MARINE · 6 MIN READ

Carrier Liability: COGSA, Hague-Visby, and Charters

Cargo insurance and carrier liability are different systems, and the exam loves the boundary. COGSA - the U.S. Carriage of Goods by Sea Act - governs the ocean carrier's liability to cargo on international bills of lading, not the terms of any insurance. Its headline rule is the $500-per-package limitation: absent a declared higher value, the carrier's liability is capped at $500 per package, and suits must be brought within one year. The carrier also enjoys defenses, most famously immunity for errors in navigation and management of the ship, plus the catch-all defense for losses without carrier fault. The Harter Act persists for domestic coastwise trade. Because carrier recovery is so limited, shippers buy their own cargo insurance and let the cargo underwriter subrogate. Internationally, the Hague-Visby Rules replaced the old package limit with a dual ceiling: the carrier's maximum liability is the greater of 666.67 Special Drawing Rights per package or 2 SDR per kilogram of gross weight - a dramatic contrast with COGSA's flat $500. The Hamburg and Rotterdam Rules propose broader carrier liability and door-to-door multimodal scope but have not displaced the Hague framework in U.S. practice. On land, the Carmack Amendment governs interstate rail and motor carrier liability, with released-value rates limiting recovery, and the Pomerene Act polices bills of lading - a carrier misdescribing goods faces liability to good-faith purchasers relying on the bill. A clean bill of lading acknowledges apparent good order; a claused bill notes damage or shortage. Collision economics produced one famous clause. In a both-to-blame collision, COGSA immunizes the carrying vessel from its own cargo's navigation-fault claims, so cargo sues the non-carrying vessel for everything, and that vessel seeks contribution from the carrier. The Both-to-Blame Collision Clause tried to pass that contribution back to cargo - but the Supreme Court in United States v. Atlantic Mutual (1952) held the clause invalid in common carriage, though it survives in private charter parties. Charters themselves come in voyage, time, and bareboat forms; under a voyage charter the shipowner allows agreed lay days for loading and discharge, and detention beyond them triggers demurrage - liquidated damages at the agreed daily rate, running continuously - while finishing early earns the charterer despatch.