cargo and other types of claims associated with the

* For a discussion on the history and function of P&I clubs,

see Thomas J. Schoenbaum, Admiralty and Maritime Law § 19-

12 (4th ed. 2004), and Mark Tilley, The Origin and Development

of the Mutual Shipowners’ Protection & Indemnity Assoctation,

17 J. Mar. L. & Com. 261 (1986).

4

use and operation of ships, e.g. pollution claims,

wreck removal claims, death and injury to passengers

and crew inter alia up to an amount of approximately

$6 billion per occurrence. Claims between $50 million

and $3.05 billion each and every occurrence are

protected by market reinsurance purchased collec-

tively through the International Group. This re-

insurance contract is written annually and 18 of the

world’s “top 20” reinsurers participate in the contract.

It is the largest marine contract written each year.

The Clubs are able to provide this high cover because

the cargo and other risks insured by the Clubs are

insured on the same terms and conditions by each

Club and are therefore capable of being pooled.

Currently Club cover for cargo claims essentially is

limited to liabilities imposed under the liability.

regimes contained in the Hague, the Hague/Visby

Rules or other legislation incorporating these regimes,

e.g. the U.S. Carriage of Goods by Sea Act (“COGSA”)."

This consistency of cover allows the risks to be

* U.S. Carriage of Goods by Sea Act, ch. 229, 49 Stat. 1207

(1936), Pub. L. No. 109-304, 120 Stat. 1485 (2006), reprinted in

note following 46 U.S.C. § 30701; International Convention for

the Unification of Certain Rules Relating to Bills of Lading,

signed at Brussels, Aug. 25, 1924, 51 Stat. 233, 247, 120 L.N.T.S.

155 (“Hague Rules”), reprinted in 6 Benedict on Admiralty, Doc.

No. 1-1 (7th rev. ed. 2007); Protocol to Amend the International

Convention for the Unification of Certain Rules of Law Relating

to Bills of Lading, signed at Brussels on Aug. 25, 1924, Feb. 23,

1968, 1412 U.N.T.S. 128 (“Hague/Visby Rules”), reprinted in 6

Benedict on Admiralty, Doc. No. 1-2 (7th rev. ed. 2007).

5

underwritten by individual Clubs and in the event

the claim exceeds the Club’s retention, to be pooled.

Mutuality is based on the sharing of common as

opposed to individual risks. The concept relies heavily

on the commonality and uniformity of the risks to

which those parties mutualizing the risk are exposed.

Lack of uniformity as is the case with the Carmack

Amendment, because the Carmack Amendment does

not itself provide uniform terms, undermines the

mutual concept. Carmack permits U.S. inland

carriers to agree to varying limitations of liability and

other contractual terms if certain conditions are met.

Carmack does not provide a consistent liability limit

as do the Hague Rules, the Hague/Visby Rules, and

COGSA.* Where cargo is shipped worldwide from

ports and places other than the U.S., it is not possible

for carriers to arrange their U.S. inland carriage

terms with any certainty or predictability if Carmack

* Compare § 4(5), ch. 229, 49 Stat. 1207 (1936) reprinted in

note following 46 U.S.C. § 30701 (“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 ... unless the nature and value of such goods

have been declared by the shipper before shipment and inserted

in the bill of lading.”) with 49 U.S.C. § 11706(cX3A) (°A rail

carrier providing transportation or service subject to the

jurisdiction of the Board under this part may establish rates for

transportation of property under which — (A) the liability of the

rail carrier for such property is limited to a value established by

written declaration of the shipper or by a written agreement

between the shipper and the carrier; .. .”).

6

applies to the U.S. inland carriage. The parties to

contracts for U.S. inland carriage may and do agree

to various differing amounts of liability for different

contracts. Carmack’s internal inconsistency prevents

uniformity of risks, which as is said above is the basis

of mutual insurance. Trade amongst nations other

than the United States does not present this problem.

As a result, the Clubs might impose a surcharge for

covering multimodal carriage in the United States.

If that were the case, multimodal carriers might

obtain separate insurance for the U.S. inland portion

of the multimodal carriage or decide to limit the

extent of the multimodal service that they currently

provide, so as to exclude the inland portion of the

carriage. If the carriers adopted this approach, the

reliability associated with the cover provided by the

Clubs would be lost to the detriment of third-party

persons filing claims against carriers. Moreover the

cost of trading with the United States would thus

likely be higher than the cost of trading with other

nations.

¢

INTRODUCTION

This case raises an issue that affects virtually all

the multimodal carriage of cargo between non-

adjacent foreign countries and the United States. In

2008, U.S. ocean container ports handled 28.2 million

7

TEUs,° nearly all of which were transported through-

out the country by either rail or truck carriers. U.S.

Dept of Transp., Bureau of Transp. Statistics,

America’s Container Ports: Freight Hubs That

Connect Our Nation to Global Markets 3, 16 (2009).

Uniformity and predictability of maritime law are

essential not only to the Amici P&I Clubs, but also to

world commerce. Insurance may be arranged for

vessel interests more efficiently if the law that gov-

erns the carriage of cargo is uniform and predictable.

