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The Carmack Amendment, 49 U.S.C.S. § 11706, does not apply to a shipment originating overseas under a single through bill of lading. The terms of the bill govern the parties' rights.
Respondent cargo owners delivered to petitioners in No. 08-1553 (“K” Line) goods for shipping from China to inland United States destinations. “K” Line issued them four through bills of lading, i.e., bills of lading covering both the ocean and inland portions of transport in a single document. As relevant in this case, the bills contained a “Himalaya Clause,” which extended the bills’ defenses and liability limitations to subcontractors; permit “K” Line to subcontract to complete the journey; provide that the entire journey was governed by the Carriage of Goods by Sea Act (COGSA), which regulated bills of lading issued by ocean carriers engaged in foreign trade; and designated a Tokyo court as the venue for any dispute. “K” Line arranged the journey, subcontracting with petitioner in No. 08-1554 (Union Pacific) for rail shipment in the United States. The cargo was shipped in “K” Line vessels to California and then loaded onto a Union Pacific train. A derailment along the inland route allegedly destroyed the cargo. Ultimately, the Federal District Court granted the motion of Union Pacific and “K” Line to dismiss the cargo owners' suits against them based on the parties' Tokyo forum-selection clause. The Ninth Circuit reversed, concluding that that clause was trumped by the Carmack Amendment governing bills of lading issued by domestic rail carriers, which applied to the inland portion of the shipment. Certiorari was granted.
Was the forum-selection clause trumped by the Carmack Amendment governing certain domestic rail transportation?
The Court held that since the Carmack Amendment did not apply to a shipment originating overseas under a single through bill of lading, and consequently, the terms of the bill governed the parties’ rights. Section § 11706(a) only required a receiving rail carrier to issue a bill of lading. If the Carmack Amendment’s bill of lading requirement referred to any rail carrier that in the colloquial sense "received" the property from another carrier, then every carrier during shipment would have to issue a separate bill, contrary to the Carmack Amendment’s purpose of making receiving and delivering carriers liable under a single, initial bill of lading. The rail carrier was not a receiving rail carrier under the Carmack Amendment. According to the Court, the COGSA and the Carmack Amendment would not be read to outlaw the efficiency of through bills of lading by requiring multiple bills of lading. The parties agreed that because their bills were governed by Japanese law, Tokyo would be the best venue for any suit relating to the cargo. The forum-selection clause was binding.