Justice Kennedy, delivered the opinion of the Court.
This case requires us to interpret the Carriage of Goods by Sea Act (COGSA), 46 U. S. C. App. § 1300 et seq., as it relates to a contract containing a clause requiring arbitration in a foreign country. The question is whether a foreign arbitration clause in a bill of lading is invalid under COGSA because it lessens liability in the sense that COGSA prohibits. Our holding that COGSA does not forbid selection of the foreign forum makes it unnecessary to resolve the further question whether the Federal Arbitration Act (FAA), 9 U. S. C. § 1 et seq. (1988 ed. and Supp. V), would override COGSA were it interpreted otherwise. In our view, the relevant provisions of COGSA and the FAA are in accord, not in conflict.
The contract at issue in this case is a standard form bill of lading to evidence the purchase of a shipload of Moroccan oranges and lemons. The purchaser was Bacchus Associates (Bacchus), a New York partnership that distributes fruit at wholesale throughout the Northeastern United States. Bacchus dealt with Galaxie Negoce, S. A. (Galaxie), a Moroccan fruit supplier. Bacchus contracted with Galaxie to purchase the shipload of fruit and chartered a ship to transport it from Morocco to Massachusetts. The ship was the M/V Sky Reefer, a refrigerated cargo ship owned by M. H. Maritima, S. A., a Panamanian company, and time-chartered to Nichiro Gyogyo Kaisha, Ltd., a Japanese company. Stevedores
Among the rights and responsibilities set out in the bill of lading were arbitration and choice-of-law clauses. Clause 3, entitled "Governing Law and Arbitration," provided:
When the vessel's hatches were opened for discharge in Massachusetts, Bacchus discovered that thousands of boxes of oranges had shifted in the cargo holds, resulting in over $1 million damage. Bacchus received $733,442.90 compensation from petitioner Vimar Seguros y Reaseguros (Vimar Seguros), Bacchus' marine cargo insurer that became subrogated pro tanto to Bacchus' rights. Petitioner and Bacchus then brought suit against Maritima in personam and M/V Sky Reefer in rem in the District Court for the District of Massachusetts under the bill of lading. These defendants, respondents here, moved to stay the action and compel arbitration in Tokyo under clause 3 of the bill of lading and § 3 of the FAA, which requires courts to stay proceedings and enforce arbitration agreements covered by the Act. Petitioner and Bacchus opposed the motion, arguing the arbitration
The District Court rejected the adhesion argument, observing that Congress defined the arbitration agreements enforceable under the FAA to include maritime bills of lading, 9 U. S. C. § 1, and that petitioner was a sophisticated party familiar with the negotiation of maritime shipping transactions. It also rejected the argument that requiring the parties to submit to arbitration would lessen respondents' liability under COGSA § 3(8). The court granted the motion to stay judicial proceedings and to compel arbitration; it retained jurisdiction pending arbitration; and at petitioner's request, it certified for interlocutory appeal under 28 U. S. C. § 1292(b) its ruling to compel arbitration, stating that the controlling question of law was "whether [COGSA § 3(8)] nullifies an arbitration clause contained in a bill of lading governed by COGSA." Pet. for Cert. 30a.
The First Circuit affirmed the order to arbitrate. 29 F.3d 727 (1994). Although it expressed grave doubt whether a foreign arbitration clause lessened liability under COGSA § 3(8), id., at 730, the Court of Appeals assumed the clause was invalid under COGSA and resolved the conflict between the statutes in favor of the FAA, which it considered to be the later enacted and more specific statute, id., at 731-733. We granted certiorari, 513 U.S. 1013 (1995), to resolve a Circuit split on the enforceability of foreign arbitration clauses in maritime bills of lading. Compare the case below (enforcing foreign arbitration clause assuming arguendo it violated COGSA), with State Establishment for Agricultural Product Trading v. M/V Wesermunde, 838 F.2d 1576 (CA11) (declining to enforce foreign arbitration clause because that would violate COGSA), cert. denied, 488 U.S. 916 (1988). We now affirm.
