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Himalaya clause & downstream carriers

Good old Himalaya clause to the rescue of downstream carriers in a $1.6m claim.

In Royal Smit v. Onego [2018], cargo owners contracted on a multimodal through B/L with a NVOCC for carriage of transformers from Netherlands to Louisiana. This multimodal B/L contained a per-package limitation as per US COGSA and also contained a Himalaya clause prohibiting cargo owner from claiming against the actual carriers. The delivery comprised three legs: sea leg from Rotterdam to New Orleans, by rail from New Orleans to St. Gabriel, and truck transportation to the final place of delivery. For these three legs, the NVOCC contracted separately with three different carriers. The cargo was delivered damaged. It was due to excessive vibrations. Cargo owner then claimed for its losses from the NVOCC and also the actual carriers.

US court of appeals for 5th circuit held that the barrier created by the Himalaya cl. could not be surpassed, thus protecting the actual carriers from any claims made by the cargo owner. In court’s view, this clause was akin to a forum selection clause or an ordering mechanism whereby cargo owner could only seek his damages from the contracting carrier (NVOCC in this case) and this non-performing carrier can then recoup his losses from the actual carrier.

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