Court Rejects Argument That Forum Selection Clause Violates COGSA Because Forum Does Not Recognize In Rem Actions

On May 4, 2018, the Third Circuit in Liberty Woods International v. MV Ocean Quartz affirmed the District Court’s dismissal of plaintiff’s action for cargo damages while onboard the MV OCEAN QUARTZ. The dismissal was based on the fact that liability was governed by the carrier’s bill of lading, which contained a foreign forum selection clause for South Korea. The plaintiff appealed, arguing that section 3(8) of the Carriage of Goods by Sea Act (COGSA), which permits in rem suits, invalidates the South Korean forum selection clause because South Korea does not recognize in rem suits.

The court disagreed, stating that under the Supreme Court’s Sky Reefer decision, foreign selection clauses would not lessen carrier lability in violation of COGSA solely because litigating abroad would be more costly and did not otherwise lessen ship liability here. In response to plaintiff’s argument, the Court also held that in rem suits are not substantive rights under COGSA because