The respondent, James N Kirby Pty Ltd (Kirby), an Australian manufacturing company, sold 10 containers of machinery to the General Motors plant located outside Huntsville, Alabama. Kirby hired International Cargo Control (ICC), an Australian freight forwarding company, to arrange for delivery by 'through' (ie end-to-end) transportation. ICC issued a bill of lading to Kirby (the ICC bill). The bill designated Sydney, Australia, as the port of loading, Savannah, Georgia, as the port of discharge, and Huntsville as the ultimate destination for delivery. In negotiating the ICC bill, Kirby had the opportunity to declare the full value of the machinery and to have ICC assume liability for that value. Instead, Kirby accepted a contractual liability limitation. The ICC bill set various liability limitations for the journey from Sydney to Huntsville. For the sea leg, the ICC bill invoked the default liability rule in COGSA. The COGSA 'package limitation' provides: 'Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.': 46 USC App § 1304(5). For the land leg, the bill limited the carrier’s liability to a higher amount. So that other downstream parties expected to take part in the contract’s execution could benefit from the liability limitations, the bill also contained a Himalaya clause.

ICC then hired Hamburg Südamerikanische Dampfschiffahrts-Gesellschaft Eggert & Amsinck (Hamburg Süd), a German ocean shipping company, to transport the containers. Hamburg Süd issued its own bill of lading to ICC (the Hamburg Süd bill). That bill designated Sydney as the port of loading, Savannah as the port of discharge, and Huntsville as the ultimate destination for delivery. It adopted COGSA's default rule in limiting the liability of Hamburg Süd, the bill's designated carrier, to USD 500 per package. It also contained a clause extending that liability limitation beyond the 'tackles' - that is, to potential damage on land as well as on sea. It also contained a Himalaya Clause.

Acting through a subsidiary, Hamburg Süd hired Norfolk Southern Railway Co (Norfolk) to transport the machinery from the Savannah port to Huntsville. The Norfolk train carrying the machinery derailed en route, causing an alleged USD 1.5 million in damages. Kirby's insurance company reimbursed Kirby for the loss. Kirby and its insurer then sued Norfolk in the United States District Court for the Northern District of Georgia, asserting diversity jurisdiction and alleging tort and contract claims. In its answer, Norfolk argued, among other things, that Kirby's potential recovery could not exceed the amounts set forth in the liability limitations contained in the bills of lading.

The District Court granted Norfolk's motion for partial summary judgment, holding that Norfolk's liability was limited to USD 500 per container. A divided panel of the Eleventh Circuit reversed. It held that Norfolk could not claim protection under the Himalaya clause in the ICC bill. It construed the language of the clause to exclude parties, like Norfolk, that had not been in privity with ICC when ICC issued the bill. The majority also suggested that 'a special degree of linguistic specificity is required to extend the benefits of a Himalaya clause to an inland carrier'. As for the Hamburg Süd bill, the Court of Appeals held that Kirby could be bound by the bill’s liability limitation 'only if ICC was acting as Kirby's agent when it received Hamburg Süd’s bill'.The Court of Appeals concluded that ICC had not been acting as Kirby’s agent when it received the bill. Based on its opinion that Norfolk was not entitled to benefit from the liability limitation in either bill of lading, the Eleventh Circuit reversed the District Court’s grant of summary judgment for the railroad. The petitioner appealed to the Supreme Court.

Held (Justice O'Connor delivering the opinion of the unanimous Court): Norfolk is entitled to the protection of the liability limitations in the two bills of lading. The judgment of the United States Court of Appeals for the Eleventh Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

Federal law governs this contract dispute. The cases do not draw clean lines between maritime and non-maritime contracts. To ascertain whether a contract is a maritime one, one cannot look to whether a ship or other vessel was involved in the dispute, as one would in a putative maritime tort case. Nor can one simply look to the place of the contract's formation or performance. Instead, the answer 'depends upon ... the nature and character of the contract', and the true criterion is whether it has 'reference to maritime service or maritime transactions': North Pacific SS Co v Hall Brothers Marine Railway & Shipbuilding Co 249 US 119, 125, 39 S Ct. 221, 63 L Ed 510 (1919). The ICC and Hamburg Süd bills are maritime contracts because their primary objective is to accomplish the transportation of goods by sea from Australia to the eastern coast of the United States. The two bills call for some performance on land; the final leg of the machinery’s journey to Huntsville was by rail. But under a conceptual rather than spatial approach, this fact does not alter the essentially maritime nature of the contracts.

Some lower federal courts appear to have taken a spatial approach when deciding whether intermodal transportation contracts for intercontinental shipping are maritime in nature. They have held that admiralty jurisdiction does not extend to contracts which require maritime and non-maritime transportation, unless the non-maritime transportation is merely incidental - and that long-distance land travel is not incidental. To the extent that these lower court decisions fashion a rule for identifying maritime contracts that depends solely on geography, they are inconsistent with the conceptual approach. Conceptually, so long as a bill of lading requires substantial carriage of goods by sea, its purpose is to effectuate maritime commerce - and thus it is a maritime contract. Its character as a maritime contract is not defeated simply because it also provides for some land carriage. Geography, then, is useful in a conceptual inquiry only in a limited sense: if a bill’s sea components are insubstantial, then the bill is not a maritime contract.

