## Facts

- An Australian manufacturer hired a freight forwarder to arrange end-to-end transport of machinery from Australia to Huntsville, Alabama, under a through transportation arrangement.
- The freight forwarder issued a bill of lading listing Savannah, Georgia, as the discharge port and Huntsville as the ultimate destination, limiting liability using the Carriage of Goods by Sea Act (COGSA) default ($500 per package) for the sea leg and a higher limit for the land leg, and containing a Himalaya clause extending limits to downstream performers, including independent contractors.
- The freight forwarder contracted with an ocean carrier, which issued its own through bill of lading to the forwarder, adopting COGSA’s default rule and extending it to land damage, and including a Himalaya clause extending protections to agents, inland carriers, and independent contractors.
- The ocean carrier arranged inland rail transport with a rail carrier from Savannah to Huntsville.
- The train derailed en route, allegedly causing approximately $1.5 million in cargo loss; the cargo insurer paid and, with the cargo owner, sued the rail carrier.
- The district court limited recovery to $500 per container based on the bills’ liability limitations; the court of appeals reversed on privity, specificity, and agency grounds.

## Issues

1. Whether through bills of lading requiring substantial inland rail carriage are maritime contracts governed by federal maritime law when the dispute is not inherently local.
2. Whether the Himalaya clauses in the bills extended contractual liability limitations to a downstream inland rail carrier.
3. Whether the cargo owner was bound by liability limitations in the ocean carrier’s bill negotiated by the cargo owner’s freight forwarder/intermediary.

## Decision

- The Supreme Court unanimously reversed and remanded, holding federal maritime law governed interpretation of both bills.
- The Court held the through bills were maritime contracts because their primary objective was ocean transportation as part of a single, continuous shipment, and the dispute was not inherently local.
- The Court held the Himalaya clauses covered the inland rail carrier as an intended beneficiary, so the carrier could invoke the contractual liability limitations.
- The Court held the cargo owner was bound by the liability limitation negotiated by its intermediary with the ocean carrier, because the intermediary had authority to arrange end-to-end carriage and to allocate risk through such terms.

## Legal Principles

- A contract is maritime when its primary objective is maritime commerce and maritime transportation services, even if it includes substantial inland carriage as part of a through shipment.
- When a contract is maritime and the dispute is not inherently local, federal maritime law controls interpretation to preserve uniform rules for maritime commerce.
- Himalaya clauses may extend liability limitations to downstream carriers and contractors when the text and commercial context show an intent to benefit those parties; privity and name-specific drafting are not required.
- A cargo owner that entrusts shipment arrangements to an intermediary may be bound by liability limitations the intermediary negotiates with downstream carriers as part of arranging end-to-end transportation.

## Conclusion

The Court treated multimodal through bills as maritime contracts governed by federal maritime law and enforced broadly worded Himalaya clauses and intermediary-negotiated liability limits to protect a downstream inland rail carrier, thereby supporting uniform, predictable risk allocation in international shipping.


Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004)