Pursuant to the North American Free Trade Agreement (NAFTA), shipments to and from the United States to Canada and Mexico are increasing. When a shipment is lost or damaged, the courts are faced with the question of whether the full liability provisions of the Carmack Amendment are applicable or whether the limited liability provisions of Mexico and Canada should be applied. This commentary by Eric Benton of Lorance & Thompson examines those questions. He writes:
"The liability provision of the Carmack Amendment, 49 U.S.C.S. § 14706(a)(1), which provides shippers recovery for the 'actual loss or injury to the property,' specifically states that only carriers 'subject to jurisdiction under subchapter I and III of chapter 135' can be held liable under the Carmack Amendment. In five different locations in Section 14706, this section specifically provides that the Carmack Amendment is 'subject to jurisdiction' of chapters I and III of chapter 135. . . .
"Very few courts have found that the Carmack Amendment does not apply based on the statutory language found in 49 U.S.C.S. § 13501. The majority of courts have incorrectly found that the Carmack Amendment was applicable to shipments on a through bill of lading that were initiated in the United States even when the loss or damage occurred in Mexico or Canada.
"An argument exists, however, that the jurisdictional provision of Section 13501 must be read with the liability provisions of Section 14706. The liability provisions contained in 14706(a) arguably expands the carrier's liability under Carmack. . . .
"Canada and Mexico limit the liability of carriers for lost or damaged cargo by statute. The Carmack Amendment generally offers full liability. Thus, plaintiffs are encouraged to file their suits in the United States. Often the evidence surrounding the loss or damage is in the adjacent country. Thus, judicial economy is not served by encouraging such increased litigation in the U.S. Courts. Motor carriers and their customers are accustomed to having a foreign country's limitation of liability applied to their shipments."
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