United States District Court,

S.D. New York.

HANJIN SHIPPING CO. LTD., Plaintiff,

v.

UNION PACIFIC RAILROAD CO., Defendant.

 

April 26, 2006.

 

SCHEINDLIN, J.

 

I. INTRODUCTION

 

Hanjin Shipping Co. Ltd. (“Hanjin”) has moved to compel arbitration and to stay this suit pending arbitration of its claims against Union Pacific Railroad Co. (“UP”). For the following reasons, the motion to compel arbitration is granted.

 

II. BACKGROUND

 

A. The Parties

 

Hanjin is a corporation organized and existing under the law of the Republic of Korea, with its principal place of business in Seoul, Korea. [] Hanjin is an international ocean transportation company. [] It transports shipping containers over the ocean on vessels it owns or charters. [] When transportation involves inland carriage, Hanjin subcontracts with inland carriers. []

 

See Complaint with Petition to Compel Arbitration (“Complaint”) ¶  1. See also Plaintiff’s Memorandum of Law (“Pl.Mem.”) at 1 (noting that Hanjin’s North American headquarters are in Paramus, New Jersey).

 

See Complaint ¶  10.

 

See Declaration of Jacob Lee, General Counsel for Hanjin (“Lee Decl.”) ¶  3.

 

See id.

 

UP is a Delaware corporation with its headquarters in Omaha, Nebraska.  [] It is a railroad that operates in interstate commerce . [] Hanjin subcontracts with UP for inland carriage of cargo to destinations throughout the United States.

 

See Complaint ¶  2.

 

See Declaration of Raymond J. Hasiak, Senior Trial Counsel for UP (“Hasiak Decl.”) ¶  3.

 

B. The Agreement

 

On August 1, 1997, Hanjin and UP entered into an Exempt Rail Transportation Agreement (“ERTA”) to govern the terms of carriage of Hanjin’s containers by UP. [] The ERTA has been periodically continued, by addendum, for further terms and on July 1, 2002, it was continued through June 30, 2007, with an optional two year extension period. [] Under the ERTA, UP agrees to provide rail transportation of loaded and empty containers between certain specified points for Hanjin. [] When shipments are under the control of UP, any matters not specifically addressed by the ERTA are governed by the “rules and provisions that would have applied in absence” of the ERTA, such as UP’s rules circulars. [0] The rules circulars include the Master Intermodal Transportation Agreement (“MITA”), which was formerly known as the UP Exempt Circular 20-B, a UP publication setting forth UP’s standard terms and conditions of carriage. [1] To the extent any provision under the rules circulars is inconsistent with the ERTA, the ERTA governs. [2]

 

See ERTA ¶  10, Ex. 1 to Lee Decl.

 

See id., First Addendum to ERTA ¶  10, Second Addendum to ERTA ¶  10, and Third Addendum to ERTA ¶  10, Ex. 1 to Lee Decl.

 

See ERTA at 1 (Recitals).

 

0. Id. ¶  11(a); Lee Decl. ¶  14 (citing ERTA ¶ ¶  11(a) and 16(b), Ex. 1 to Lee Decl.).

 

1. See 6/1/03 MITA, Ex. 3 to Lee Decl.

 

2. See ERTA ¶  11(a). See also id. ¶  16(b) (“Except as otherwise set forth herein, liability for freight loss and damage to lading while under the control [of] UP shall be governed by the applicable rules circular(s).”) (emphasis added).

