Carmack Amendment and Through Bills of Lading

Kevin Anderson Cargo Liability, Judgments, Transportation

A question that comes up from time to time in the shipping and cargo transport industry is the applicability of the Carmack Amendment to overseas shipments. This question was raised recently in an opinion issued by a federal district court in Illinois. And while there are clear rules in place that regulate the applicability of the Carmack Amendment to international shipment, there are details that can easily be overlooked.

In the case out of Illinois, the court was asked to dismiss a complaint based (in part) on the provisions of the Carmack Amendment. The underlying dispute was over a damaged aircraft engine that was shipped from Mexico to the U.S. The shipper argued that the carrier was liable for the damages under the Carmack Amendment, as the damages happened while being transported inside the U.S.

The defendant wanted that portion of the complaint dismissed. After all, the Carmack Amendment is a domestic law that holds carriers liable for damaged goods shipped interstate, not internationally. But the court did not immediately dismiss the case because under a 2010 Supreme Court case, international shipments are not subject to Carmack Amendment liability, but only under certain circumstances. Because neither party in this case could prove those circumstances to the court, the case was not dismissed.

International Shipments

In 2010 the Supreme Court was tasked with answering the question of whether the Carmack Amendment applies to shipments of cargo originating overseas. That case, Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 130 S. Ct. 2433 (2010), involved a dispute over damaged cargo shipped from China to the United states. It was not clear where the damaged took place, but the plaintiff in the case sued the railroad company for the damage to the goods. But the railroad company stated that other federal and international law applied because the goods were shipped from a foreign country under a single through bill of lading.

The defendant’s argument in that case carried the day. The court held that an international shipment, originating under a single, through bill of lading, is not subject to the Carmack Amendment. The reasons were fairly obvious. For one, a contrary holding would require domestic companies to open each container coming into the country, inspect that the cargo was fine, and issue a separate bill of lading that complies with the Carmack Amendment. For this and other reasons it is now clear that overseas shipments with a single through bill of lading are not subject to the provisions of the Carmack Amendment.

Shipments that originate internationally will be subject to other federal laws. For example, the Carriage of Goods by Sea Act, or other, international laws. This is another area of transportation law that if used properly, can be important to how your company does its business. In this, and other areas, the advice and counsel from the the right law firm can make all the difference between success and failure for a company.

At Anderson and Yamada, we have decades of experience successfully representing and counseling transportation companies. As you evaluate your company’s legal needs, contact us so we can help you understand how we will add value to your company.