Liberty Woods International Inc (LWI) brought an in rem action against the M/V Ocean Quartz (the Ocean Quartz), seeking to recover for cargo damage caused by improper stowage. The bill of lading contained a forum selection clause which required any claim concerning cargo damage to be brought in South Korea. Regardless of the bill of lading, LWI sought to bring an in rem action against the Ocean Quartz in the District of New Jersey.

The Ocean Quartz moved to dismiss the action based on the forum selection clause in the bill of lading. Against this motion to dismiss, LWI argued that enforcing the forum selection clause would violate COGSA / the Hague Rules, art 3.8, because in rem actions were themselves a substantive right guaranteed by COGSA / the Hague Rules, but South Korea did not allow in rem actions. In addition, LWI argued that mandating a South Korean forum would effectively relieve or lessen the liability of the Ocean Quartz.

Held: The court granted the motion to dismiss. The court held that COGSA / the Hague Rules did not create a substantive right to in rem actions because the substantive protections under COGSA / the Hague Rules, art 3.8, encompassed ship liability, not in rem actions specifically as the procedural means to seek that recovery. Moreover, the court concluded that since it has recognized LWI’s ability to obtain a letter of underwriting in lieu of bringing an in rem action, the forum selection clause did not effectively eliminate or lessen ship liability for cargo damage in violation of COGSA/the Hague Rules.