 

The parties do not dispute the applicability of the ERTA to the shipments in question. The ERTA contains an arbitration clause, providing that “[a]ny dispute arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in New York, NY, in accordance with the Federal Arbitration Act (Title 9, U.S.Code) and the International Arbitration Rules of the American Arbitration Association.”  [3] The provision also states that “[n]o state or local law provision shall be applied to limit the scope or appropriateness of any arbitration.”  [4]

 

3. Id. ¶  19.

 

4. Id.

 

Section 16(b) of the ERTA governing liability for cargo damage states: “Except as otherwise set forth herein, liability for freight loss and damage to lading while under the control [of] UP shall be governed by the applicable rules circular(s).”  [5] Section 16(b) also notes that a written claim for cargo loss or damage arising out of a transportation under the ERTA must be filed within twelve months from when the Container is tendered to “Hanjin’s agent, an adjoining carrier or to a drayman.”  [6]

 

5. Id. ¶  16(b).

 

6. Id.

 

The MITA is the applicable rules circular and it is silent as to the arbitrability of cargo loss or damage. However, it contains a forum selection clause which states:

All lawsuits must be filed within eighteen (18) months from the actual or in the event of loss of Shipment, from the expected date of delivery by [UP] or any Connecting Carrier. All lawsuits for freight loss or damage must be filed in a court of competent jurisdiction in Omaha, Douglas County, Nebraska.  [7]

 

7. MITA Item 3.3.

 

C. The Events Leading to This Suit

 

Hanjin contracted with UP for rail transportation of several containers originating in the Far East to various destinations in the United States.  [8] Hanjjin alleges that “some or all of the cargoes in each container” were broken into and pilfered while in UP’s possession. [9]

 

8. Complaint ¶  10.

 

9. Id. ¶ ¶  12-13.

 

On September 27, 2005, Hanjin served an arbitration demand on UP pursuant to section 19 of the ERTA. [0] In response, UP advised Hanjin that it would not arbitrate the claims because it believed such claims were governed by the MITA rather than by the arbitration clause in the ERTA. [1] As a result of UP’s refusal and because some of those claims were nearing the contractual deadline for bringing suit, Hanjin commenced both arbitration and this action.  [2]

 

0. See Lee Decl. ¶  10.

 

1. See id. ¶  11. See also Union Pacific Railroad Company’s Memorandum of Law in Opposition to Plaintiff’s Motion to Compel Arbitration (“Opp.Mem.”) at 2.

 

2. See Lee Decl. ¶  15. On September 26, 2005, Hanjin and UP reached an agreement that “Hanjin could satisfy any alleged obligations it might have under MITA Item 3.3 by filing suit in this Court rather than in a court in Omaha, Nebraska, and that this would be totally without prejudice to all rights and defenses of the parties including Hanjin’s arbitration rights.” Id. ¶  16.

 

III. LEGAL STANDARD

 

The determination of whether a dispute is arbitrable under the Federal Arbitration Act (“FAA”)  [3] comprises two questions: “(1) whether there exists a valid agreement to arbitrate at all under the contract in question … and if so, (2) whether the particular dispute sought to be arbitrated falls within the scope of the arbitration agreement.”  [4] To find a valid agreement to arbitrate, a court must apply the “generally accepted principles of contract law.”  [5] “[A] party is bound by the provisions of a contract that [it] signs, unless [it] can show special circumstances that would relieve [it] of such obligation.”  [6]

 

3. 9 U.S.C. §  3, et seq.

 

4. Hartford Accident & Indemnity Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir.2001) (quotation marks omitted).

 

5. Gold v. Deutsche Aktiengesellschaft, 365 F.3d 144, 149 (2d Cir.2004). Accord Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 845 (2d Cir.1987).

 

6. Genesco, Inc., 815 F.2d at 845.

 

There is “a strong federal policy favoring arbitration,”  [7] which  ” ‘applies with particular force in international disputes.” ‘  [8] The Second Circuit has emphasized that “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. Accordingly, [f]ederal policy requires us to construe arbitration clauses as broadly as possible.”  [9]

 

7. Ace Capital Re Overseas Ltd. v. Central United Life Ins. Co., 307 F.3d 24, 28 (2d Cir.2002) (quotation marks and citations omitted).

