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Tulane Maritime Law Journal
Tulane Law School
John Giffen Weinmann Hall
6329 Freret Street
New Orleans, Louisiana 70118
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Tulane Maritime Law Journal

The Tulane Maritime Law Journal is the preeminent student-edited law journal in the field of Admiralty and Maritime Law. Published semi-annually, each issue of the Journal includes scholarly works written by academics, practitioners, and students concerning current topics in Admiralty and Maritime Law. In addition, the Journal publishes annual sections in Recent Developments and International Law for the United States and the international community, as well as periodic symposia on relevant topical areas in the field and quantum and collision surveys every other year.

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Tulane Maritime Law Journal
John Giffen Weinmann Hall
Tulane Law School
6329 Freret Street
New Orleans, Louisiana 70118-6231
tel. 504.865.5959
fax 504.862.8878
Editor in Chief
Yaakov U. Adler 
Article Submissions
Lynn Becnel 
Subscriptions / Questions
 Nicholas Foster 

Tulane Maritime Law Journal Updates

Kawasaki Kisen Kaisha, Ltd. v. Regal-Beloit Corp.: Supreme Court Rules the Carmack Amendment Does Not Apply to the Inland Leg of an Intermodal Shipment Originating Oversease Under a Single Bill of La

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In a 6-3 decision handed down on June 21, 2010, the Supreme Court overturned a Ninth Circuit ruling and declared that the Carmack Amendment does not apply to a shipment that originates overseas and travels under a single through bill of lading. Therefore, the forum selection clause in the bill of lading, which obliged the parties to litigate disputes in Tokyo, was binding.

The case, Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., No. 08-1553 (June 21, 2010) arose out of a carriage of goods agreement that originated in China and was to terminate at inland destinations in the United States. The bills of lading required “K” Line to arrange delivery of the goods by any method of transportation it chose, and included a “Himalaya Clause,” extending the bills’ defenses and liabilities to parties subcontracted to perform services that would accomplish the bills’ objectives. The bills also contained a Tokyo forum selection clause. A K-Line vessel transported the goods from China to California, and they were then transferred to Union Pacific for rail carriage. The cargo was allegedly destroyed when a Union Pacific train derailed in Tyrone, Oklahoma.   

The cargo owners filed suit in the Superior Court of California, Los Angeles County, and were removed to the United States District Court for the Central District of California, whereupon the defendants moved to dismiss based on the agreements’ forum selection clause. The District Court granted the motion, but the Ninth Circuit Court of Appeals reversed and remanded, because it concluded that the Carmack Amendment applied to the inland portion of the carriage and superseded the parties’ forum selection clause.

The Supreme Court granted certiorari on the question of whether the Carmack Amendment applies to the inland portion of overseas shipments on a through bill of lading. If Carmack applied, then its venue provisions would trump the parties’ forum selection clause. If, as the defendants argued, the Carriage of Goods by Sea Act (“COGSA”) applied, then the parties are free to adopt a (enforceable) forum selection clause, as was established in Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 537-39 (1995). Though COGSA only applies to shipments to or from ports in the United States, the statute allows parties to extend its terms by contract to cover the entire length of an intermodal journey. See Norfolk Southern R. Co. v. James N. Kirby Pty. Ltd., 543 U.S. 14 (2004). The Court analogized its Kirby holding, where it found that Congress intended for parties to extend COGSA’s terms to inland, domestic segments of an international journey when using a through bill of lading, to the present case.

The cargo owners, on the other hand, argued that the Carmack Amendment applied to the domestic inland portion of the transportation. Because Carmack has its own venue provisions, the argument went, those would trump the party’s forum selection clause. The Court parsed the text of the Carmack Amendment and concluded that it requires only the receiving rail carrier—not the delivering or connecting rail carrier—to issue a bill of lading. This is because, the Court reasoned, “[i]f Carmack’s bill of lading requirement did not refer to the initial carrier, but rather to any rail carrier that in the colloquial sense ‘received’ the property from another carrier, then every carrier during the shipment would have to issue its own separate bill,” which would be contrary to the purpose of Carmack.

By limiting the requirement to issue a bill of lading to only the receiving rail carrier, the Court was able to easily distinguish between through bills of lading and a journey that required separate bills of lading. A rail carrier who takes on goods that have traveled overseas on a through bill of lading is not a “receiving” carrier, by the Court’s reasoning, because it does not issue its own bill of lading. The rail carrier in that situation is not really receiving the property for domestic rail transportation, as Carmack requires. By contrast, where there is no through bill of lading, the first rail carrier in the United States is the receiving rail carrier and must issue a Carmack bill of lading. Citing Reider v. Thompson, 339 U.S. 113 (1950). Here, the Court found that K-Line was not a “receiving” rail carrier, and neither was Union Pacific, because the latter served merely as the “delivering” carrier, who would never be required by Carmack to issue a bill of lading.

The Court then discussed Carmack’s venue provisions, which require that suit be brought against the receiving rail carrier in the judicial district in which the point of origin is located, while suit against the delivering carrier or an intermediate carrier can be brought in various other districts. § 11706(d)(2)(A), (A)(i). The Court reasoned that because Carmack’s venue provisions clearly contemplate a point of origin within the United States, Carmack cannot be intended to apply to carriages like the one in this case. “Indeed, if ‘K’ Line were a receiving carrier in a case where the journey’s ‘point of origin’ was China, there would be no place under Carmack to sue ‘K’ Line, since China is not within a judicial district ‘of the United States or in a State Court.’” Citing § 11706 (d)(1).

The Court found support for its interpretation of Carmack in its statutory history, and invoked the maxim of statutory interpretation that “[w]here the text permits, congressional enactments should be construed to be consistent with one another” when it evaluated the consistency between Carmack and COGSA under this interpretation. In the interest of modern intermodal transport, the Court found that this interpretation reflected the same interests displayed in Kirby: uniformity, efficiency, and predictability. The Court noted that the parties had chosen a venue that was mutually acceptable, and the forum selection clause was “an indispensable element in international trade.” Quoting The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13-14 (1972). Finally, the Court dismissed the cargo owners’ argument about the not-yet-ratified Rotterdam Rules: “[n]othing in the Rotterdam Rules…requires every country to mandate a different regime to govern the inland rail leg of an international through shipment[.]”  The Court declined to address the instances where goods are received in the United States for export or where goods are received in adjacent foreign countries for import into the United States.

 Justice Sotomayor authored a dissent, and was joined by Justices Stevens and Ginsburg. The dissent argued that as the default legal regime for rail transport of cargo in the United States, the Carmack Amendment applies to the inland leg of a multimodal shipment traveling on an international through bill of lading. Sotomayor found that the absence of a bill of lading is not dispositive of the question of Carmack liability, and that it is the rail carrier’s provision of transport subject to the jurisdiction of the Surface and Transportation Board that establishes Carmack liability. Finding that the Board would have jurisdiction over this shipment (“[o]nce a first domestic rail carrier subject to the Board’s jurisdiction receives property in the United States, Carmack attaches”), Sotomayor concluded that Carmack and its venue provisions should have applied. Because, the dissent argues, nothing in the statute requires that the receiving carrier take goods from the point at which they originate, that the cargo originated in China is unimportant. To the dissent, “[a]s long as there is a receiving rail carrier in the United States…Carmack attaches.”


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