Ocean carriers who sustain losses resulting from dangerous cargoes no longer enjoy a virtual guarantee that shippers of the cargo will be held liable for their losses. A 3 March ruling by the US Appeals Court for the Second District, struck down the “strict liability” standard of the Carriage of Goods by Sea Act (COGSA) where the carrier is aware that a cargo is inherently dangerous.
In a communiqué to its clients, the Blank Rome law firm warns that “Where the carrier is generally aware of the hazardous nature of cargo, even if it is not aware of the precise nature of the risk, and the carrier nevertheless exposes it to potentially dangerous conditions, it will not be able to rely on the strict liability provisions of COGSA but will be required to show that the shipper acted negligently with respect to the cargo and/or its obligation to warn the carrier of the specific nature of the cargo’s risks.”
The change came as the appellate court reversed a lower court ruling that held PPG Industries fully liable for the loss of the DG Harmony, which caught fire off Brazil in November 2007 after one of ten containers packed with calcium hypochlorite (hydrated) (“calhypo”) exploded. The lower court held PPG fully liable under the “strict liability standard” but the appeals court that “a shipper cannot be held strictly liable for damage caused during the shipment of hazardous cargo in circumstances where the carrier was generally aware that the cargo’s dangerous nature requires careful handling or stowage.”
The case has been returned to the US District Court for the Southern District of New York “to make findings on the issue of whether an adequate warning would have affected how the carrier stowed the calhypo.”
In a communiqué to its clients, the Blank Rome law firm warns that “Where the carrier is generally aware of the hazardous nature of cargo, even if it is not aware of the precise nature of the risk, and the carrier nevertheless exposes it to potentially dangerous conditions, it will not be able to rely on the strict liability provisions of COGSA but will be required to show that the shipper acted negligently with respect to the cargo and/or its obligation to warn the carrier of the specific nature of the cargo’s risks.”
The change came as the appellate court reversed a lower court ruling that held PPG Industries fully liable for the loss of the DG Harmony, which caught fire off Brazil in November 2007 after one of ten containers packed with calcium hypochlorite (hydrated) (“calhypo”) exploded. The lower court held PPG fully liable under the “strict liability standard” but the appeals court that “a shipper cannot be held strictly liable for damage caused during the shipment of hazardous cargo in circumstances where the carrier was generally aware that the cargo’s dangerous nature requires careful handling or stowage.”
The case has been returned to the US District Court for the Southern District of New York “to make findings on the issue of whether an adequate warning would have affected how the carrier stowed the calhypo.”