The respondents, Regal-Beloit Corp, Victory Fireworks Inc, PICC Property & Casualty Co Ltd, and Royal & Sun Alliance Insurance Co Ltd, were cargo owners or insurers that paid losses to cargo owners and succeeded to their rights. To ship their goods from China to inland destinations in the Midwestern United States, the cargo owners delivered the goods in China to the petitioners, Kawasaki Kisen Kaisha Ltd, and its agent 'K' Line America Inc (both referred to as K Line). All agree that the relevant contract terms governing the shipment are contained in four through bills of lading that K Line issued to the cargo owners. The bills of lading covered the entire course of shipment.

The bills required K Line to arrange delivery of the goods from China to their final destinations in the United States by any mode of transportation of K Line's choosing. K Line's through bills: (1) contained a Himalaya clause; (2) permitted K Line 'to sub-contract on any terms whatsoever' for the completion of the journey; (3) provided that COGSA's terms governed the entire journey; (4) required that any dispute will be governed by Japanese law; and (5) stated that any action relating to the carriage must be brought in the 'Tokyo District Court in Japan'.

Pursuant to the bills of lading, K Line arranged for the entire journey. It subcontracted with the Union Pacific Railroad Co (Union Pacific) for rail shipment in the United States. The goods were to be shipped on a K Line vessel to Long Beach, California, and then transferred to Union Pacific for rail carriage to the final destinations. The train operated by Union Pacific derailed in Tyrone, Oklahoma, allegedly destroying the cargo.

The cargo owners filed four separate lawsuits in the Superior Court of California, County of Los Angeles. The suit named K Line and Union Pacific as defendants. Union Pacific removed the suits to the United States District Court for the Central District of California. Union Pacific and K Line then moved to dismiss based on the Tokyo forum selection clause. The District Court granted the motion to dismiss. It decided that the forum selection clause was reasonable and applied to Union Pacific pursuant to the Himalaya clause in K Line’s bills of lading.

The United States Court of Appeals for the Ninth Circuit reversed and remanded. The Court concluded that the Carmack Amendment applied to the inland portion of an international shipment under a through bill of lading and thus trumped the parties' forum selection clause. The Supreme Court granted certiorari to address whether Carmack applies to the inland segment of an overseas import shipment under a through bill of lading.

Held (Justice Kennedy delivering the opinion of the Court): The judgment of the Court of Appeals for the Ninth Circuit is reversed, and the cases are remanded for further proceedings consistent with this opinion.

K Line's and Union Pacific's primary contention is that COGSA, not Carmack, controls. COGSA governs the terms of bills of lading issued by ocean carriers engaged in foreign trade: 46 USC App §30701. It requires each carrier to issue to the cargo owner a bill that contains certain terms: §§ 3(3)-3(8). Although COGSA imposes some limitations on the parties' authority to adjust liability, it does not limit the parties' ability to adopt forum selection clauses: see Vimar Seguros y Reaseguros SA v M/V Sky Reefer 515 US 528, 537-539 (1995) (CMI1456). By its terms, COGSA only applies to shipments from United States ports to ports of foreign countries and vice versa: §§1(e), 13. The statute, however, allows parties 'the option of extending [certain COGSA terms] by contract' to cover 'the entire period in which [the goods] would be under [a carrier’s] responsibility, including [a] period of ... inland transport': Norfolk Southern Railway Co v Kirby 543 US 14, 29 (citing COGSA §7) (see CMI1454).

In Kirby, an ocean shipping company issued a through bill of lading, agreeing to deliver cargo from Australia to Alabama. Like the through bills here, the Kirby bill extended COGSA's terms to the inland segment under a Himalaya clause. There, as here, the property was damaged by a domestic rail carrier during the inland rail portion. Kirby held that the through bill's terms governed under federal maritime law, notwithstanding contrary state laws. Kirby explained that 'so long as a bill of lading requires substantial carriage of goods by sea, its purpose is to effectuate maritime commerce'. The Court added that '[a]pplying state law to cases like this one would undermine the uniformity of general maritime law. ... Confusion and inefficiency will inevitably result if more than one body of law governs a given contract’s meaning.' The Court noted that its conclusion 'reinforce[d] the liability regime Congress established in COGSA', and explained that COGSA allows parties to extend its terms to an inland portion of a journey under a through bill of lading. Finally, the Court concluded that a contrary holding would defeat 'the apparent purpose of COGSA, to facilitate efficient contracting in contracts for carriage by sea'.

Much of what the Court said in Kirby applies here. K Line issued the through bills under COGSA, in maritime commerce. Congress considered such international through bills and decided to permit parties to extend COGSA's terms to the inland domestic segment of the journey. The cargo owners and K Line did exactly that in these cases, agreeing in the through bills to require that any suit be brought in Tokyo.

