Facts
- Cargo owners shipped goods from China to inland destinations in the Midwestern United States using an ocean carrier, Kawasaki Kisen Kaisha Ltd. and its agent (K Line).
- K Line issued four through bills of lading covering both ocean and inland transport in a single contract.
- The through bills extended COGSA terms by contract beyond the statutory sea-carriage period and included a Himalaya clause extending defenses and liability limits to subcontractors.
- The bills contained an exclusive forum-selection clause requiring disputes to be litigated in Tokyo, Japan.
- K Line carried the goods by vessel to California and subcontracted the inland rail leg to Union Pacific Railroad Co.
- During the inland rail leg in the United States, a derailment allegedly damaged or destroyed the cargo.
- Cargo interests sued K Line and Union Pacific in U.S. court and challenged enforcement of the Tokyo forum-selection clause.
Issues
- Whether the Carmack Amendment applies to the inland rail segment of an international shipment that originates overseas and moves under a single through bill of lading.
- If Carmack applies, whether it supersedes or invalidates the through bill’s Tokyo forum-selection clause and related contractual terms extending COGSA inland.
- Whether a domestic rail carrier subcontracting under an ocean carrier’s through bill is a “receiving” carrier required to issue a Carmack bill of lading for that inland movement.
Decision
- The Supreme Court reversed the Ninth Circuit and reinstated dismissal of the U.S. actions in favor of the Tokyo forum-selection clause.
- The Court held that the Carmack Amendment does not apply to shipments originating overseas under a single through bill of lading covering the entire intermodal movement.
- Because Carmack did not apply, the parties’ contractual choice of Tokyo as the exclusive forum was binding.
- The Court treated the through bill as a maritime contract involving substantial sea carriage, governed by federal maritime law and COGSA as incorporated by contract.
- Dissent: Justice Sotomayor (joined by Justices Stevens and Ginsburg) would have treated Carmack as the default regime for domestic rail carriage and would have addressed whether a valid opt-out occurred.
Legal Principles
- Carmack applies when a rail carrier “receives” property for transportation under the Interstate Commerce Act’s rail provisions; it does not automatically attach to an inland rail leg performed as subcontract carriage under an overseas-origin through bill.
- Courts should not recharacterize a single, integrated intermodal contract into separate domestic and foreign segments when the parties contracted for through transportation under one bill.
- When a through bill requires substantial sea carriage and is made to facilitate maritime commerce, federal maritime law governs the contract’s interpretation and enforcement, supporting uniform rules for international intermodal shipping.
- COGSA does not prohibit forum-selection clauses, and when Carmack is inapplicable, foreign forum-selection clauses in through bills of lading are generally enforceable.
- A Himalaya clause can extend contractual defenses and liability limitations in the through bill to downstream subcontractors, including inland carriers.
Conclusion
For overseas-origin, door-to-door shipments moved under a single through bill of lading, the Carmack Amendment does not govern the inland rail segment; COGSA and maritime law control as provided by contract, and a foreign exclusive forum-selection clause (Tokyo) is enforceable against cargo interests.