The parties devote much of their argument to the question whether COGSA or the FAA has priority. "[W]hen two statutes are capable of co-existence," however, "it is the duty of the courts, absent a clearly expressed congressional intention to the contrary, to regard each as effective." Morton v. Mancari, 417 U.S. 535, 551 (1974); Pittsburgh & Lake Erie R. Co. v. Railway Labor Executives' Assn., 491 U.S. 490, 510 (1989). There is no conflict unless COGSA by its own terms nullifies a foreign arbitration clause, and we choose to address that issue rather than assume nullification arguendo, as the Court of Appeals did. We consider the two arguments made by petitioner. The first is that a foreign arbitration clause lessens COGSA liability by increasing the transaction costs of obtaining relief. The second is that there is a risk foreign arbitrators will not apply COGSA.
The leading case for invalidation of a foreign forum selection clause is the opinion of the Court of Appeals for the Second Circuit in Indussa Corp. v. S. S. Ranborg, 377 F.2d 200 (1967) (en banc). The court there found that COGSA invalidated a clause designating a foreign judicial forum because it "puts `a high hurdle' in the way of enforcing liability, and thus is an effective means for carriers to secure settlements lower than if cargo [owners] could sue in a convenient forum." Id. , at 203 (citation omitted). The court observed "there could be no assurance that [the foreign court] would apply [COGSA] in the same way as would an American tribunal subject to the uniform control of the Supreme Court." Id., at 203-204. Following Indussa, the Courts of Appeals without exception have invalidated foreign forum selection clauses under § 3(8). See Union Ins. Soc. of Canton, Ltd. v. S. S. Elikon, 642 F.2d 721, 723-725 (CA4 1981); Conklin & Garrett, Ltd v. M/V Finnrose, 826 F.2d 1441, 1442-1444 (CA5 1987); see also G. Gilmore & C. Black, Law of Admiralty
The determinative provision in COGSA, examined with care, does not support the arguments advanced first in Indussa and now by petitioner. Section 3(8) of COGSA provides as follows:
The liability that may not be lessened is "liability for loss or damage . . . arising from negligence, fault, or failure in the duties and obligations provided in this section." The statute thus addresses the lessening of the specific liability imposed by the Act, without addressing the separate question of the means and costs of enforcing that liability. The difference is that between explicit statutory guarantees and the procedure for enforcing them, between applicable liability principles and the forum in which they are to be vindicated.
The liability imposed on carriers under COGSA § 3 is defined by explicit standards of conduct, and it is designed to correct specific abuses by carriers. In the 19th century it was a prevalent practice for common carriers to insert
Petitioner's contrary reading of § 3(8) is undermined by the Court's construction of a similar statutory provision in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991). There a number of Washington residents argued that a Florida forum selection clause contained in a cruise ticket should not be enforced because the expense and inconvenience of litigation in Florida would "caus[e] plaintiffs unreasonable hardship in asserting their rights," id., at 596, and therefore "`lessen, weaken, or avoid the right of any claimant to a trial by court of competent jurisdiction on the question of liability for . . . loss or injury, or the measure of damages therefor' "
If the question whether a provision lessens liability were answered by reference to the costs and inconvenience to the cargo owner, there would be no principled basis for distinguishing national from foreign arbitration clauses. Even if it were reasonable to read § 3(8) to make a distinction based on travel time, airfare, and hotels bills, these factors are not susceptible of a simple and enforceable distinction between domestic and foreign forums. Requiring a Seattle cargo owner to arbitrate in New York likely imposes more costs and burdens than a foreign arbitration clause requiring it to arbitrate in Vancouver. It would be unwieldy and unsupported by the terms or policy of the statute to require courts to proceed case by case to tally the costs and burdens to particular plaintiffs in light of their means, the size of their claims, and the relative burden on the carrier.