The cargo owners argue that the Carmack Amendment, which has its own venue provisions and was not discussed in Kirby, requires a different result. In particular they argue that Carmack applies to the domestic inland segment of the carriage here, so that the Tokyo forum selection clause is inapplicable. This contention must be rejected. Instructed by the text, history, and purposes of Carmack, the Court holds that the amendment does not apply to a shipment originating overseas under a single through bill of lading. As in Kirby, the terms of the bill of lading govern the parties' rights. K Line received the goods in China, under through bills for shipment into the United States. K Line was thus not a receiving rail carrier under Carmack and was not required to issue bills of lading under that Amendment. Union Pacific is also not a receiving carrier for this carriage and was thus not required to issue Carmack-compliant bills. Because the journey included no receiving rail carrier that had to issue bills of lading under Carmack, Carmack does not apply. The parties' agreement to litigate these cases in Tokyo is binding. The cargo owners must abide by the contracts they made.

Justice Sotomayor, with Justices Stevens and Ginsburg, dissenting: The Carmack Amendment to the Interstate Commerce Act (ICA), §7, 34 Stat 595, applies to the inland leg of a multimodal shipment traveling on an international through bill of lading. Unless they have permissibly contracted around Carmack’s requirements, rail carriers in the United States such as the petitioner Union Pacific are subject to those requirements, even though ocean carriers such as the petitioner K Line are not. To avoid this simple conclusion, the Court contorts the statute and case law, misreads the statutory history, and ascribes to Congress a series of policy choices that Congress manifestly did not make. Carmack provides the default legal regime for rail transportation of cargo within the United States, regardless of whether the shipment originated abroad. Therefore, on the issue as to whether Union Pacific was free to opt out of Carmack under 49 USC §10709, or whether Union Pacific first had to offer K Line, its contractual counterparty, Carmack-compliant terms under §10502, the dissent holds that opt-out under §10709 was not available and would remand to the District Court to consider in the first instance whether Union Pacific satisfied its obligations under §10502.

As compared to COGSA, Carmack provides heightened liability rules for rail transportation - compare COGSA §4 with 49 USC §§11706(a)-(c); stricter venue requirements - compare Vimar Seguros y Reaseguros SA v M/V Sky Reefer 515 US 528, 535 (1995) with §11706(d); and more generous time allowances for filing suit - compare COGSA §3(6) with §11706(e). By taking Carmack’s protections out of the picture for goods that travel by rail in the United States whenever the goods first traveled by ocean liner, the Court 'undermine[s] Carmack's purposes'. The Court's suggestion that its interpretation best comports with the goals of COGSA fares no better. The Court is correct that Congress has permitted parties contractually to extend COGSA, which, by its own terms, applies only to the period 'from the time when the goods are loaded on to the time when they are discharged from the ship': §§1(e), 7. But the Court ignores that COGSA specifically contemplates that there may be 'other law' that mandatorily governs the inland leg, and makes clear that contractual extension of COGSA does not trump this law: §12.

The Court relies heavily on Kirby as identifying the relevant policy consideration in these cases, but it takes the wrong lesson from Kirby. In that case, the Court was concerned about displacing a single federal law, COGSA, with 50 varying state liability regimes. The rule that the Court establishes today creates even greater practical difficulties than the regime criticised in Kirby by displacing Carmack with as many liability rules as there are bills of lading. It would even permit different liability rules to apply to different lawsuits arising out of the same inland accident depending on where each piece of cargo originated. Contrary to the Court's view, the value of uniformity articulated in Kirby is best promoted by application of Carmack to the obligations of the rail carrier during the inland leg in these cases.

Finally, while purporting to effectuate the contractual choices of the parties in the international multimodal shipping industry, the Court ignores the realities of the industry's operation. The industry has long been accustomed to drafting bills of lading that encompass two legal regimes, one governing ocean transportation and another governing inland transportation, given mandatory law governing road and rail carriage in most of Europe and in certain countries in Asia and North Africa. Indeed, K Line’s own bills of lading evidence this practice, providing that, where an 'applicable international convention or national law' exists which 'cannot be departed from', and 'would have applied' if a separate contract for inland carriage had been made between the merchant and the inland carrier, those laws govern K Line's liability. The United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea, also known as the Rotterdam Rules, provided an opportunity for the international community to adopt rules for multimodal shipments that would be uniform for both the ocean and inland legs. Instead, the final version of the Rotterdam Rules retained the current system in which the inland leg may be governed by a different legal regime than the ocean leg. Thus, the Court’s mistaken interpretation not only upsets domestic law but also disregards industry practice as evidenced by carefully calibrated international negotiations.