Second Circuit Decision Affects COGSA Liability For Shipment Of Dangerous Cargo

On March 3, 2008, the United States Court of Appeals for the Second Circuit in In re M/V DG HARMONY,¹ issued an important decision which clarifies the standard used to determine the liability of shippers and carriers transporting hazardous cargo under the Carriage of Goods by Sea Act ("COGSA").²

Under the holding of this case, shippers will not be held strictly liable for damage caused by hazardous goods if both the shipper and the carrier had pre-shipment knowledge of the dangerous nature of the cargo, even if the carrier lacked information about the precise characteristics of the cargo and its hazards. Instead, in such a case the shipper's liability will be determined on negligence principles. In particular, where the carrier alleges that the shipper failed adequately to warn the carrier about the characteristics of the particular shipment, the carrier must show: