The plaintiffs brought this action against the defendants for loss and damage to cargo carried by sea from Türkiye to the US. This dispute concerned limitation of liability provisions in international Conventions and domestic maritime laws: the Hague Rules, and Hague-Visby Rules, the US Carriage of Goods by Sea Act (the COGSA), and the Turkish Commercial Code (the TCC).

The Hague Rules were the result of a multinational effort 'to establish uniform ocean bills of lading to govern the rights and liabilities of carriers and shippers inter se in international trade': Robert C Herd & Co v Krawill Machinery Corp 359 US 297, 301 (1959) (CMI1735). The original Hague Rules provided a liability limit of 100 pounds sterling per package or unit. A later Protocol, the Hague-Visby Rules, amended the Hague Rules to replace the 100 pounds sterling liability limit with a per-package or per-kg limit.

The Hague Rules were adopted by the US as the COGSA in 1936. In the event of damage to, or loss of cargo, COGSA limits liability to '$500 per package ... or ... per customary freight unit ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading'. COGSA applies to '[e]very bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade': see 46 USC § 307013e.

However, COGSA allows parties to contract for a liability limit greater than its USD 500 per package limitation. In 1955, Türkiye ratified the Hague Convention. Türkiye enacted the Hague Rules as the TCC, Law No 6762, its domestic law including certain provisions on maritime trade. While neither the US nor Türkiye is a signatory to the Hague-Visby Rules, the modern TCC incorporates rules drawn from the Hague Rules, the Hague-Visby Rules, and later Protocols amending the Hague Rules.

Held: The Hague-Visby limits adopted by Türkiye apply.

The general facts of this case are not in dispute. Rather, the parties contest the meaning of the general paramount clause in the bills of lading. Under federal maritime choice-of-law principles, the Court looks first to any contractual choice-of-law provisions entered into by the parties. The relevant language in the general paramount clause contemplates three situations: (1) where there is legislation in the country of shipment enacting the Hague Rules, that legislation is applicable; (2) where there is no legislation in the country of shipment enacting the Hague Rules, any such legislation in the destination country is applicable; and (3) where there is no legislation enacting the Hague Rules in either the country of shipment or the destination country, the Hague Rules are applicable. It goes on to specify that where the Hague-Visby Rules apply 'compulsorily' under this hierarchy, the 'provisions of the respective legislation' apply to the bills of lading.

The defendants argue that the COGSA limitation of liability of USD500 per package applies here because the Hague Rules are not 'in force' in Türkiye. To support their position, the defendants provided the opinion of Dr Sami Aksoy, a legal expert in Turkish maritime law. Dr Aksoy opined that although Türkiye formally ratified the Hague Convention in 1955, Turkish courts 'almost never directly applied [the Hague Rules] in legal disputes'. Instead, when a bill of lading is issued in Türkiye, its courts look to the TCC to determine the applicable liability limits. The defendants claim that because Turkish courts look to Türkiye's statutory implementation of the Hague Rules rather than applying the Hague Rules directly (ie, the 100 pounds sterling liability limit), the Hague Rules are not 'in force' in Türkiye.

The defendants' argument is unavailing. The fact that Turkish courts apply Turkish law, rather than applying the original Hague Rules directly, does not mean that the Hague Rules are no longer 'in force' in Türkiye. Türkiye 'enacted' the Hague Rules when it became a signatory to the Hague Convention in 1955. Türkiye subsequently incorporated the Hague Rules into its Commercial Code, following other signatory nations' approach of enacting the Hague Rules into its domestic laws (as the United States did through COGSA).

The current TCC therefore constitutes the 'Hague Rules ... as enacted in the country of shipment'. This is a clear-cut instance of the first scenario that the general paramount clause anticipates, which establishes that the Hague Rules as enacted in the country of shipment 'shall' apply.

Furthermore, art 8 of the Hague Rules states: 'The provisions of this Convention shall not affect the rights and obligations of the carrier under any statute for the time being in force relating to the limitation of the liability of owners of sea-going vessels.' In other words, the Hague Rules clearly contemplate that 'any statute ... in force' related to limitations of liability may override its provisions. The defendants' interpretation suggests that limitation of liability in the Hague Rules must prevail over any signatory's domestic law, and that if any signatory applies its own laws, its 'enactment' of the Hague Rules is void. That cannot be the case, because art 8 expressly permits that scenario. If Türkiye's enactment of the Hague Rules is not 'in force' because its courts apply the TCC, art 8 would be rendered meaningless.

Even if COGSA does apply to the bills of lading as 'contract[s] for the carriage of goods by sea to ... ports of the United States', COGSA permits parties to contract for their chosen liability limitation. The TCC, art 1178, which includes provisions on maritime trade regarding limitations on a carrier's liability, stipulates that a carrier is liable up to '666.67 units of account per package or unit or 2 units of account per kilogram of gross weight of the goods lost or damaged, whichever is the higher'. The language of the bills of lading evinces a contractual agreement to be bound by this higher liability limit by providing that 'the Hague Rules ... as enacted in the country of shipment' are the default rules, which in this case are provided in the Turkish enactment of the Hague Rules.

The general paramount clause designates Türkiye's version of the Hague Rules as the governing law. The COGSA limitation of liability is not applicable in this case, and the defendants are not entitled to limit their liability to USD500 per package under COGSA.