Even a Carrier Stealing Cargo Would not be an “Unreasonable Deviation” in the Second Circuit Court of Appeals

Types : Alerts

The Second Circuit Court of Appeals in New York has been steadfast in not extending the old maritime law doctrine of “Unreasonable Deviation.” Recently it ruled that even assuming arguendo that an ocean carrier played a part in the theft of two autos delivered to it for shipment that would not constitute an “unreasonable deviation” that would nullify bill of lading defenses, including the COGSA $500 package limitation.

The doctrine grew out of maritime insurance law long before COGSA was passed, and it has been narrowly applied by the Second Circuit to only a few specific scenarios:  First, a geographic deviation that increases the risk of damage to cargo. Second, unauthorized deck stowage that increases risk of loss or damage to cargo. Third, issuing an “On Board” bill of lading for cargo that is not actually loaded.

The Second Circuit has refused to extend the doctrine even where a carrier is alleged to have committed criminal acts, such as accepting bribes to deliver cargo to an unknown party.

Fair Opportunity to Declare Higher Value

In the same case, the Appeals Court ruled that where a bill of lading clearly states that in order to avoid the $500 limitation, a shipper may declare a higher value and pay a higher freight, the bill of lading form does not have to provide a special space in which to declare the higher value – although providing such a space would be better. This is especially true in a case like this where the shipper made frequent shipments with the same carrier and, in fact, had declared higher value for some previous shipments. His claim that he had not been given “a fair opportunity” to declare higher value was rejected. OOO “Garant-S” v. Empire United Lines Co., Inc. (2nd Cir. Feb. 8, 2014).