 

8. JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 171 (2d Cir.2004) (quoting Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 654 (2d Cir.2004)). Accord Chelsea Square Textiles v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 294 (2d Cir.1999) (holding that in the context of international transactions, bias in favor of arbitration is particularly strong).

 

9. Oldroyd v. Elmira Sav. Bank, 134 F.3d 72, 76 (2d Cir.1998). Accord Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir.1995).

 

“[A] court should decide at the outset whether ‘the arbitration agreement [is] broad or narrow.” ‘  [0] “No fixed rules govern the determination of an arbitration clause’s scope.”  [1] However, clauses that cover all claims or controversies arising from an agreement have generally been held to be broad. [2] To determine if an arbitration clause is broad “a court must determine whether, on the one hand, the language of the clause, taken as a whole, evidences the parties’ intent to have arbitration serve as the primary recourse for disputes connected to the agreement containing the clause, or if, on the other hand, arbitration was designed to play a more limited role in any future dispute.”  [3] “The existence of a broad agreement to arbitrate creates a presumption of arbitrability which is only overcome if it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.”  [4]

 

0. Collins, 58 F.3d at 20 (quoting Prudential Lines, Inc. v.. Exxon Corp., 704 F.2d 59, 63 (2d Cir.1983)).

 

1. Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 225 (2d Cir.2001).

 

2. See, e.g., Collins, 58 F.3d at 18 (“Any claim or controversy arising out of or relating to this agreement shall be settled by arbitration.”); Abram Landau Real Estate v. Bevona, 123 F.3d 69, 71 (2d Cir.1997) (“Contract Arbitrator shall have the power to decide all differences arising between the parties to this agreement as to interpretation, application or performance of any part of this agreement.”); Louis Dreyfus Negoce, 252 F.3d at 225 (arbitration mandated for “any dispute arising from the making, performance or termination of this Charter Party”).

 

3. Louis Dreyfus Negoce, 252 F.3d at 224 (citation omitted).

 

4. Bank Julius Baer & Co. v. Waxfield Ltd., 424 F.3d 278, 284 (2d Cir.2005).

 

Under New York law, “a written contract is to be interpreted so as to give effect to the intention of the parties as expressed in the unequivocal language they have employed.”  [5] “[M]atters extrinsic to the agreement may not be considered when the intent of the parties can fairly be gleaned from the face of the instrument.”  [6] In addition, ” ‘the entire contract must be considered, and all parts of it reconciled, if possible, in order to avoid an inconsistency.” ‘  [7]

 

5. British Int’l Ins. Co. v. Seguros la Republica, S.A., 342 F.3d 78, 82 (2d Cir.2003). Accord Cruden v. Bank of New York, 957 F.2d 961, 976 (2d Cir.1992) (citing Breed v. Insurance Co. of North Am., 385 N.E.2d 1280 (N.Y.1978)).

 

6. Cruden, 957 F.2d at 976 (citing Teitelbaum Holdings, Ltd. v. Gold, 396 N.E.2d 1029 (N.Y.1979)).

 

7. Terwilliger v. Terwilliger, 206 F.3d 240, 245 (2d Cir.2000) (quoting Cruden, 957 F.2d at 976 (citing National Conversion Corp. v. Cedar Bldg. Corp., 246 N.E.2d 351 (N.Y.1969)).

 

When interpreting an arbitration clause, “the court looks to all terms of the parties’ agreement bearing on arbitration. Even though the words of the agreement’s arbitration clause may be broad, its scope may be limited by language elsewhere in the agreement clearly and unambiguously negating or limiting it with respect to a matter in dispute.”  [8]

 

8. Woodcrest Nursing Home v. Local 144, Hotel, Hosp., Nursing Home and Allied Services Union, S.E.I.U., AFL-CIO, 788 F.2d 894, 898 (2d Cir.1986) (citing Nolde Bros. v. Bakery & Confectionery Workers Union, 430 U.S. 243, 254 (1977)).

