Maritime Intermodal Carrier who Subcontracts Rail Segment in USA is not Subject to Carmack Amendment

August 14, 2014

–Ocean Carrier’s Bill of Lading Extends COGSA $500 Limitation to Rail Carrier–

When an ocean carrier issues a through or intermodal bill of lading, including land segments by rail in the USA, the overall carriage is still subject to maritime law. The Supreme Court ruled in 2010 that the Carmack Amendment, which usually applies to rail carriage, is preempted for the sake of uniformity of maritime law in intermodal carriage.

The Carmack Amendment, which applies to “receiving” and “delivering” land carriers in the USA, is much stricter than the U.S. Carriage of Goods by Sea Act that applies to all maritime carriers that carry goods to and from the USA. For example, the COGSA $500 per package limitation that protects maritime carriers is not found in the Carmack Amendment. Furthermore, the Himalaya Clause contained in most ocean bills of lading contractually extends the ocean carrier’s defenses to all agents, servants and subcontractors of the maritime carrier.

The railway company issues its receipt or bill of lading to the ocean carrier. Thus, if a train derails causing heavy damage to cargo shipped by an ocean carrier, the cargo owner will find out that the railway carrier, as well as the ocean carrier who issued a bill of lading, are both protected by all the defenses listed in the ocean bill of lading and in the Carriage of Goods by Sea Act. American Home Assurance v. A.P. Moller Maersk (S.D.N.Y. March 31, 2014).