Originally from American Review of International Arbitration - ARIA

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In 1936, Congress enacted the Carriage of Goods by Sea Act[1] (COGSA) to create uniformity[2] in maritime bills of lading.[3] Congress enacted COGSA to discourage carriers, which draft bills of lading, from assigning the risks of transportation to shippers.[4] Under COGSA, contractual clauses that increase the liability of the carriers are accepted.[5] However, clauses that lessen such liability are enjoined.[6]

Nearly three decades ago, the Second Circuit Court of Appeals decided Indussa Corp. v. S.S. Ranborg,[7] a case that the courts have unanimously interpreted as a basis for nullifying forum selection clauses in maritime bills of lading.[8] The courts have reasoned that forum selection clauses lessen the liability of carriers because of the "transaction costs"[9] associated with obtaining relief in foreign jurisdictions.[10] The courts have thus held that forum selection clauses violate Section 3(8) of COGSA.[11] Consequently, the courts have nullified such clauses because they prevent "American courts from deciding cases properly before them."[12] Influenced by the unanimous endorsement of Indussa by the courts, the Eleventh Circuit Court of Appeals nullified a foreign arbitration clause[13] 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.[14]