 

When a forum selection clause conflicts with an arbitration clause, a court cannot nullify an arbitration clause ” ‘unless the forum selection clause specifically precludes arbitration.” ‘  [9] Therefore “[w]here the parties to an arbitration agreement specifically have excepted a certain type of claim from mandatory arbitration, it is the duty of courts to enforce not only the full breadth of the arbitration clause, but its limitations as well.”  [0]

 

9. Bank Julius Baer, 424 F.3d at 284 (quoting Personal Sec. & Safety Sys. v. Motorola, 297 F.3d 388, 396 n.11 (5th Cir.2002)).

 

0. State of New York v. Oneida Indian Nation of New York, 90 F.3d 58, 62 (2d Cir.1996).

 

IV. DISCUSSION

 

The first question is whether the ERTA contains a broad agreement to arbitrate. The “paradigm of a broad [arbitration] clause” is one that submits to arbitration “[a]ny claim or controversy arising out of or relating to th[e] agreement.”  [1] Section 19 of the ERTA provides that “[a]ny dispute arising out of or relating to this Agreement or breach thereof shall be settled by arbitration.”  [2] This is a broad arbitration clause, [3] and Hanjin’s claims are presumptively arbitrable unless UP presents clear and unambiguous evidence that such claims are not within the agreement’s scope.  [4]

 

1. Collins, 58 F.3d at 20. See also ACE Capital, 307 F.3d at 26 (holding that the clause, “any dispute [that] shall arise between the parties … with reference to the interpretation of this Agreement or their rights with respect to any transaction involved” was broad); Oldroyd, 134 F.3d at 76 (“[a]ny dispute, controversy or claim arising under or in connection with [the agreement]” was a broad arbitration clause); Lewis Tree Serv., Inc. v. Lucent Techs., Inc., 239 F.Supp.2d 332, 335-36 (S.D.N.Y.2002) (holding that a clause covering “any controversy or claim … related directly or indirectly to this Agreement” was a broad arbitration clause).

 

2. ERTA ¶  19.

 

3. See, e.g., Louis Dreyfus Negoce, 252 F.3d at 226 (holding that an arbitration clause that covered “the making, performance or termination of this Charter Party” covered all disputes connected with a ship’s voyage which was the subject of the Charter Party).

 

4. See Bank Julius Baer, 424 F.3d at 284; Oldroyd, 134 F.3d at 77.

 

UP’s argument that sections 16(b) and 11(a) of the ERTA exclude issues of liability for freight loss and damage from the arbitration clause is unavailaing. UP relies heavily on section 16(b), which reads in pertinent part: “[e]xcept as otherwise provided herein, liability for freight loss and damage to lading while under the control [of] UP shall be governed by the [MITA].”  [5] UP argues that this sentence “clearly removes questions regarding liability for freight loss and damage from the ERTA.”  [6] However, section 16(b) only applies if there is no provision addressing a point that is “otherwise provided” for in the ERTA. Thus, while “liability for freight loss and damage to lading” under the control of UP may be governed by the MITA, the existence of an arbitration clause in the ERTA trumps the forum selection clause found in the MITA by the plain language of section 16.

 

5. ERTA ¶  16(b).

 

6. Opp. Mem. at 8.

 

Second, to the extent section 11(a) incorporates the forum selection clause in the MITA, the ERTA’s arbitration clause nonetheless governs. UP relies on section 11(a), to argue that the parties “never contemplated that claims for freight loss and damage would be submitted to arbitration.”  [7] Section 11(a) of the ERTA provides that “[s]ervice and other matters not specifically addressed in this Agreement” are governed by the MITA. UP asserts that the parties intended “that all matters involving performance and obligations imposed by ERTA be subject to arbitration under Section 19 and that all matters involving cargo loss and damage be controlled by Section 11.”  [8] Section 11(a) of the ERTA clearly provides, however, that “[t]o the extent any [rules circulars] are inconsistent with the terms of [the ERTA], the terms of [the ERTA] shall govern.”

