While awaiting potential ratification, some shipping interests could contemplate adopting the Rotterdam Rules voluntarily with a choice of law clause, or a clause paramount, in their contract of carriage. Research indicates that no reported case in US courts has decided the question as to whether contractual selection of the Rotterdam Rules would be enforceable to displace statutory application of COGSA. In the absence of definitive case law, one can expect US courts to be guided by the following COGSA provisions.
Section 6 of COGSA describes circumstances under which US courts should enforce a Rotterdam Rules choice of law clause. Section 6 allows the carrier and shipper to agree to any terms regarding the carrier’s duties, immunities, liabilities, and seaworthiness of the ship, provided that no bill of lading is issued and the agreed terms are included in a receipt that is marked non-negotiable. In addition, the agreed term regarding seaworthiness cannot be one that is contrary to public policy. This provision, allowing contract terms to differ from COGSA, does not apply to “ordinary commercial shipments made in the ordinary course of trade,” but only to other shipments when the particular cargo or other circumstances justify a special agreement.
If the Section 6 circumstances are met, the parties’ agreement to apply the Rotterdam Rules should be given full legal effect. If a negotiable bill of lading is issued, US courts probably would treat the choice of law clause differently.
In general, COGSA applies as a matter of law to bills of lading that are (1) a document of title to the cargo, and (2) evidence of the contract of carriage for transport of goods to or from US ports in foreign trade. When COGSA applies as a matter of law, Section 3(8) prohibits any contract clauses that would reduce the carrier’s duties or liabilities to a level below the minimum threshold provided in COGSA. Section 5 expressly allows a carrier contractually to increase its responsibilities and liabilities in a bill of lading. Section 5 also says COGSA does not apply to a charter party, but if a bill of lading is issued under a charter party then the bill of lading must comply with COGSA.
As a final observation, one could presume that US courts would not enforce a Rotterdam Rules choice of law clause to impose Article 19 liability on a port or terminal who is not a party to the contract of carriage. On the other hand, the automatic Himalaya Clause provisions in Articles 4 and 19, which extend the carrier’s defenses and liability limits to a “maritime performing party,” raise interesting questions about whether the non-parties could be insulated from the liabilities while still benefitting from these protections.