New Maritime Contract Case From Ninth Circuit – Federal Insurance Co. v. Union Pacific Railroad Co.

Another maritime case about a train wreck. The case is Federal Insurance Company v. Union Pacific Railroad Company and it can be found here. Facts: Company contracts with carrier to ship goods from Singapore to Alabama. Cargo damages when train derails on mainland portion of transport. Insurance company pays shipper's claim then brings subrogation claim against carrier and rail line. The bill of lading had a covenant not to sue carrier's subcontractors, in this case, the railroad. Legal Issue: is the covenant not to sue enforceable? Analysis: Under the contract's paramount clause, the Carriage of Goods at Sea Act (COGSA) applied until the discharge of the cargo from the vessel and the Hague Rules (also known as the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading) applied after discharge. The rub is that the Harter Act would typically apply and provide the liability scheme for the land portion of the transport. The Harter Act can be displaced by contract, as the court in this case, found. The court found that the contract's exclusive liability provision (i.e. Shippers can only sue carrier), was valid under both the Hague Rules and COGSA.

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