The application of one law, COGSA, throughout the

entire door-to-door multimodal carriage of goods is

extremely beneficial to all parties involved in multi-

modal carriage and the efficient operation of multi-

modal movements. See Pet. App. 48a-61a.’

If, instead of COGSA, Carmack were to apply to

the U.S. inland part of multimodal carriage, the

inland carriers or the contracting carriers would,

according to the lower court opinion in this case, have

to give the shipper a fair opportunity to demand full

Carmack coverage, which is quite different than

COGSA. Full Carmack rights would have to be

offered as the primary regime to govern the inland

carriage. Pet. App. 33a-35a.

* Because shipping containers are of various lengths, the

TEU (twenty foot equivalent) was developed as the standard

measure for counting containers. One 40 foot container equals 2

TEUs.

" “Pet. App.” refers to the Appendices to the Petition for

Writ of Certiorari filed by Petitioners on June 18, 2009.

8

Offering such a fair opportunity and the notice

of the alternative terms required by Carmack to the

shipper would be very difficult if not impossible in

practice. In multimodal carriage, the inland carrier

does not contract directly with the shipper. The

shipper contracts with the contracting carrier, which

may be a non-vessel operating common carrier

(““NVOCC”) or a vessel operating common carrier

(““VOCC”) or some other kind of contracting carrier.

The contracting carrier might contract directly or

indirectly with the U.S. inland carrier. The con-

tracting carrier probably would not know which

inland carrier would perform the U.S. inland carriage

or the terms of that unknown inland carrier’s

contract at the time it contracted with the shipper.

Without that knowledge, the contracting carrier could

not give the shipper notice of the alternate terms a

particular inland carrier wished to use.

Moreover, if more than one law were to govern

various parts of each carriage, resolution of claims for

loss or damage would be needlessly and wastefully

complicated. Before the merits of a claim could be

addressed, the applicable law (Carmack or COGSA)

would have to be determined. The applicable law could

not be ascertained until the location of the loss or

damage and the location of its cause was determined.”

* Moreover, if COGSA governed the ocean part of the

carriage and Carmack governed the land part, the receiver

would want to make a claim against both the ocean carrier and a

land carrier, whose liability may be higher than the ocean

carrier's. Carmack imposes a strict, insurer-type liability scheme

(Continued on following page)

9

The location of the loss or damage or the location

of its cause may be difficult or impossible to prove.

Ocean containers used for multimodal transportation

are generally not opened during their carriage; as a

result, damage or loss is often not discovered until

the container reaches its final destination and is

opened by its receiver. If different legal regimes

required shippers to open and inspect containers as

they were transferred from one mode or party to

another, the transportation would be slowed and

cargo might be damaged or pilfered. The ocean

container has greatly reduced damage and loss

during transportation.” This advantage should not be

lost by a need to open containers in transit.

«

on the carrier while COGSA employs a fault-based liability

scheme. See Sompo Japan Ins. Co. of America v. Union Pacific

R.R. Co., 456 F.3d 54, 58 (2d Cir. 2006); Rankin v. Allstate Ins.

Co., 336 F.3d 8, 9 (1st Cir. 2003); see also Missouri P. R. Co. v.

Elmore and Stahl, 377 U.S. 134, 137 (1964). lf COGSA governed

the entire carriage, the receiver could prove its prima facie case

simply by proving delivery of a certain quantity of cargo to the

carrier in good order and condition and delivery by the carrier in

damaged condition, or that some cargo was missing when it was

delivered to its receiver. The claim would be governed only by

COGSA. There would be no reason for cargo interests to attempt

to improve their chances of recovery by suing the inland carrier

in addition to the contracting carrier.

* See generally Marc Levinson, The Box 1-4 (2006)

(suggesting that the container shaped the world economy by

reducing the time and costs of shipping); Henry A. Tombani,

(Continued on following page)

10

SUMMARY OF ARGUMENT

As more fully explained below, the concept of

mutual insurance underpins the liability cover

effected by the owners of the great majority of the

world’s ocean-going ship tonnage. Mutual insurance

depends on known and predictable liability regimes.

The Carmack Amendment does not provide a

knowable and consistent liability and if applied, as it

was by the court below, to multimodal through bills of

lading, it will increase the potential liability during

the U.S. land-based leg of international carriage. This

increase of potential liability will increase the cost of

insurance and ultimately the cost of international

trade to and from the U.S. It will also increase the

likelihood, cost and complexity of litigation of cargo

claims.

However, the decision below should not stand

because the Carmack Amendment simply does not

apply to carriage of goods between a non-adjacent

foreign country and a place in the United States. It

only applies to carriage from one U.S. state or

territory to another or to carriage between an

adjacent foreign country and a place in the United

States. This limited foreign application makes sense

Trends in Oceanborne Containerization and its Implications for

the U.S. Liner Industry, 10 J. Mar. L. & Com. 311, 311-12 (1979).

(“Overall, the advantages of containerization over the breakbulk

system are to reduce (i) the time and effort needed to handle

cargo; (ii) possible theft and damage; (iii) time required to move

from point of origin to final destination and (iv) a ship’s turn

around time in port.”).