Applying state law to cases like this would undermine the uniformity of general maritime law. The same liability limitation in a single bill of lading for international intermodal transportation often applies both to sea and to land, as is true of the Hamburg Süd bill. Such liability clauses are regularly executed around the world. Likewise, a single Himalaya clause can cover both sea and land carriers downstream, as is true of the ICC bill. Confusion and inefficiency will inevitably result if more than one body of law governs a given contract's meaning. In protecting the uniformity of federal maritime law, this Court also reinforces the liability regime Congress established in COGSA. By its terms, COGSA governs bills of lading for the carriage of goods 'from the time when the goods are loaded on to the time when they are discharged from the ship': 46 USC App § 1301(e). For that period, COGSA’s 'package limitation' operates as a default rule: § 1304(5). But COGSA also gives the option of extending its rule by contract: see § 1307. As COGSA permits, Hamburg Süd in its bill of lading chose to extend the default rule to the entire period in which the machinery would be under its responsibility, including the period of the inland transport. Hamburg Süd would not enjoy the efficiencies of the default rule if the liability limitation it chose did not apply equally to all legs of the journey for which it undertook responsibility. And the apparent purpose of COGSA, to facilitate efficient contracting in contracts for carriage by sea, would be defeated.

The next question is whether the liability limitation in Kirby’s and ICC’s contract extends to Norfolk, which is ICC’s sub-subcontractor. This is a simple question of contract interpretation. The plain language of the Himalaya clause indicates an intent to extend the liability limitation broadly - to 'any servant, agent or other person (including any independent contractor)' whose services contribute to performing the contract. Kirby and ICC contracted for the transportation of machinery from Australia to Huntsville, Alabama. Huntsville is some 366 miles inland from the port of discharge. Thus, the parties must have anticipated that a land carrier's services would be necessary for the contract’s performance. It is clear that a railroad like Norfolk was an intended beneficiary of the ICC bill's broadly written Himalaya clause. Accordingly, Norfolk’s liability is limited by the terms of that clause.

The question arising from the Hamburg Süd bill of lading is more difficult. ICC and Hamburg Süd agreed that Hamburg Süd would transport the machinery from Sydney to Huntsville, and agreed to the COGSA 'package limitation' on the liability of Hamburg Süd, its agents, and its independent contractors. The second question presented is whether that liability limitation, which ICC negotiated, prevents Kirby from suing Norfolk (Hamburg Süd’s independent contractor) for more. The liability limitation in the ICC bill, the first contract, sets liability for a land accident higher than this bill does. Because Norfolk’s liability will be lower if it is protected by the Hamburg Süd bill too, this second question must be answered in the affirmative in order to give Norfolk the full relief for which it petitioned.

To interpret the Hamburg Süd bill, the Court turns to a rule drawn from precedents about common carriage: when an intermediary contracts with a carrier to transport goods, the cargo owner's recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed. The intermediary is certainly not automatically empowered to be the cargo owner's agent in every sense. That would be unsustainable. But when it comes to liability limitations for negligence resulting in damage, an intermediary can negotiate reliable and enforceable agreements with the carriers it engages. We derive this rule from the decision about common carriage in Great Northern R Co v O’Connor 232 US 508, 34 S Ct 380, 58 L Ed 703 (1914). In Great Northern, an owner hired a transfer company to arrange for the shipment of her goods. Without the owner's express authority, the transfer company arranged for rail transport at a tariff rate that limited the railroad's liability to less than the true value of the goods. The goods were lost en route, and the owner sued the railroad. The Court held that the railroad must be able to rely on the liability limitation in its tariff agreement with the transfer company. The railroad 'had the right to assume that the Transfer Company could agree upon the terms of the shipment'; it could not be expected to know if the transfer company had any outstanding, conflicting obligation to another party. The owner’s remedy, if necessary, was against the transfer company.

Reliance on agency law is misplaced here. It is undeniable that the traditional indicia of agency, a fiduciary relationship and effective control by the principal, did not exist between Kirby and ICC. But that is of no moment. The principle derived from Great Northern does not require treating ICC as Kirby's agent in the classic sense. It only requires treating ICC as Kirby's agent for a single, limited purpose: when ICC contracts with subsequent carriers for limitation on liability. Holding that an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers, does not infringe on traditional agency principles. It merely ensures the reliability of downstream contracts for liability limitations. In Great Northern, because the intermediary had been 'entrusted with goods to be shipped by railway, and, nothing to the contrary appearing, the carrier had the right to assume that [the intermediary] could agree upon the terms of the shipment'. Likewise, here, intermediaries, entrusted with goods, are 'agents' only in their ability to contract for liability limitations with carriers downstream.