The plaintiff cargo owner filed suit in rem against the M/V Kacey and in personam against the shipowner and ship manager after 447 pieces of steel pipe were lost or damaged during transit from the Subric, Philippines to Houston, Texas. The defendants filed a motion to dismiss on the basis of forum non conveniens relying on a forum selection clause contained in the bills of lading issued to the cargo owner, which designated the forum and the substantive law as deriving from 'the country where the Carrier has his principal place of business.'

The carrier’s principal place of business was determined to be Greece, so Greek law governed. The bills of lading also included a provision requiring compulsory application of the Hague-Visby Rules.

The bills further contained an exoneration clause stating that the 'shipowner only shall by liable for any damage or loss due to any breach or nonperformance of any obligation arising out of the contract of carriage…'

The plaintiff argued that the court should deny enforcement of the forum selection clause, alleging Greek law does not recognize in rem actions against a vessel and therefore its substantive rights would be impermissibly reduced below those required by the Carriage of Goods by Sea Act (COGSA), which is the US domestic implementation of the original Hague Rules. The Plaintiff further argued that the Greek forum would enforce the exoneration clause, which would reduce the defendants’ liability below COGSA / Hague Rules requirements.  

The issues before the court were:

(1) Whether the application of Greek law and the Hague-Visby Rules would prevent the plaintiff from asserting an in rem action against the vessel in contravention of COGSA / Hague Rules requirements;

(2) Whether enforcement of the exoneration clause would reduce the liability of the defendants below COGSA / Hague Rules requirements. 

Held: The Court held that the application of Greek law and the Hague-Visby Rules would not deprive the plaintiff of an in rem action against the vessel. Interpreting art 3.8 of the Hague-Visby Rules, the Court found that this provision was equivalent to COGSA / Hague Rules 3.8, which recognises the possibility of in rem actions against a vessel under the language, '[a]ny clause … in a contract of carriage relieving the carrier or the ship from liability … or lessening such liability … shall be null and void.'  The Court therefore found that the plaintiff failed to show that application of the Hague-Visby Rules would reduce the carrier’s obligations below COGSA / Hague Rules requirements.

The Court further held that the exoneration clause channeling all claims to the shipowner and limiting the liability of other entities does not contravene any provision of COGSA / Hague Rules or the Hague-Visby Rules. Therefore, the Court held that pursuant to the exoneration clause the plaintiff could not assert claims in personam against the ship manager in the United States or in Greece.

Consequently, the Court granted the defendants’ motion to dismiss and enforced the forum selection clause.