 

7. Id.

 

8. Id. at 3.

 

Finally, even if the MITA’s forum selection clause did conflict with the ERTA’s arbitration clause the arbitration clause would still govern. The MITA does not mention arbitration in relation to freight loss claims. MITA Item 3.3 requires only that “[a]ll lawsuits for freight loss or damage must be filed in a court of competent jurisdiction in Omaha, Douglas County, Nebraska.”  [9] While the forum selection clause in the MITA expresses a venue requirement for any cargo loss or damage litigation, it does not expressly forbid arbitration as an alternative form of dispute resolution. Thus, it does not conflict with the arbitration clause. But even if it did, under the rule of Bank Julius Baer, the arbitration agreement cannot be nullified on these grounds. [0]

 

9. MITA Item 3.3 (emphasis added).

 

0. See Bank Julius Baer, 424 F.3d at 284 (holding that when a forum selection clause conflicts with an arbitration clause, the arbitration clause governs unless the forum selection clause specifically forecloses arbitration.).

 

A court must look first to the “face of the instrument” to determine the intent of the parties. [1] As noted, the arbitration clause contained in section 19 of the ERTA states that “[a]ny dispute arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration.”  [2] There is no language in the ERTA from which I could conclude “with positive assurance” that a claim for cargo loss or damage is not within the scope of the arbitration clause. [3] In fact, the language points to the contrary. Therefore, Hanjin’s motion to compel arbitration is granted and this case is closed.

 

1. Cruden, 957 F.2d at 976 (citations omitted).

 

2. ERTA ¶  19.

 

3. See Bank Julius Baer, 424 F.3d at 284.

 

V. CONCLUSION

 

Should the parties wish to confirm or vacate the arbitration award, they must bring a separate action, which I will accept as a related case. The Clerk of the Court is directed to close this motion [docket # 10] and this case.

SO ORDERED:

 

United States Court of Appeals,

Second Circuit.

AMERICAN HOME ASSURANCE COMPANY, As Subrogee of Caterpillar, Inc., Plaintiff-

Appellant,

v.

HAPAG LLOYD CONTAINER LINIE, GMBH, Defendant-Cross-Claimant-Appellee,

The Burlington Northern and Santa Fe Railway Company, Defendant-Cross-

Defendant-Appellee,

Matson Intermodal Systems, Defendant-Cross-Claimant,

Danzas Aei Intercontinental, Defendant-Cross-Defendant.

 

Argued: Oct. 19, 2005.

Decided: May 3, 2006.

 

HALL, Circuit Judge.

 

On July 23, 2002, a Burlington Northern and Santa Fe Railway Company  (“BNSF”) train derailed en route to Long Beach, California from Chicago, Illinois. The derailment resulted in extensive damage to cargo, including a containerized shipment of two engines owned by Caterpillar, Inc. (“Caterpillar”). This case concerns BNSF’s right to limit its liability to $500.00 for the loss and damage to the engines pursuant to the contracts governing the shipment.

 

I. Background

The shipment originated at Caterpillar’s facility in Morton, Illinois and was destined for a Caterpillar affiliate in Singapore. Caterpillar booked the entire shipment with Danzas AEI (“Danzas”), a freight forwarder. Danzas, in turn, engaged G & D Transportation to carry the cargo from Morton to Chicago by truck and Hapag Lloyd Container Linie, GmbH (“Hapag Lloyd”) to ship the cargo from Chicago to Singapore, via Long Beach. Hapag Lloyd then hired Matson Intermodal Systems (“Matson”) to arrange the cargo’s shipment from Chicago to Long Beach. Matson contracted with BNSF to carry the cargo by rail from Chicago to Long Beach. Due to the derailment, the container carrying the two engines never reached Long Beach.

