NVOCC Is Protected by COGSA $500 Limitation Although Autos Were Stolen From Its Facility and a Bill of Lading Was Not Issued

November 25, 2013

A federal court in New York has held that a Non-Vessel Operating Carrier (NVOCC) is entitled to the U.S. Carriage of Good by Sea Act (COGSA)’s $500 limitation although the autos were stolen from its facility before they were delivered to the loading pier and before a bill of lading was issued by the carrier.

There have been COGSA cases where an ocean carrier was protected from thefts on its pier before the cargo was loaded and before bills of lading were issued. The COGSA statute applies only from loading to discharge, but usually by contract the bill of lading extends its protection before loading and after discharge while the goods remain in the custody of the Carrier at the ocean terminals. It is common for ocean carriers not to issue bills of lading until after the cargo is loaded.

Usually “dock receipts” are issued to shippers when cargo is delivered to a pier, and those receipts incorporate by reference the carrier’s bill of lading.

What is unusual in this case is that the NVOCC, who is recognized as a maritime carrier regulated by the Federal Maritime Commission (FMC), although it does not own or charter the carrying vessel, extended the COGSA provision in its house bills of lading to the time the cargo was delivered to its “facility,” which could be a warehouse miles inland. Because the autos were stolen, the NVOCC had not actually issued bills of lading. Its custom was to issue the house bills of lading after the autos had been loaded on a vessel. The shipper was aware of this practice and was well aware of the terms of the house bills of lading since it was a regular customer of the NVOCC. The Court held the shipper was bound by the terms of the unissued bills of lading. (OOO “Garant-S” v. Empire United Lines Co.).

This article is from Montgomery McCracken’s Fall/Winter 2013 Maritime and Transportation Newsletter.

Download PDF for full article