Our reading of "lessening such liability" to exclude increases in the transaction costs of litigation also finds support in the goals of the Brussels Convention for the Unification of Certain Rules Relating to Bills of Lading, 51 Stat. 233 (1924) (Hague Rules), on which COGSA is modeled. Sixty-six countries, including the United States and Japan, are now parties to the Convention, see Department of State, Office of the Legal Adviser, Treaties in Force: A List of Treaties and Other International Agreements of the United States in Force on January 1, 1994, p. 367 (June 1994), and it appears that none has interpreted its enactment of § 3(8) of the Hague Rules to prohibit foreign forum selection clauses, see Sturley, International Uniform Laws in National Courts:
It would also be out of keeping with the objects of the Convention for the courts of this country to interpret COGSA to disparage the authority or competence of international forums for dispute resolution. Petitioner's skepticism over the ability of foreign arbitrators to apply COGSA or the Hague Rules, and its reliance on this aspect of Indussa Corp. v. S. S. Ranborg, 377 F.2d 200 (CA2 1967), must give way to contemporary principles of international comity and commercial practice. As the Court observed in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), when it enforced a foreign forum selection clause, the historical judicial resistance
That the forum here is arbitration only heightens the irony of petitioner's argument, for the FAA is also based in part on an international convention, 9 U. S. C. § 201 et seq. (codifying the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, June 10, 1958,  21 U. S. T. 2517, T. I. A. S. No. 6997), intended "to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries," Scherk, supra, at 520, n. 15. The FAA requires enforcement of arbitration agreements in contracts that involve interstate commerce, see Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995), and in maritime transactions, including bills
Petitioner's second argument against enforcement of the Japanese arbitration clause is that there is no guarantee foreign arbitrators will apply COGSA. This objection raises a concern of substance. The central guarantee of § 3(8) is that the terms of a bill of lading may not relieve the carrier of the obligations or diminish the legal duties specified by the Act. The relevant question, therefore, is whether the substantive law to be applied will reduce the carrier's obligations to the cargo owner below what COGSA guarantees. See Mitsubishi Motors, supra, at 637, n. 19.
Petitioner argues that the arbitrators will follow the Japanese Hague Rules, which, petitioner contends, lessen respondents' liability in at least one significant respect. The Japanese version of the Hague Rules, it is said, provides the carrier with a defense based on the acts or omissions of the stevedores hired by the shipper, Galaxie, see App. 112, Article 3(1) (carrier liable "when he or the persons employed by him" fail to take due care), while COGSA, according to petitioner, makes nondelegable the carrier's obligation to "properly and carefully . . . stow . . . the goods carried," COGSA § 3(2), 46 U. S. C. App. § 1303(2); see Associated Metals &
Whatever the merits of petitioner's comparative reading of COGSA and its Japanese counterpart, its claim is premature. At this interlocutory stage it is not established what law the arbitrators will apply to petitioner's claims or that petitioner will receive diminished protection as a result. The arbitrators may conclude that COGSA applies of its own force or that Japanese law does not apply so that, under another clause of the bill of lading, COGSA controls. Respondents seek only to enforce the arbitration agreement. The District Court has retained jurisdiction over the case and "will have the opportunity at the award-enforcement stage to ensure that the legitimate interest in the enforcement of the . . . laws has been addressed." Mitsubishi Motors, supra, at 638; cf. 1 Restatement (Third) of Foreign Relations Law of the United States § 482(2)(d) (1986) ("A court in the United States need not recognize a judgment of the court of a foreign state if . . . the judgment itself, is repugnant to the public policy of the United States"). Were there no subsequent opportunity for review and were we persuaded that "the choice-of-forum and choice-of-law clauses operated in tandem as a prospective waiver of a party's right to pursue statutory remedies . . . , we would have little hesitation in condemning the agreement as against public policy." Mitsubishi Motors, supra, at 637, n. 19. Cf. Knott v. Botany Mills, 179 U.S. 69 (1900) (nullifying choice-of-law provision under the Harter Act, the statutory precursor to COGSA,
Because we hold that foreign arbitration clauses in bills of lading are not invalid under COGSA in all circumstances, both the FAA and COGSA may be given full effect. The judgment of the Court of Appeals is affirmed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
Justice Breyer took no part in the consideration or decision of this case.
Justice O'Connor, concurring in the judgment.