 

American Home Assurance Company (“American Home”), as subrogee of Caterpillar, brought this action against Danzas, Hapag Lloyd, Matson, and BNSF seeking to recover $234,585.88 for the total loss of the engines. BNSF claimed, as an affirmative defense, that it was entitled to limit its liability under either its contract with Matson or the Express Cargo Bill (“ECB”), the bill of lading pursuant to which Hapag Lloyd agreed to ship the engines from Chicago to Singapore. American Home and BNSF filed competing motions for partial summary judgment concerning BNSF’s right to limit its liability. The District Court granted BNSF’s motion for partial summary judgment, concluding that the BNSF-Matson agreement limits the rail carrier’s liability to $500 per package. In doing so, the District Court determined that it need not consider the limitation provision in the ECB, as that provision–if applicable–would limit BNSF’s liability to the same amount. Thereafter, the parties, without waiving their rights of appeal, consented to the entry of a final judgment against Hapag Lloyd and BNSF jointly and severally in the amount of $1,000 (i.e., $500 per engine). [] For the reasons stated below, we conclude that the ECB limits BNSF’s liability to the same amount and affirm the judgment of the District Court.

 

II. Discussion

A. Applicable Law

 

“We review de novo the district court’s grant of a motion for partial summary judgment, but we only undertake to do so when, as here, a final decision has rendered the case appealable.” Ehrlich v. American Airlines, Inc., 360 F.3d 366, 370 (2d Cir.2004) (citation omitted). Summary judgment is only appropriate where the record reveals that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). In determining whether there is a genuine issue as to any material fact, “the court must view the evidence in the record in the light most favorable to the non-moving party, drawing all reasonable inferences in that party’s favor.” Abdu-Brisson v. Delta Air Lines, Inc., 239 F.3d 456, 466 (2d Cir.2001). “[I]f there is any evidence in the record that could reasonably support a jury’s verdict for the non-moving party,” summary judgment must be denied. Marvel Characters, Inc. v. Simon, 310 F.3d 280, 286 (2d Cir.2002). We may, however, “affirm a district court’s grant of summary judgment on any ground upon which the district court could have rested its decision.” Santos v. Murdock, 243 F.3d 681, 683 (2d Cir.2001).

 

As this is a contract dispute, “a motion for summary judgment may be granted only where the agreement’s language is unambiguous and conveys a definite meaning.” Sayers v. Rochester Tel. Corp. Supplemental Mgmt. Pension Plan, 7 F.3d 1091, 1094 (2d Cir.1993). Although the interpretation of these agreements is governed by federal common law, see Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 22-23, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004), “[i]n developing federal common law in an area, [we] may look to state law,” Critchlow v. First UNUM Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir.2004). Contract language is ambiguous if it is ” ‘capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.’ ” Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir.1997) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1192 (2d Cir.1996)). If the court determines that “the language of the contract is clear and unambiguous, the contract is to be given effect according to its terms, and those terms may be the basis for summary judgment.” Dusé v. Int’l Bus. Machs. Corp., 252 F.3d 151, 158 (2d Cir.2001) (internal quotation and citation omitted). We find the language of the contractual provisions at issue here to be clear and unambiguous.

 

B. The BNSF-Matson Agreement

 

By incorporating the BNSF Intermodal Rules and Policies Guide, the BNSF-Matson agreement provides:

If a shipment moves under the terms of a through intermodal ocean bill of lading with BNSF as a participating rail carrier, the liability of BNSF will be no greater than the liability of the ocean carrier issuing the bill of lading.

Clause 7(2) of the ECB, in turn, limits Hapag Lloyd’s liability:

[W]here the Carriage is to or from a port or final destination in the United States, the Carrier’s limitation of liability in respect of the Goods shall not exceed U.S.$500.00 per package ….

