Jurisdiction At Bay? The Validity of Foreign Arbitration Clauses in Maritime Bills of Lading under Section 3(8) of COGSA: A Comment on Vimar Serguros Y Reaseguros v. M/V Sky Reefer - Vol. 7 No. 1 ARIA 1996
1 PDF from "The American Review of International Arbitration (ARIA)"
In 1936, Congress enacted the Carriage of Goods by Sea Act (COGSA) to create uniformity in maritime bills of lading. Congress enacted COGSA to discourage carriers, which draft bills of lading, from assigning the risks of transportation to shippers. Under COGSA, contractual clauses that increase the liability of the carriers are accepted. However, clauses that lessen such liability are enjoined.
Nearly three decades ago, the Second Circuit Court of Appeals decided Indussa Corp. v. S.S. Ranborg, a case that the courts have unanimously interpreted as a basis for nullifying forum selection clauses in maritime bills of lading. The courts have reasoned that forum selection clauses lessen the liability of carriers because of the "transaction costs" associated with obtaining relief in foreign jurisdictions. The courts have thus held that forum selection clauses violate Section 3(8) of COGSA. Consequently, the courts have nullified such clauses because they prevent "American courts from deciding cases properly before them." Influenced by the unanimous endorsement of Indussa by the courts, the Eleventh Circuit Court of Appeals nullified a foreign arbitration clause in a bill of lading on the ground that it could potentially lessen the liability of the carrier in violation of Section 3(8) of COGSA.