11

and allows one liability regime to govern interna-

tional multimodal carriage, including the U.S. inland

portion of that carriage. It allows the carrier to

extend its defenses and limitation via its Himalaya

Clause” to all parties that it subcontracts to perform

a particular part of a carriage.

The scope of Carmack was quite clear before

Congress attempted in 1978 to clarify and modernize

its language by recodification. The pre-1978 re-

codification language clearly described Carmack’s

scope of foreign carriage application to carriage

between the United States and adjacent foreign

countries. 49 U.S.C. § 20(11) (1976).

Congress clearly stated that the 1978 re-

codification was not intended to change the substance

of the Carmack Amendment. Despite that clear

introductory paragraph in the recodification bill," the

1978 language has been interpreted by two circuits,

the Second Circuit and the Ninth Circuit, to have

made a very important substantive change by

extending Carmack’s scope from carriage between the

United States and adjacent foreign countries to all

foreign countries.

The term “Himalaya Clause” derives its name from the

S/S Himalaya, which was involved in Adler v. Dickson, [1955] 1

Q.B. (C.A. 1954) (reprinted at 2009 AMC 2917), and is used to

describe provisions that extend maritime liability limitations.

See, e.g., Norfolk Southern Ry. Co. v. James N. Kirby Pty Ltd..,

543 U.S. 14, 20 n. 2 (2004).

" Pub. L. No. 95-473, 49 U.S.C. § 10501 [Carmack], 92 Stat.

1359 (1978), 49 U.S.C. §§ 10730 and 11707.

12

If allowed to stand, the lower court opinion in

this case would also severely harm the uniformity

sought by the United States while negotiating the

United Nations Convention on Contracts for the

International Carriage of Goods Wholly or Partly by

Sea, the Rotterdam Rules, which were approved by

the U.N. General Assembly on December 11, 2008.”

One of the first issues negotiated by the UNCITRAL”

Working Group III that drafted the Convention

determined whether the new Convention would

govern during the entire door-to-door multimodal

carriage or only during the ocean port-to-port portion

of the carriage.

The Convention provides that its terms will

govern contracts between shippers and contracting

carriers for the entire door-to-door carriage with the

exception that where loss, damage or delay in

delivery occurs prior to loading or post-discharge, the

provisions of any other compulsorily applicable inter-

national instrument that governs liability, limitation

of liability, or time for suit will prevail over the

provisions of the Convention. That exception does

not involve carriage in the United States.

_———— -

"UN Convention on Contracts for the International

Carriage of Goods Wholly or Partly by Sea (“Rotterdam Rules”),

Dec. 11, 2008 General Assembly Resolution 63/122, Annex, U.N.

Doc. A/RES/63/122.

United Nations Commission on International Trade Law.

‘* Rotterdam Rules, Article 26.

13

The Convention will govern multimodal contracts

of carriage, including the inland U.S. portion.

Although the Rotterdam Rules will govern the U.S.

inland portion of the contract between cargo interests

and the contracting carrier, the Rotterdam Rules will

not govern actions between the contracting carrier

and inland sub-contracted carriers such as railroads

or trucking companies. The Rotterdam Rules would

also not govern a tort action by cargo interests

against a U.S. inland rail or road carrier.

Complete door-to-door uniformity of laws gov-

erning liability in the United States may be extended

to the U.S. railroads and trucks through the con-

tracting carrier’s Himalaya Clause if the decision of

the lower court is reversed. However, if the Carmack

Amendment is applied then there cannot be uni-

formity for the entire carriage.

This Court emphasized in Kirby, 543 U.S. 14,

the need for uniformity in the law governing con-

tracts for multimodal carriage and demonstrated the

use of Himalaya Clauses to achieve uniformity by

extending COGSA to the U.S. inland carriage:

Likewise, a single Himalaya Clause can

cover both sea and land carriers down-

stream. .. Confusion and inefficiency will

inevitably result if more than one body of law

governs a given contract’s meaning. As we

said in Kossick,”” when “a |maritime] contract

'* Kossick v. United Fruit Co., 365 U.S. 731 (1960).

14

... May well have been made anywhere in

the world,” it “should be judged by one law

wherever it was made.” Here, that one law is

federal.

Id. at 29.

The lower court in this case recognized the policy

expressed by this Court in Kirby, but claimed that

the “plain meaning” of Carmack, a federal statute,

took precedence over COGSA."

The lower court opinion would prevent the

uniformity of law sought by the United States while

negotiating the Rotterdam Rules and by this Court in

deciding Kirby. Id.

‘* “Defendants fairly argue that policies recently endorsed

by the Supreme Court-such as uniformity in the law of maritime

contracts and contractual autonomy for sophisticated shippers

and carriers-recommend applying COGSA here. See Kirby, 543

U.S. at 29, 125 S.Ct. 385.” Regal-Beloit Corp. v. Kawasaki Kisen

Kaisha Ltd., 557 F.3d 985, 992 (9th Cir. 2009); Pet. App. 12a.

" “The policy of uniformity in maritime shipping law,

however compelling, must give way to controlling statutes and

precedent. Given Neptune’s [Neptune Orient Lines, Ltd. v.

