Peter Zambito, partner in Dougherty, Ryan, Giuffra, Zambito and Hession of New York, writes about the problems of claiming against US railroad operators.

Where an intermodal move involved both sea and rail transport, the rail carriers are normally retained by the ocean carrier. There is often no direct contractual link between the shipping line's customer (whether a cargo-owner or an NVO) and the railroad operator, so that if an accident occurs during the rail transport the shipper has to rely on the ocean carrier to give timely and proper notice to the rail carrier of the claim. The ocean carrier is, of course, also the one to hear earliest about the accident: it may be some time before the news seeps through to the shipper or consignee.

It often happens in the USA that when legal proceedings are started by cargo owners (or their underwriters) following a rail accident to an intermodal shipment, the ocean carrier is more often than not left off the list of defendants. This means that an NVO may be left to defend the claim by himself, particularly if he cannot drag the main carrier into the proceedings. There are many reasons why an ocean carrier can escape US proceedings: it may, for instance, be domiciled in another jurisdiction or have a valid jurisdiction clause in its bill of lading conditions. If timely notice of a claim has not been given to the rail carrier, in accordance with the railway's own conditions of carriage, the NVO will be truly left out in the cold with nowhere to turn to for effective recourse.

A recent case in the US highlights the problem: a TT Club member acting as an NVO made timely written claim on the rail carrier and shortly afterwards received a confirming letter indicating that the notice did not conform to the governing statute. While still within the nine month time for notice, the member unfortunately did nothing further and allowed the nine month period to lapse. The member was validly sued by cargo interests within COGSA's one year period and eventually had to settle the case without recourse against the ocean carrier or rail carrier.

Accordingly, we recommend that if you are unfortunate enough to have cargo damaged in a rail accident in the USA., you give timely and proper written notice to the rail carrier and do not rely upon the ocean carrier to do so. US law (Title 49, Section 1005.2 (a) and (b) of the Code of Federal Regulations) and the regulations promulgated by the Surface Transportation Board, sets out the following requirements for a claim notice:

A claim for loss, damage, injury, or delay to cargo, may not be voluntarily paid by a carrier unless the claim is filed in writing. This provision sets forth the mandatory requirement for filing a proper written claim with a carrier.

Minimum filing requirements.

A written or electronic communication (when agreed to by the carrier and shipper or receiver involved) from a claimant, filed with a proper carrier within the time limits specified in the bill of lading or contract of carriage or transportation and:

(1) Containing facts sufficient to identify the baggage or shipment (or shipments) of property

(2) asserting liability for alleged loss, damage, injury, or delay, and

(3) making claim for the payment of a specified or determinable amount of money,

shall be considered as sufficient compliance with the provisions for filing claims embraced in the bill of lading or other contract of carriage; provided, however, that where claims are electronically handled, procedures are established to ensure reasonable carrier access to supporting documents.

Such notice must be sent to the railway operator within nine months of the accident. If the railroad then writes back saying that your notice does not conform to the requirements of US law, please consult your usual TT claims handler as a matter of urgency, so that the complaint can be re-drafted to meet legal requirements.