The Carriage of Goods by Sea Act (COGSA) is a crucial United States statute that regulates the rights and responsibilities of shippers and ship-owners in the context of ocean shipments to and from the United States. Serving as the US implementation of the International Convention Regarding Bills of Lading, also known as the Hague Rules, COGSA is found in Title 46 Appendix of the United States Code, specifically in Section 1301, although it has been relocated to a note in 46 United States Code 30701.
COGSA was enacted by the United States Congress to address concerns that the original Hague Rules did not provide sufficient protection to shippers against damage to cargo by shipowners. Notable amendments were made to the Hague Rules to enhance shipper protection. One significant change was the increase in the amount shipowners had to pay cargo owners for damage during transit, raising it from GBP 100 per package to US$500 per package or per customary freight unit for goods not shipped in packages. This amendment led to the contentious issue of the package limitation, particularly concerning cargo transported in ocean shipping containers.
Historically, cargo was often shipped in boxes, crates, and bags. However, as cargo-handling practices evolved, palletisation became more common, consolidating numerous cargo units onto a single pallet. Shipowners contended that pallets were now packages, allowing them to limit their liability to $500 per pallet. Subsequently, the introduction of ocean shipping containers led to similar debates, with shipowners arguing that containers constituted packages, enabling them to limit liability to $500 per container.
This package limitation problem, exacerbated by the disparity in bargaining power between cargo owners and shipowners, as well as the imbalance between the $500 limitation and the actual value of shipments, has led to numerous lawsuits and legal disputes. While the rest of the world addressed this issue through the Visby Amendments in 1968, substituting a limitation per kilogram, Congress did not pass these amendments in the United States.
COGSA also addresses the limitation of liability for cargo not shipped in packages, such as automobiles, yachts, and heavy construction equipment. Originally, Congress intended the limitation for such cargo to be $500 per 100 cubic feet. However, judicial decisions altered this approach by allowing shipowners to determine the freight unit for limiting liability, leading to creative freight unit designations that reduced shipowners' liability for cargo damage.
In summary, COGSA plays a vital role in governing the relationships between shippers and shipowners in ocean shipments to and from the United States, addressing liability limitations, and influencing international shipping practices.
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