Although cargo claims for lost or damaged cargo are inevitable claims managers for steamship lines and other carriers should be familiar with changes in the law regarding bills of lading and COGSA in order to minimize them. The Federal Court in Miami just issued a decision of great importance and favorable to international freight forwarders, carriers and NVOCCs. In the case of Seven Seas Insurance Company v. Danzas, S.A., Case No. 95-2427-CIV-KING, U.S. District Court for the Southern District of Florida (Miami), Judge King applied a new U.S. Supreme Court decision to the terms of international bills of lading.

The basic facts of the case were that Danzas, S.A., the freight forwarder, was hired by a shipper, West Indies Corp., to transport merchandise from France to St. Thomas, U.S. Virgin Islands. Danzas, S.A. then contracted with European Shipping Transport (EST) to move the merchandise. Upon inspection of the merchandise once it arrived in St. Thomas, it was discovered that some of it was either damaged or missing. West Indies Corp., through its insurance company, Seven Seas, then filed suit in Federal Court in Miami against Danzas for approximately $80,000, which represented the value of the damaged or missing cargo.

Danzas, S.A. through its attorneys, filed a Motion to Dismiss with the Court arguing that the bill of lading limited the locations or forum where the shipper could sue. The attorneys filed the motion based on a decision issued by the U.S. Supreme Court in 1995 which radically changed the importance of a forum selection clause in bills of lading. The forum selection clause in the particular bill of lading used by Danzas, S.A. limited the location to file suit to the courts of Paris, France, and nowhere else. Since the suit was filed in Miami, Judge King dismissed the claim of the insurance company, finding that suit by the shipper in Miami was inappropriate under the agreement between the parties. Consequently, Danzas, S.A. was able to convince the Court to quickly throw the case out of Court without having to spend the time (and high legal fees) to defend itself at trial.

In addition to dismissing the suit, Judge King determined that, according to the Hague Rules and COGSA, unless otherwise specified in the bill of lading, the statute of limitations on such a claim is one year from the date of the loss. Although the insurance company filed suit within a year, by the time Judge King issued a decision, over a year had passed. The shipper was thereby also prevented from bringing suit in the courts of Paris.

Becker & Poliakoff, P.A. represented Danzas, S.A. in this litigation