The M/V Honor was a ro-ro ship designed to carry motor vehicles. In 2014, the defendant, International Auto Logistics Inc (IAL), was awarded a contract with the US Department of Defence (DOD) under which it was responsible for transporting private vehicles of DOD employees or service members. IAL and American Roll-On Roll Off-Carrier LLC (ARC) were parties to an ocean carrier agreement pursuant to which IAL (as the shipper) engaged ARC (as the carrier) to transport the relevant vehicles. ARC was the charterer and operator of the vessel, and issued a bill of lading for each vehicle to be transported. In February 2017, the vessel was loaded for transit from Bremerhaven, Germany, to Baltimore, US. Loaded on board were 152 vehicles that IAL delivered to Bremerhaven, as well as 750 new Daimler vehicles.

On 24 February 2017, a fire broke out on the upper deck of the vessel. The ship diverted to Southampton, UK, where an inspection showed that 16 vehicles were 'completely burnt out'. It is undisputed that the fire originated from a 2010 Nissan Rogue which was to be shipped from Bremerhaven, Germany, to Galveston, US. The exact cause of the fire remained unclear.

HDI Global SE (HDI), the vehicles' insurer, and the vessel interests sought partial summary judgment holding IAL strictly liable for their damages.

Held: Application denied.

The parties agree that any claim for cargo loss is governed by COGSA. COGSA 'applies to all contracts for carriage of goods by sea': In re M/V MSC Flaminia 72 F 4th 430, 446 (2d Cir 2023) (CMI2229). HDI and the vessel interests' strict liability claim is premised on s 1304(6) of COGSA, a strict liability provision which distributes liability between shipper and carrier and which states:

(6) Inflammable, explosive, or dangerous cargo

Goods of an inflammable, explosive, or dangerous nature to the shipment whereof the carrier, master or agent of the carrier, has not consented with knowledge of their nature and character, may at any time before discharge be landed at any place or destroyed or rendered innocuous by the carrier without compensation, and the shipper of such goods shall be liable for all damages and expenses directly or indirectly arising out of or resulting from such shipment. If any such goods shipped with such knowledge and consent shall become a danger to the ship or cargo, they may in like manner be landed at any place, or destroyed or rendered innocuous by the carrier without liability on the part of the carrier except to general average, if any.

'Strict liability will not attach to the shipper ... when the carrier knows that a particular type of cargo in its charge is dangerous': In re M/V MSC Flaminia 447, citing In re M/V DG Harmony 533 F 3d 83, 93 (2d Cir 2008) (holding that 'notice of any aspect of the cargo's dangerousness' is sufficient to defeat the carrier's ability to recover in strict liability). A carrier's entitlement to recovery in strict liability requires overcoming a very high hurdle: a carrier cannot invoke strict liability if it knows that a cargo poses a danger and requires gingerly handling or stowage, and nevertheless exposes the cargo to the general condition that triggers the known danger, regardless of whether the carrier is aware of the precise characteristics of the cargo: In re M/V MSC Flaminia 447, citing Contship Containerlines Ltd v PPG Indus Inc 442 F 3d 74, 77 (2d Cir 2006). Parties cannot recover on a strict liability theory if a party with notice of the general dangerousness of the cargo agreed to transport it. The strict liability analysis is 'binary', and the notice threshold is relatively modest: the carrier's knowledge can be 'incomplete' or reflect an 'underestimation of the danger' and yet still preclude recovery in strict liability.

HDI and the vessel interests assert that IAL is a shipper for the purposes of COGSA and is strictly liable under COGSA s 1304(6), pursuant to which a shipper of 'inflammable, explosive or dangerous cargo' is strictly liable for damages if neither the shipper nor the carrier of such goods knew of the danger. IAL contends that it is not a shipper, but rather a 'freight forwarder', and thus not subject to s 1304(6), and that vehicles are not 'inflammable, explosive or dangerous cargo' under s 1304(6). Even if it were a shipper, IAL argues that strict liability cannot apply where, as here, the carrier knew of the nature and associated risks of the cargo being transported.

HDI and the vessel interests concede that 'automobiles are not dangerous cargoes under the IMDG code and are not inherently dangerous', but argue that 'a vehicle with a hidden defect which causes it to spontaneously combust is "explosive, inflammable or dangerous".' The Court finds this circular argument unavailing. All the parties in this case are in the business of shipping vehicles on a vessel specifically designed for this purpose. While the exact cause of the fire remains in dispute, the risk is a known (and obvious) one. Transporting cars, particularly used ones, may present a risk of fire. The potential of a car to combust is common knowledge, well understood even to a layperson. The analysis of what cargo is 'inflammable, explosive or dangerous' cannot proceed as to each individual vehicle. Rather, the question is whether vehicles such as the ones in question are 'inflammable, explosive or dangerous' under s 1304(6). The Court finds that they are not.

Even assuming, for the sake of argument, that the cargo was dangerous, knowledge of the general risk of fire precludes strict liability. Here, all of the parties had prior experience transporting cars and would be aware 'at least at the corporate level' that a used car may present a risk of fire. This risk would especially be understood by the parties because just two years earlier, in June 2015, a similar incident occurred on the Courage, another ARC ro-ro vessel carrying US vehicles, new Mercedes-Benz and BMW vehicles, and military vehicles, from Bremerhaven, Germany, to Southampton, UK. Accordingly, knowledge of fire risk precludes strict liability under s 1304(6).