Recovery for hijackings under COGSA

PRACTISING marine cargo recovery work can be full of mystery and intrigue. The ever-expanding world of multimodal transportation lends itself to crimes of opportunity, and is becoming an increasingly common source of hijackings.

The hijacking of loaded containers usually takes place during the inland transportation of the cargo by truck, either to or from the ports. One of the first considerations when handling these types of cases is whether the hijacking was an inside job. It is hard to imagine potential thieves committing these very serious crimes if the container is empty or has merchandise that has little black market value. The hijackers want to make sure they are getting something of value. Accordingly, one has to look at the sources for these inside jobs.

Perhaps the problem lies in the fact that the paperwork associated with the transportation of cargo leaves a literal paper trail that is a great source of information for hijackers. A thief can usually look to any of the transportation documents to get the critical information - type and quantity of merchandise. First and foremost, the bill of lading contains this information along with the container number. How, then, does the potential thief obtain the documents?

The source can be any of the parties involved in the shipment - the trucker, the ocean carrier, the freight forwarder, the customs broker, the shipper, the consignee. All of these have access to some or all of the shipping documents. All it takes at that point is one dishonest employee to make a plan.

Since hijackings usually take place while the cargo is in the possession of an inland trucker, the first step in an action to recover for the stolen cargo is to determine who hired or employed the trucker. If a container is hijacked in the custody of a trucker who was hired by the ocean carrier, the ocean carrier may be responsible for the loss even if the trucker is an independent contractor. This is based on the principal-agent concept.

If, for example, an ocean carrier is hired to transport a loaded container door-to-door, it goes without saying that it is the carrier's responsibility to make the inland moves itself, or hire a trucker to make the inland moves on its behalf. In those cases, you have the option of trying to recover from both the carrier and the trucker. If, however, the trucker was hired by the owner of the goods directly, then recovery will only be against the trucker.

Almost every ocean bill of lading issued these days by an ocean carrier operating to and from US ports includes a Paramount Clause in its terms and conditions on the back side of the bill of lading that calls for the application of the Carriage of Goods by Sea Act, prior to loading and after discharge and during the entire time the cargo is in the possession of the carrier and/or its agents.

Since COGSA does not apply of its own force prior to loading and after discharge, it is important that the bill of lading incorporates and applies COGSA during the entire time that the cargo is in the possession of the carrier in order for the carrier to assert the numerous affirmative defences contained in COGSA.

It should also be noted that ocean bills of lading will typically contain an enforceable Himalaya Clause that extends the application of COGSA to the trucker hired by the carrier. With an enforceable Himalaya Clause, the trucker, if sued as well, may assert the defences contained in COGSA.

Once it is shown that COGSA applies, the cargo owner and/or its subrogated insurer must establish a prima facie case of liability against the carrier. (Banana Services, Inc v M/V Tasman Star, 68 F 3d 418, 420, 11th Cir, 1995). In order to prove its prima facie case, the cargo owner must show (i) that the cargo was delivered to the carrier in good condition; and (ii) outturn by the carrier of damaged or missing cargo. (Plastique Tags, Inc v Asia Trans Line, Inc, 83 F 3d 1367, 1369, 11th Cir, 1996).

In the case of a hijacking, the cargo owner can easily establish its prima facie case. Once the cargo owner's prima facie case is established, the burden of proof shifts to the carrier to establish that it was free from fault under one of the enumerated defences contained in COGSA. It is at this point that the cases involving hijacking become very interesting in a legal context.

COGSA does not contain an enumerated defence for piracy or the intervening criminal act of a third party, so the carriers must rely on the catch-all defence in what is commonly referred to as the "Q Clause".

The Q Clause states that a carrier shall not be responsible for loss or damage 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."

The carrier has no easy burden establishing a defence under the Q Clause because it is difficult for carriers to prove an inside job, or show that they provided every reasonable precaution to safeguard the cargo.

There have not been many cases reported involving hijackings. One possible reason for this is the relatively new popularity of this type of crime. But, over the next few years, we are likely to see US courts address more precisely what the parties have to prove and what they do not have to prove. If COGSA does not apply but, rather, state law were to apply, most states would place the burden of proof on the plaintiff to prove that the carrier was negligent and did not provide adequate security to the cargo. This is frequently the case if the bill of lading is not a through bill of lading. Of course, if it is determined that a foreign law applies, then the parties must look to the foreign law to apply the proper legal principles. With the growth in the number of hijackings, the logical question is what can be done about the problem. First, many carriers, especially those in Central American countries, transport containers by truck in armed convoys. In fact, the armed convoys have become the custom and practice of many ocean carriers in Central America, and if the carrier does not provide an armed convoy and a container is hijacked, it more than likely will be held responsible for not doing what is customary.Second, although no-one expects the truck driver to protect the container at all costs, the truck driver should be trained to anticipate and react properly in hijacking situations - assuming, of course, the driver is not involved himself. Security professionals should provide training to drivers in order to avoid hijacking situations.

There have not been many cases reported involving hijackings. One possible reason for this is the relatively new popularity of this type of crime. But, over the next few years, we are likely to see US courts address more precisely what the parties have to prove and what they do not have to prove.

Third, document control should be better. There is no reason why a trucking company needs to know exactly what type of merchandise is in the container. If the truck driver is involved but he or she is not given any details of what is in the container, that may make the cargo less vulnerable to attack. Of course, the practice must become customary for all cargo, or the hijackers will suspect that, by an omission of description, the cargo must be high-value goods.

Fourth, background checks of drivers and employees could help, although it should be pointed out that in the United States there are questions concerning the constitutionality of background checks. Fifth, insurance companies should certainly make every effort to reward their insureds for taking more significant steps to safeguard cargo and in turn reducing underwriters' exposure to claims. With the increasing number of hijackings taking place around the world, every party to the multimodal transportation of cargo must be cognisant of that danger and should take every reasonable precaution to safeguard the delivery of cargo. Of course, cargo owners and carriers should be properly insured to withstand the loss as well. In the meantime, all ocean carriers should be aware of their potential liability for hijacked cargo transported under a through bill of lading.