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Supreme Court rules on Carmack Amendment for overseas shipment of goods

By Hillary Stemple

[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] 6-3 in Kawasaki Kisen Kaisha v. Regal-Beloit Corporation [Cornell LII backgrounder] that the Carmack Amendment to the Interstate Commerce Act of 1887 [49 USC § 11706] does not apply to a shipment that originated overseas under a single bill of lading. The petitioner, shipping company Kawasaki Kisen Kaisha (K Line), included provisions in its bills of lading providing that the terms of the Carriage of Goods by Sea Act (COGSA) [46 USC § 30701] would govern the shipments, that Japanese law would govern any dispute and that the Tokyo District Court in Japan would have jurisdiction over any such disputes. The respondents contracted with the petitioners to ship products from China to the US and filed suit against K-Line in the US after products were damaged during the rail portion of transport. K-Line moved to dismiss the case based on the forum selection clause of the bill of lading. The district court granted the dismissal, but the US Court of Appeals for the Ninth Circuit overturned [opinion, PDF] the district court's ruling, holding that the district court did not consider whether the parties had properly opted out of the Carmack Act, without which the COGSA does not apply. Justice Anthony Kennedy, delivering the opinion of the court, reversed the court of appeals ruling, holding that COGSA governs over Carmack because:

[F]or Carmack's provisions to apply the journey must begin with a receiving railcarrier, which would have to issue a Carmack-compliant bill of lading. It follows that Carmack does not apply if the property is received at an overseas location under a through bill that covers the transport into an inland location in the United States. In such a case, there is no receiving rail carrier that receives the property for [domestic rail] transportation and thus no carrier that must issue a Carmack-compliant bill of lading.

Under the holding, the parties' agreement to litigate in Japan and under Japanese law is binding. Justice Sonia Sotomayor dissented and was joined by Justices John Paul Stevens and Ruth Bader Ginsburg.

During oral arguments, counsel for the respondent argued for a plain reading [JURIST report] of the statute to determine its meaning, while counsel for the petitioner argued that Carmack has not historically, and does not currently, apply to foreign trade. Counsel for the US government argued as amicus curiae on behalf of petitioners. The court granted certiorari [JURIST report] in the case to resolve a split among the circuits.

Full post as published by JURIST - The Paper Chase on June 21, 2010 (boomark / email).