Burlington N. & Santa Fe Ry. Co., 213 F.3d 1118 (9th Cir. 2000)|

holding that Carmack applies and the conspicuous absence in

COGSA of language allowing parties to give superseding

statutory force to their contractual extensions of COGSA inland

under Section 7, we hold that a mere contractual extension of

COGSA is not sufficient by itself to overcome Carmack.” /d. at

998; Pet. App. 26a.

15

ARGUMENT

I. MUTUAL INSURANCE BRINGS SECURITY

AND STABILITY TO INTERNATIONAL

TRADE. IT DEPENDS ON PREDICTABLE

LIABILITY REGIMES GOVERNING MULTI-

MODAL TRANSPORTATION.

The great majority of the world’s ocean-going

shipping tonnage is insured by the Clubs. Clubs are

“associations of shipowners banded together to spread

and absorb the liabilities falling on their members.””

Mutual protection and indemnity insurance emerged

in the mid-nineteenth century when shipowners

sought ways to protect themselves for liability for

newly recognized third-party risks that other types of

underwriters were not interested in covering.” The

Group is a non-profit organization comprised of

thirteen principal individual non-profit making

Clubs, which provide liability cover to approximately

92% of the world’s ocean-going ship tonnage and

which share or pool their larger claims. Mutual

insurance provides security and stability to inter-

national maritime trade because the claims of

individual shipowners are secured not by a single

insurer, but rather by the owners of 92% of the

* Grant Gilmore & Charles L. Black, Jr., The Law of

Admiralty 76 (2d ed. 1975).

* Mark Tilley, The Origin and Development of the Mutual

Shipowners’ Protection & Indemnity Associations, 17 J. Mar. L.

Com. 261, 262-65, 267 (1986).

16

world’s ocean-going ship tonnage if a claim exceeds

each Club’s individual retention, currently $7 million.

The concept of mutuality underpins the suc-

cessful operation of risk and claim’ sharing amongst

member shipowners at the individual Club level, i.e.,

claims within the Club retention and between Clubs

at the pooling level, i.e., claims in excess of Club

retention. The pooling of claims is achieved by way of

the pooling agreement, which, inter alia, defines the

risks and claims that can be pooled and provides the

mechanism by which pool claims, i.e. those claims

that exceed each Club’s individual retention up to

approximately $6 billion per occurrence, are shared

amongst the Clubs (although claims between $50

million and $3.05 billion each and every occurrence

are protected by market reinsurance purchased

collectively through the International Group). The

pooling or mutualizing of risks reduces financial

volatility for individual Clubs, since the individual

Club does not itself have to meet a large claim in a

short time frame, but pools/shares it with other

Group Clubs. However, the pooling mechanism is

structured in such a way that over time each

individual Club will repay to the pool what it takes

from the pool. No premium is paid by Clubs with

respect to pool claims; each Club’s contribution to

such claims is calculated in accordance with the

mechanism contained in the pooling agreement,

which in part will depend upon the tonnage entered

with the individual Club, the premium paid by that

Club’s members to the Club and the Club’s pool

17

claims record. As these factors vary from policy year

to policy year so will a Club’s contribution to the pool.

Club policy terms are set out in each Club’s

Rules. As will be appreciated, Club Rules cannot and

do not differ in substance because of the pooling

arrangements.

Mutual insurance depends upon known and

predictable liability regimes. The basic premise,

which the Clubs apply when determining what risks

they collectively will cover and the extent of that

cover in relation to any particular risk, for example

loss and damage to cargo, is whether the risk can be

mutualized, that is whether it is a risk common to the

great majority of the Clubs’ memberships and

whether members will be exposed to the same or

similar liability in relation to the risk. Accordingly

the Clubs, when determining the benchmark for the

cover that they will provide, will look to widely

adopted and well-established liability regimes. In the

case of contracts for the carriage of cargo by sea, the

liability cover provided by the Clubs in all but very

limited cases, is that established by the Hague, the

Hague/Visby Rules and COGSA liability regimes.”

Claims that a carrier by sea incurs under a contract

on terms less favorable than Hague or the Hague/

Visby are not covered to the extent they exceed the

Hague or Hague/Visby liabilities although Clubs have

a discretion to admit such claims.

»” See note 4.

18

The Carmack Amendment has no standard

limitation of liability. Instead, Carmack permits U.S.

inland carriers to agree to varying limitations of

liability and other contractual terms if certain

conditions are met. The parties to contracts for inter-

state carriage may and do agree to various different

amounts of liability for different contracts. Limits

vary from railroad to railroad, from trucker to

trucker, and from contract to contract. The resulting

inconsistency prevents uniformity of risks, which is

necessary for mutual insurance. If the opinion below

were not overturned and if Carmack were applied as

it was in the decision below, the Clubs might well

impose a penalty for those members trading in the

high risk area of the United States, where Carmack

Amendment rulings are common. If the Clubs know

that over a period of time claims will deteriorate due

to application of Carmack to multimodal carriage,

premiums would likely be adjusted upwards for

individual members trading in such areas, or possibly

a surcharge would be imposed on insuring the U.S.

inland portion of multimodal carriage.

