Many disputes in the maritime industry involve cargo loss or damage. These claims are governed by the Carriage of Goods by Sea Act (COGSA), a federal law that outlines the rights and obligations of shippers and ship owners regarding cargo that is shipped across oceans to and from the US. COGSA adjusted the rules provided by the International Convention Regarding Bills of Lading (the Hague Rules) to offer greater protection to shippers when cargo is damaged during transit. Cargo owners can obtain greater reimbursement from ship owners for damage to cargo during transit under COGSA than they can obtain under the Hague Rules. This amount is calculated per package, or per customary freight unit when cargo is not shipped in packages.
Limitations on the Carriage of Goods by Sea Act
COGSA applies only to foreign trade and to the time between when the cargo is loaded and when it is discharged from the ship. An older federal law, known as the Harter Act, applies in situations not covered by COGSA.
COGSA imposes certain duties on a ship owner. They must use due diligence to ensure that their vessel is seaworthy and that it is appropriately equipped, supplied, and manned. The ship owner also must ensure that areas where the cargo will be stored on the vessel, such as holds and cooling compartments, are fit and safe for receiving, preserving, and transporting the cargo. Each maritime contract of carriage, known as a bill of lading, incorporates the COGSA duties automatically. A shipper and a ship owner may increase the ship owner’s duties under a contract but cannot decrease them. In other words, COGSA is designed to prevent ship owners from devising contracts that remove their duty to provide a seaworthy vessel and handle cargo on the vessel with proper care.
Exemptions to Liability for Loss or Damage to Cargo
If the ship owner meets their duties under the law and the contract, they will not be liable for any loss or damage caused by unseaworthiness. In any dispute related to unseaworthiness that caused loss or damage to cargo, though, the ship owner has the burden of proving that they used due diligence and should not be liable for the damage or loss.
COGSA lists certain uncontrollable causes of loss, which are situations in which the ship owner will not be liable. For example, the ship owner will not be liable for loss or damage caused by the negligence of a captain, seaman, pilot, or other employee of the ship owner while navigating or managing the ship. Other exemptions cover situations such as:
Fires (unless they were caused by the ship owner)
Perils of sea
Acts of God (natural causes that could not have been prevented)
Acts of war
Seizures under legal process
Strikes and other work stoppages
Inherent defects in the cargo
Damage or loss caused by the actions of the cargo owner or shipper
A final exemption covers any loss or damage resulting from any other cause that arose without the fault of the ship owner and without the fault or neglect of its agents or employees. Again, the ship owner has the burden of proving that this exemption applies.
Impact of Deviations on Cargo Loss Disputes
A deviation in maritime law involves any behavior not provided by a contract of carriage that increases the risk of losing or damaging the cargo. This might include an intentional change to the route of a ship or a situation in which the ship remains in port longer than planned. COGSA provides that a reasonable deviation does not violate the law or a contract of carriage, such as when a vessel attempts to save life or property at sea. However, an unreasonable deviation turns the ship owner into an insurer of the cargo and automatically waives its COGSA defenses and other contractual defenses. COGSA provides that a deviation to load or unload cargo or passengers is presumed to be unreasonable.