The District Court concluded that these two provisions were applicable and operated together to limit BNSF’s liability to $500 per package. In so holding, the District Court made four determinations: (1) the ECB constitutes a through bill of lading; (2) the ECB had been “issued” insofar as it governed the rights of the parties; (3) Caterpillar is bound by the ECB; and (4) the BNSF train originated at a port–Chicago–and was headed to a port–Long Beach–in the United States.

 

On appeal, American Home raises two points of error with respect to the District Court’s factual determinations. First, American Home contends that the District Court improperly conflated two distinct concepts: whether the ECB had been issued and whether its terms, nonetheless, governed the parties. American Home concedes the terms of the ECB, but argues that the ECB had to have been issued in order for the BNSF-Matson agreement to limit BNSF’s liability to that of Hapag Lloyd. Second, American Home contends that the District Court erroneously divided the shipment into two separate carriages–one inland by rail and another overseas by ship. According to American Home, Clause 7(2) of the ECB is inapplicable, because, when properly viewed as a single carriage from Morton to Singapore, the shipment was not to or from a port or final destination in the United States. We need not address these contentions, however, because BNSF is entitled to the same $500 per package limitation pursuant to a separate provision of the ECB.

 

C. The ECB

 

While the ECB contains several provisions, such as Clause 7(2), related to Hapag Lloyd’s liability as the carrier, the parties agree that it also contains a “Himalaya Clause” at Clause 5(1) extending the application of the Carriage of Goods by Sea Act, 49 Stat. 1207, 46 U.S.C.App. § §  1300 et seq. (“COGSA”)–including its $500 per package limitation on liability, see id. §  1304(5)–to certain downstream parties expected to take part in the shipment before the goods are loaded on and after they are discharged from Hapag Lloyd’s ship. [] The Himalaya Clause states in relevant part:

The provisions set forth in COGSA shall (except as may be otherwise specifically provided herein) also govern before the Goods are loaded on and after they are discharged from the Vessel provided, however, that the Goods at said time are in the actual custody of the Carrier or any Sub-Contractor.

The sole factual point in dispute with respect to the applicability of the Himalaya Clause to BNSF on appeal is whether the rail carrier is a sub-contractor within the meaning of the ECB. In considering the issue, we are mindful of the Supreme Court’s recent admonition that “there is no special rule for [interpreting] Himalaya Clauses.” Kirby, 543 U.S. at 31, 125 S.Ct. 385. In other words, they “must be construed like any other contracts: by their terms and consistent with the intent of the parties.” Id.

 

 

The ECB defines ” ‘Sub-Contractor[s]’ ” as:

[O]wners and operators of vessels (other than the Carrier), Underlying Carriers, stevedores, terminal and groupage operators, road and rail transport operators and any independent contractors employed by the Carrier in the performance of the Carriage.

American Home concedes, as it must, that BNSF is an underlying carrier,  [] but contends that BNSF is not a sub-contractor, because it was “employed by” Matson not Hapag Lloyd. Therefore, American Home argues that BNSF is a sub-sub-contractor of Hapag Lloyd and, as such, is not entitled to COGSA’s $500 per package limitation. We disagree.

 

In making that argument, American Home fails to appreciate the nature of the relationship between Hapag Lloyd and Matson. Article 3 of Matson’s standard terms and conditions, incorporated into the contract between Matson and Hapag Lloyd, states:

[Matson] is a shipper’s agent, and will act for [Hapag Lloyd] in arranging for the transportation of the Units. [Matson] does not itself provide transportation or assume carrier or insurance obligations.

“When a duly constituted agent acts in accordance with his instructions … he has power to affect the legal relations of the principal to the same extent as if the principal had so acted.” Restatement (Second) of Agency §  12 cmt. a (1958). Matson, in accordance with Hapag Lloyd’s instructions, engaged BNSF to transport the engines from Chicago to Long Beach. Thus, BNSF was employed by Hapag Lloyd, even though the rail carrier dealt with Matson in arranging the shipment.