In addition to the uncertainty of the liability

limit applicable in any particular case, the expense of

resolving disputes would be increased by the expense

of determining where the damage occurred or was

caused. If cargo were lost or damaged sometime

during a multimodal carriage, and Carmack applied

to a portion of the carriage, the location of the cargo

at the time the loss or damage occurred or was caused

would have to be determined before the parties could

19

know which law governed the loss or damage. This

requirement would needlessly increase the cost of

discovery and claims handling and would delay the

claims handling procedure. If COGSA applied

throughout the multimodal carriage, there would be

no need to prove where the damage was caused or

occurred.

Il. THE CARMACK AMENDMENT DOES NOT

GOVERN CARRIAGE BETWEEN A NON-

ADJACENT FOREIGN COUNTRY AND A

PLACE IN THE UNITED STATES.

The Carmack Amendment’s jurisdiction is limited

to carriage from one state or territory of the United

States to another, or between an adjacent foreign

country and a place in the United States. Prior to

1978, the plain text of the Carmack Amendment

clearly limited its foreign carriage scope to carriage

“from any point in the United States to a point in an

adjacent foreign country,” i.e. exports to Canada and

Mexico. 49 U.S.C. § 20(11) (1976); Pet. App. 98a; see

also Aaacon Auto Transp., Inc. v. State Farm Mut.

Ins. Co., 537 F.2d 648, 652 n. 7 (2d Cir. 1976) (quoting

49 U.S.C. § 20(11)). When Congress recodified the

statute in 1978, Congress linked the description of

Carmack’s scope of application to the jurisdiction

of the Interstate Commerce Commission, later the

20

Surface Transportation Board.” The jurisdiction of

the Surface Transportation Board was described in

the recodification as shipments “between a place in

.. the United States and a place in a foreign

country.” See 49 U.S.C. § 10501(a)(2); Pet. App. 62a. It

has been argued that this language suggests that the

Carmack Amendment applies to all exports and

imports between the United States and all foreign

countries and has drastically amended the scope of

application of Carmack. See Michael F. Sturley,

Maritime Cases About Train Wrecks: Applying Mari-

time Law to the Inland Damage of Ocean Cargo, 40

J. Mar. L. & Com. 1, 34 (2009).” This argument is

contrary to Congress’s expressed intent not to change

the law by recodification and is contrary to the law

concerning recodification.

Despite the omission of the “from ... to” and

“adjacent” language in the jurisdictional statement in

the 1978 recodification, Congress has made it clear

that it did not intend the recodification to change the

* The Surface Transportation Board is the successor to the

Interstate Commerce Commission.

*“ Nevertheless, Professor Michael F. Sturley has explained

that recodification is “not intended to make any substantive

change in the law.” See Michael F. Sturley, “Reflections on the

Recodification of Title 46”, 2 Benedict's Maritime Bulletin 209,

212 (2004). Professor Sturley basically argues that Congress

intended to make substantive changes even though Congress

stated in the introduction to the recodification bill that was not

the intent, and even though recodification does not make

substantive changes.

21

substance of the Carmack Amendment. See Riduco,

S.A. v. A.P. Moller-Maersk A/S, Civ. No. 08-3008, 2009

WL 4680197, *3 (N.D. Ill. Dec. 7, 2009) (“because this

language was added as part of the recodification of

the Interstate Commerce Act in 1978, and the re-

codification was not intended to work a substantive

change, the language must be read in conjunction

with the pre-1978 Interstate Commerce Act.”) (citing

Keene Corp. v. U.S., 508 U.S. 200, 209 (1993)).

Accordingly, the Carmack Amendment should not

apply to shipments between the United States and a

non-adjacent foreign country that are governed by a

through bill of lading.” The Fourth, Sixth, Seventh,

and Eleventh Circuits have all held that the Carmack

Amendment does not apply to the inland leg of a

multimodal shipment under a through bill of lading.

See, e.g., Shao v. Link Cargo (Taiivan) Litd., 986 F.2d

700 (4th Cir. 1993); American Road Service Co. v.

Consolidated Rail Corp., 348 F.3d 565 (6th Cir. 2003);

* In Toshiba Intl Corp. v. M/V Sea-Land Express, 841

F. Supp. 123, 128 (S.D.N_Y. 1994), Judge Leval explained that a

“through bill of lading is one which governs the entire course of

transport and applies to the connecting carriers despite the fact

that they are not parties to the contract.” (Citing Capital

Converting Equip., Inc. v. LEP Transp., Inc., 965 F.2d 391, 394

(7th Cir. 1992)). The Clubs and Group respectfully agree with

Judge Leval’s holding in this case that “whether the limitation

provided by the bill of lading extends its protection to .. . inland

carriage also turns on whether it is a ‘through bill of lading.’ If

so, the Carmack Amendment, which might otherwise apply to

the inland portion of the journey and disallow a limitation on

liability, does not apply.” Jd. (citing Capital Converting Equip.,

965 F.2d at 394)

22

Capital Converting Equip., Inc. v. LEP Transp., Inc.,

965 F.2d 391 (7th Cir. 1992); Swift Textiles, Inc. v.

Watkins Motor Lines, 799 F.2d 697 (11th Cir. 1986).”

These holdings are consistent with Congress’s intent

to continue to limit the Carmack Amendment’s

application only to domestic shipments or shipments

between the United States and an adjacent foreign

country.

