Cases—Maritime contracts—Railroad transport may be “maritime” if coupled with ocean transport

Is a bill of lading that covers both ocean and overland transport a “maritime contract” subject to the liability limitations of federal admiralty law?  Yes, says the U.S. Supreme Court in a recent opinion.  The holds that a railroad was entitled under admiralty law to the liability limitations of the original shipping contract where the carriage involved both land and sea transportation.

In the case, goods were destroyed in a train wreck on the last leg of a trip from Australia to Alabama.  The original contract contained a Himalaya clause that purported to limit the liability of any third party whose services were used to perform the shipment.  The railroad argued that it was entitled to the limitation under admiralty law, because the goods included ocean transport.

Justice O’Connor, writing for the court, agreed.  Privity of contract is not required before a carrier can benefit from a shipping contract’s liability limitations.  The default rule, she wrote, is that any intermediary involved in the transportation contract is acting as an agent of the cargo owner for the purpose of extending liability limits to downstream carriers.

Norfolk Southern Railway Co. v. James N. Kirby, Pty Ltd., No. 02-1028 (U.S. Nov. 9, 2004)