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Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer
United States Supreme Court
515 U.S. 528 (1995)
An American importer bought fruit from a Moroccan supplier, who shipped the fruit to America on a Panamanian refrigerated-cargo ship chartered to a Japanese company, the M/V Sky Reefer (shippers) (defendants). The bill of lading provided that any dispute would be arbitrated in Japan and according to Japanese law. The fruit spoiled in transit. Insurance covered the American importer’s loss. The insurer, Vimar Seguros y Reaseguros, S.A. (insurer) (plaintiff) sued the shippers for indemnification. The shippers moved to stay the action pending the outcome of Japanese arbitration. The insurer responded that the federal Carriage of Goods by Sea Act (COGSA) made unenforceable any contractual term that might lessen a shipper’s legal liability and that lessened liability was likely to result by making the insurer bear the extra costs and risks of arbitrating in a foreign forum according to foreign law. Both Japanese and American statutes, including COGSA, generally followed the Hague Rules for settling international maritime-shipping disputes. The district court ordered the parties to proceed with Japanese arbitration but retained jurisdiction over the case. The United States Court of Appeals for the First Circuit affirmed, and the United States Supreme Court granted certiorari to resolve a circuit split.
Rule of Law
Holding and Reasoning (Kennedy, J.)
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