In Riduco, S.A., 2009 WL 4680197, at *2, the

Northern District of Illinois recently considered

whether the Carmack Amendment applies to an

international multimodal shipment from the United

States to Columbia, covered by a through bill of

lading. The court noted the circuit split on the issue

of whether the Carmack Amendment applies in cases

involving imports from a non-adjacent foreign country

under a through bill of lading. Jd. at *4. The court

was guided by the Seventh Circuit’s decision in

Capital Converting Equip., Inc. v. LEP Transp. Inc.,

965 F.2d 391, 394 (7th Cir. 1992) which held that the

Carmack Amendment did not apply to a shipment

between a non-adjacent foreign country and the

United States that was covered by a through bill of

lading. Id. at *2. The Riduco court explained that

“(djespite the omission of the ‘from ... to’ and

“ By contrast the Ninth Circuit in the opinion below, and

the Second Circuit in Sompo Japan Ins. Co. v. Union Pacific

R.R. Co., 456 F.3d 54, 68-69 (2d Cir. 2006), have erroneously

held that the Carmack Amendment applies to the inland leg of a

continuous multimodal shipment.

23

‘adjacent’ language in the 1978 recodification of the

Carmack Amendment, Congress made it clear that it

did not intend to work a substantive change in the

law.” Id. at *3. Accordingly, the Riduco court held that

“the Carmack Amendment does not apply to the

shipment in this case from the United States to

Columbia, a non-adjacent foreign country, under a

through bill of lading.” Jd.

Congress’s intent was made clear in the intro-

duction to the recodification which states, “to revise,

codify, and enact without substantive change the

Interstate Commerce Act and related laws as subtitle

IV of title 49, United States Code.” 1978 Re-

codification, Pub. L. No. 95-473, 49 U.S.C. § 10501

[Carmack], 92 Stat. 1359 (1978) (emphasis added);

Pet. App. 90a. Additionally, a House Report regarding

the 1978 recodification explains that “[l]ike other

codifications undertaken to enact into positive law all

titles of the United States Code, this bill makes no

substantive change in the law.” H.R. Rep. No. 95-

1395, at 9, reprinted at 1978 U.S.C.C.A.N. 3009,

3018:

It is sometimes feared that mere changes in

terminology and style will result in changes

in substance or impair the precedent value of

earlier judicial decisions and other inter-

pretations. This fear might have some

weight if this were the usual kind of

amendatory legislation where it can be

inferred that a change of language is

intended to change substance. In a codi-

fication statute, however, the courts uphold

24

the contrary presumption: the statute is

intended to remain substantively unchanged.

Moreover, it is widely accepted that when inter-

preting a recodification it should be presumed that

the law is intended to remain substantively

unchanged. See, e.g., Keene Corp. v. U.S., 508 U.S.

200, 209 (1993) (courts should not presume that a

comprehensive revision “changed the underlying

substantive law unless an intent to make such a

change is clearly expressed.”); U.S. v. Booky, 733 F.2d

1335, 1337 n. 3 (9th Cir. 1984) (finding language

present in original section of code, but absent in

recodified section, must be read into recodified section

when absence of language creates a substantive

change); Atchison, Topeka and Santa Fe Railway Co.

v. U.S., 617 F.2d 485, 491 (7th Cir. 1980) (“Congress

has unequivocally forbidden any interpretation that

would substantively change the [Interstate Com-

merce Act]”).

Furthermore, the argument that the Carmack

Amendment applies to shipments to and from non-

adjacent foreign countries is erroneous as it conflicts

with the original purpose of the Amendment. In 1887,

Congress enacted the Interstate Commerce Act and

established the Interstate Commerce Commission for

the purpose of establishing uniform law applicable to

interstate shipments. See Interstate Commerce Act,

ch. 104, § 11, 24 Stat. 379, 383 (1887); William C.

Baldwin, Land Versus Sea; Carmack Versus COGSA:

Why the Carmack Amendment Should Not Apply to

Inland Portions of Multimodal Shipments, 82 Tul. L.

25

Rev. 731, 737-38 (2007). The 1906 Carmack Amend-

ment to the Interstate Commerce Act applied

originally only to interstate commerce and did not

apply to foreign shipments of any kind. 49 U.S.C.

§ 20(11) (1976). The Amendment originally read:

“That any common carrier . .. receiving property for

transportation from a point in one State to a point in

another State shall issue a receipt or bill of lading

therefor. . . .” An Act to Regulate Commerce, ch. 3591,

34 Stat. 593 (1906); Harvard Law Review, Foreign

Commerce and the Interstate Commerce Act, 40 Harv.

L. Rev. 1130, 1134 n. 21 (1927); J.H. Hamlen & Sons

Co. v. Illinois C.R. Co., 212 F. 324 (E.D. Ark. 1914).

The addition of the Cummins Amendments in

1915, by express reference brought the liability of a

carrier engaged in transportation “from a point in the

United States to a point in an adjacent foreign

country” within the scope of the Carmack Amend-

ment. See 40 Harv. L. Rev. 1130. The Amendments

did not include non-adjacent foreign countries.