 

It is the nature of the relationship between Matson and Hapag Lloyd that distinguishes this case from those relied on by American Home. In each of those cases, the intermediary entity, unlike Matson, remained obligated to the carrier to perform a service that it had contracted out to a third party, whereas here, Matson’s sole obligation was to arrange the transportation, not provide it. In Tokio Marine and Fire Ins. Co. v. Nippon Yusen Kaisha Lines, 466 F.Supp. 212 (W.D.Wash.1979), for instance, the applicable bill of lading extended the liability limitation to any ” ‘servant, agent or sub-contractor of the Carrier.’ ” Id. at 213. The court determined that a third party was not a beneficiary of that provision, where “the carrier subcontracted its obligation to discharge the cargo in question to the Port of Seattle which in turn contracted with [the third party] to fulfill its obligation to the carrier.” Id.

 

Similarly, in Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518 (2d Cir.1975), this Court refused to allow a security company hired by the stevedore, not the carrier, to benefit from a Himalaya Clause extending the liability limitation to ” ‘all servants, agents and independent contractors … [u]sed or employed by the Carrier.’ ” Id. at 521 (emphasis in original). Unlike Matson, however, the stevedore was contractually obligated to provide the very same service it contracted out to the security company– protecting the goods after they had been discharged from the ship. See Toyomenka, Inc. v. S.S. Tosaharu Maru, 392 F.Supp. 450, 451 (S.D.N.Y.1974). As such, the security company was properly deemed to be an independent contractor of the stevedore, not the carrier. See Toyomenka, 523 F.2d at 522. [] By contrast, Matson discharged its obligations to Hapag Lloyd under the contract by engaging BNSF to transport the engines from Chicago to Long Beach. Matson was under no obligation to provide such transportation. Given that the sole purpose of the agency relationship between Matson and Hapag Lloyd was to arrange for the transportation of the engines on Hapag Lloyd’s behalf, it is clear that BNSF was “employed by” Hapag Lloyd and thus entitled to limit its liability to $500 per package pursuant to the Himalaya Clause in the ECB.

 

III. Conclusion

Because we conclude, albeit for different reasons, that BNSF’s liability is limited to $500 per package, the judgment of the District Court is affirmed.

 

The consent judgment dismissed Danzas and Matson from the action with prejudice.

 

The term Himalaya Clause is derived from the case of Adler v. Dickson, [1955] 1 Q.B. 158 (C.A.), involving the vessel Himalaya, and is used to describe contractual provisions that extend maritime liability limitations. See Kirby, 543 U.S. at 20 n. 2, 125 S.Ct. 385. Because the liability limitation contained in COGSA only protects the primary carrier, but not the carrier’s agents or other parties participating in effectuating the shipment, see Robert C. Herd & Co. v. Krawill Mach. Corp., 359 U.S. 297, 302-03, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959), a Himalaya Clause is necessary to extend this limitation beyond its normal parameters, see Mikinberg v. Baltic S.S. Co., 988 F.2d 327, 332 (2d Cir.1993).

 

According to the ECB, ” ‘Underlying Carriers’ ” include “any water, rail, motor, air or other carrier utilized by the Carrier for any part of the transportation of the shipment covered by this Bill of Lading.”

 

Appellants also rely on Lucky-Goldstar Int’l (Am.), Inc., v. S.S. California Mercury, 750 F.Supp. 141 (S.D.N.Y.1990). This case, however, simply emphasizes the importance of the nature of the relationship between the carrier and the intermediate entity in determining whether a downstream party is an intended beneficiary. In Lucky-Goldstar, an intermediate entity engaged the services of an inland rail carrier. See id. at 143. Noting that the rail carrier had failed to establish the “nature of the relationship” between the intermediate entity and the carrier and, as a result, its “position in the contractual chain,” the court concluded that the rail carrier was not a subcontractor of the carrier that the Himalaya Clause was intended to protect. Id. at 146.