Navigating Cargo Claims - Part 2

The "Q Clause" Defense

COGSA's last and 17th exception in Section 4(2) is enumerated in 4(2)(q) and thus known as "the Q Clause." The Q Clause protects ocean carriers from liability for cargo damage arising without the actual fault of the carrier or its agents. The exception is a catch-all defense for those situations not covered under the sixteen exceptions listed above it. The provision states:

Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from.......any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.

This defense, however, is particularly difficult for the carriers to prove. The burden of proving it rests on the carrier and requires the carrier to prove (a) it was free from any fault relating to the damage, and (b) what caused the cargo damage.

The Calavan Foods case (Appeal No. 4649), in the San Francisco Superior Court of Appeals demonstrates the perils of the Q Clause when relying on the perils of the sea defense. The case involved cargo damaged when a vessel unexpectedly encountered a typhoon on a voyage from Hong Kong to San Francisco. The trial court found that the wind speed of 47 knots were too low to validate the peril of the sea defense. On appeal, the court reversed the finding of liability against the carrier, not on the basis of the peril of sea defense but on the basis of the Q Clause. The court of appeals agreed with the trial court that the typhoon was not a peril of the sea. However, the court found that the shipowner had established the following Q Clause elements: (1) the vessel was free from fault in that the carrier took all reasonable steps to safeguard the cargo, and (2) the actual cause of the cargo damage was the storm, i.e., the unpredicted change of the typhoon's course. Thus is it possible to defeat the perils of the sea defense but be caught with a viable Q clause defense.

Other Defenses

Other exceptions related to human force include: acts of war; acts of public enemies; arrest or restraint of princes; seizure under legal process; quarantine restrictions; riots and civil commotions; strikes; lockouts or stoppages of work; acts or omissions of the owner or shipper of the goods; losses arising from inherent defect of the goods or insufficiency of packing.

CONFLICTS BETWEEN COGSA AND CARMACK

As noted above, COGSA applies to international shipments only. However, most international shipments to the United States will involve transport between states. Interstate shipments are typically governed by COGSA. The question often arises whether COGSA applies or Carmack applies when the cargo is damaged while en route from one American state to another.

The issue was addressed in Norfolk Southern Railway Co. v. James N. Kirby, 543 U.S. 14 (2004), which considered whether COGSA's $500-per-package limitation of liability provision applied when the cargo was damaged in the United States. The $500 limitation applied to the bill of lading because the reverse side of the bill of lading referred to the Himalaya and Paramount Clauses...