Accordingly, courts routinely held that the Carmack

Amendment was not applicable to shipments to and

from non-adjacent foreign countries. See, e.g.,

Missouri P. R. Co. v. Porter, 273 U.S. 341 (1927)

(Carmack Amendment inapplicable to a bill of lading

for a shipment of a load of cotton being shipped from

the State of Georgia to England because England was

a non-adjacent foreign country); Cudahy Packing Co.

v. Munson S.S. Line, 22 F.2d 898 (2d Cir. 1927)

(Carmack Amendment inapplicable to a suit by a

shipper of hams from Iowa to Havana, Cuba because

26

Cuba was a non-adjacent foreign country). Although

the Carmack Amendment has been further amended

and recodified, nothing has changed the original

purpose or the substance of the Carmack Amendment

regarding its inapplicability to shipments to and from

non-adjacent foreign countries.

Congress’s original purpose in enacting the Inter-

state Commerce Act and later the Carmack Amend-

ment was to create a uniform statutory framework for

the carriage of cargo domestically and between the

U.S. and adjacent countries. To stray from Congress’s

intent by applying the Carmack Amendment to the

carriage of cargo between non-adjacent countries and

the United States destroys uniformity and drastically

undermines the original purpose of the Interstate

Commerce Act and the Carmack Amendment.

Ill. THE PRACTICAL RESULT OF THE

DECISION OF THE LOWER COURT IN

THIS MATTER IS OPPOSITE TO THE

RESULT ACHIEVED BY THIS COURT IN

NORFOLK SOUTHERN RY. CO. V. JAMES

N. KIRBY PTY LTD.

This Court explained the advantages of uniform

law governing multimodal carriage in Norfolk

Southern Ry. Co. v. James N. Kirby Pty Ltd., 543 U.S.

14 (2004).

Kirby presented multimodal carriage that was

slightly more complicated than the carriage in this

case. In Kirby, the shipper of cargo (Kirby) contracted

27

with a Non-Vessel Operating Common Carrier

(NVOCC) to carry cargo from Sydney, Australia to

Huntsville, Alabama. The NVOCC contracted with a

Vessel Operating Common Carrier (VOCC) also to

carry the cargo from Sydney to Huntsville, Alabama.

The VOCC contracted with a railroad (Norfolk

Southern) to carry the cargo over land from the U.S.

port of entry, Savannah, Georgia, to Huntsville,

Alabama. The contract for the entire shipment was

evidenced by the NVOCC through bill of lading

issued to Kirby, and by the VOCC through bill of

lading issued by the VOCC to the NVOCC. Kirby, 543

USS. at 19.

This Court held that the bill of lading was a

maritime contract, and therefore, was governed by

federal law. The Court stated:

Likewise, a single Himalaya Clause can

cover both sea and land carriers down-

stream.... Confusion and inefficiency will

inevitably result if more than one body of law

governs a given contract’s meaning. As we

said in Kossick, when “a [maritime] contract

.. may well have been made anywhere in

the world,” it “should be judged by one law

wherever it was made.” Here, that one law is

federal.

Id. at 29 (citing Kossick v. United Fruit Co., 365 U.S.

731, 741 (1960)). This Court explained that the

defenses and limitations in the NVOCC bill of lading

28

protected all the parties that helped perform the

multimodal carriage, including the railroad.” The

limitation contained in the VOCC bill of lading was

lower than the NVOCC’s bill of lading limitation and

there was no direct contract between Kirby and the

VOCC. This Court held that the NVOCC had acted as

Kirby’s limited agent to bind Kirby to the limitation

contained in the VOCC’s bill of lading. The lower

VOCC limit was extended to the railroad by the

Himalaya Clause in the VOCC’s bill of lading.

The case at bar is simpler and no limited agency

theory is necessary. The cargo shipper, Regal-Beloit

Corporation, et al. contracted with Kawasaki Kisen

Kaisha, Ltd. (K-Line) to carry cargo from China to

various inland destinations in the United States. K-

Line’s U.S. agent, K-Line America, contracted with

the Union Pacific Railroad Company (UPRR) for the

inland carriage. K-Line Pet. App. at 9.

Kirby’s reasoning applies a fortiori here: It

suggests that K-Line’s Himalaya Clause extended the

* As COGSA permits, Hamburg Siid in its bill of lading

chose to extend the default rule to the entire period in

which the machinery would be under its respon-

sibility, including the period of the inland transport.

Hamburg Siid would not enjoy the efficiencies of the

default rule if the liability limitation it chose did not

apply equally to all legs of the journey for which it

undertook responsibility. And the apparent purpose of

COGSA, to facilitate efficient contracting in contracts

for carriage by sea, would be defeated.

Kirby, 543 U.S. at 29.

29

terms of K-Line’s contract, including a choice of forum

clause, to the railroad. K-Line would of course be

entitled to that choice of forum clause as well. See

Vimar Seguros Y Reaseguros, S.A. v. M.V. Sky Reefer,

515 U.S. 528, 541 (1995) (holding that foreign

arbitration clauses in a bill of lading are valid under

COGSA). However, the decision below is in conflict

with the reasoning of Kirby, and if the decision below

is upheld more than one body of law will govern the

multimodal contract at issue here. Reversal of the

lower court decision in this case will allow parties to

contracts for multimodal carriage to enjoy the

efficiencies described by this Court in Kirby.

