Forum Selection Clause and Liability Limit in Bill of Lading

Friday, June 28, 2002
The U.S. Court of Appeals for the Ninth Circuit ruled that a cargo owner is bound by the forum selection clause of a bill of lading issued by the carrier to the NVOCC and that the NVOCC may take advantage of the statutory limit of liability referred to in its bill of lading. In the instant case, a cargo owner contracted with a non-vessel-operating common carrier (NVOCC), which issued a bill of lading, to have its cargo transported from Korea to Los Angeles. The NVOCC's bill of lading provided that disputes ere to resolved in U.S court. The carrier issued its own bill of lading to the NVOCC. The cargo was damaged en route. Plaintiff cargo insurer brought suit in Los Angeles against the vessel and the NVOCC for full damages. The court held that, since the NVOCC acted as the agent of the shipper, the shipper was bound by the forum selection clause of the carrier's bill of lading - which provided that disputes were to be resolved in Korea. The court further held that the bill of lading issued by the NVOCC met the COGSA fair opportunity requirement, allowing the shipper to declare a higher value that the statutory limit. Since the shipper did not declare a higher value on the bill of lading, it was bound by the statutory limit. Kukje Hwajae Insurance v. M/V Hyundai Liberty. Source: HK Law
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