IV. THE RESULT BELOW IS IN TENSION

WITH THE WELL-REASONED POSITION

OF THE UNITED STATES IN RECENTLY

COMPLETED TREATY NEGOTIATIONS

FOR THE ROTTERDAM RULES, WHICH

IS THAT ONLY ONE LAW SHOULD

GOVERN ALL ASPECTS OF INTERNA-

TIONAL, MULTIMODAL, DOOR-TO-DOOR

CARRIAGE OF GOODS.

The United States played an active role in

negotiating a Convention on Contracts for the

International Carriage of Goods Wholly or Partly by

Sea, which was recently completed by the United

Nations Commission on International Trade Law

(UNCITRAL) and approved on December 11, 2008 by

30

the United Nations General Assembly.” It was signed

in Rotterdam on September 23, 2009 by several

nations including the United States. The Rotterdam

Rules will not affect the decision in this case. The

lower court opinion in this case, if allowed to stand,

would however prevent one law from governing the

entire door-to-door multimodal carriage whether that

one law were COGSA or the Rotterdam Rules.

The United States stated its position” during the

Rotterdam Rules negotiation as follows:

I. Scope of application and _ performing

parties...

5. As part of the overall package, the

United States supports a door-to-door

regime on a uniform liability basis as

between the contracting parties, subject

to a limited network exception. This

means that the contracting carrier’s

liability to the cargo interests would

always be resolved under the Instru-

ment’s own substantive liability provi-

sions (including the Instrument’s own

limitation and exoneration provisions)

except when the network principle

* UN Convention on Contracts for the International

Carriage of Goods Wholly or Partly by Sea, Dec. 11, 2008

General Assembly Resolution 63/122, Annex, U.N. Doc. A/RES/

63/122.

* UNCITRAL, 12th Sess., Working Group III at 3, A/CN.9/

WG_III/WP34 (Aug. 7, 2003) available at http://daccessdds.un.org/

doc/UNDOC/LTD/V03/869/05/P DF/V0386905.pdf?OpenElement.

31

applies to supersede these provisions.

To provide the maximum degree of

uniformity possible, we would keep the

network exception as narrow as possible.

The narrow network exception contained

in article 4.2.1 of the Draft Instrument

would be acceptable to the United

States.”

The network exception referred to a desire by

European Nations to have their road and rail con-

ventions” govern damage or loss on European roads

or rails.

While the Convention will govern a multimodal

carrier’s liability to cargo interests during U.S. inland

carriage, it will not apply directly to the railroad or

trucking company acting as subcontractor to the

carrier and referred to by the Rotterdam Rules as a

“performing party.” The United States indicated that

the carrier’s Himalaya Clause should preserve

* Id. The 2003 draft of the Instrument, A/CN.9/WGIII/

WP.21, was referred to when discussing the narrow network

exception. It may be found at Article 26 in the Rotterdam Rules.

It does not affect the U.S. inland part of a multimodal move.

” See Convention on the Contract for the International

Carriage of Goods By Road (CMR), May 19, 1956, 399 U.N.T.S.

189; Appendix B to the Convention Concerning International

Carriage by Rail (COTIF) of May 9, 1980, and Uniform Rules

Concerning the Contract for International Carriage of Goods by

Rail (CIM), 2 International Transport Treaties, V-213 (Wolters

Kluwer, Supp. 1-10 Jan. 1986).

” Rotterdam Rules, Article 1(6\a).

32

uniformity by applying the carrier’s defenses to the

railroad or motor carrier:

With regard to other performing parties, the

Instrument should not create new causes of

action or preempt existing causes of action.

For example, the liability of an inland carrier

(e.g., a trucker or a railroad) should be based

on existing law. In some countries, this may

be a regional unimodal convention.... In

others, it may be a mandatory or non-

mandatory domestic Jaw governing inland

carriage, or the generally applicable tort law.

In some countries, cargo interests may not

have a cause of action against inland

performing parties. Preserving the status

quo in this regard would, of course, preserve

whatever rights an inland performing party

may have under applicable national law to

rely on a Himalaya clause to claim the

benefit of the contracting carrier’s rights

under the Instrument. The Instrument

should neither increase nor decrease these

existing rights.

Id. q 7.

The present and future reliance by U.S. inland

carriers on Himalaya Clauses would be destroyed if

the lower court opinion were allowed to stand. To

interpret Carmack contrary to the clear meaning and

intent expressed by Congress before the 1978

Recodification and specifically prescribed by the

recodification bill would severely harm the uniformity

described in Kirby and the uniformity sought by the

33

United States in the future Rotterdam Rules and

would increase the expense of U.S. foreign trade.

+

CONCLUSION

The judgment of the United States Court of

Appeals for the Ninth Circuit should be reversed.

Dated: New York, New York

December 30, 2009.

Respectfully submitted,

CHESTER DOUGLAS HOOPER

Counsel of Record

HOLLAND & KNIGHT LLP

195 Broadway

New York, NY 10007

(212) 513-3200

Attorneys for Amici Curiae

The International Group

of Protection and

Indemnity (P&I) Clubs

and Its Members