I agree with what I understand to be the two basic points made in the Court's opinion. First, I agree that the language of the Carriage of Goods by Sea Act (COGSA), 46 U. S. C. App. § 1300 et seq., and our decision in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), preclude a
Because the Court's opinion appears to do more, however, I concur only in the judgment. Foreign arbitration clauses of the kind presented here do not divest domestic courts of jurisdiction, unlike true foreign forum selection clauses such as that considered in Indussa Corp. v. S. S. Ranborg, 377 F.2d 200 (CA2 1967) (en banc). That difference is an important one—it is, after all, what leads the Court to dismiss much of petitioner's argument as premature—and we need not decide today whether Indussa, insofar as it relied on considerations other than the increased cost of litigating in a distant forum, retains any vitality in the context of true foreign forum selection clauses. Accordingly, I would not, without qualification, reject "the reasoning [and] the conclusion of the Indussa rule itself," ante, at 534, nor would I wholeheartedly approve an English decision that "long ago rejected the reasoning later adopted by the Indussa court," ante, at 537. As the Court notes, "[f]ollowing Indussa, the Courts of Appeals without exception have invalidated foreign forum selection clauses under § 3(8)." Ante, at 533. I would prefer to disturb that unbroken line of authority only to the extent necessary to decide this case.
Justice Stevens, dissenting.
The Carriage of Goods by Sea Act (COGSA),
Petitioners in this case challenge the enforceability of a foreign arbitration clause, coupled with a choice-of-foreignlaw clause, in a bill of lading covering a shipment of oranges from Morocco to Boston, Massachusetts. The bill, issued by the Japanese carrier, provides (1) that the transaction "`shall be governed by the Japanese law,' " and (2) that any dispute arising from the bill shall be arbitrated in Tokyo. See ante, at 531. Under the construction of COGSA that has been uniformly followed by the Courts of Appeals and endorsed by scholarly commentary for decades, both of those clauses are unenforceable against the shipper because they "relieve" or "lessen" the liability of the carrier. Nevertheless, relying almost entirely on a recent case involving a domestic forum selection clause that was not even covered by COGSA, Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), the Court today unwisely discards settled law and adopts a novel construction of § 3(8).
In the 19th century it was common practice for shipowners to issue bills of lading that included stipulations exempting themselves from liability for losses occasioned by the negligence of their employees. Because a bill of lading was (and is) a contract of adhesion, which a shipper must accept or else find another means to transport his goods, shippers
Section 1 of the Harter Act makes it unlawful for the master or owner of any vessel transporting cargo between ports of the United States and foreign ports to insert in any bill of lading any clause whereby the carrier "shall be relieved from liability for loss or damage arising from negligence."
The Court's holding that the choice-of-law clause was invalid rested entirely on the Harter Act's prohibition against relieving the carrier from liability. Id., at 72. Since Knott, courts have consistently understood the Harter Act to create a flat ban on foreign choice-of-law clauses in bills of lading. See, e. g., Conklin & Garrett, Ltd. v. M/V Finnrose, 826 F.2d 1441, 1442-1444 (CA5 1987); Union Ins. Soc. of Canton, Ltd. v. S. S. Elikon, 642 F.2d 721, 723-725 (CA4 1981); Indussa Corp. v. S. S. Ranborg, 377 F.2d 200 (CA2 1967). Courts have also consistently found such clauses invalid under COGSA, which embodies an even broader prohibition against clauses "relieving" or "lessening" a carrier's liability. Indeed, when a panel of the Second Circuit in 1955 interpreted COGSA to permit a foreign choice-of-law clause, Muller v. Swedish American Line Ltd., 224 F.2d 806, scholars noted that "the case seems impossible to reconcile with the holding in Knott."
In the 1957 edition of their treatise on the Law of Admiralty, Gilmore and Black had criticized not only the choiceof-law
Judge Friendly's opinion for the en banc court in Indussa endorsed this reasoning. In Indussa, the bill of lading contained a provision requiring disputes to be resolved in Norway under Norwegian law.
As the Court notes, ante, at 533, the Courts of Appeals without exception have followed Indussa. In the 1975 edition of their treatise, Gilmore and Black also endorsed its holding, adding this comment:
Thus, our interpretation of maritime law prior to the enactment of the Harter Act, our reading of that statute in Knott, and the federal courts' consistent interpretation of
The foreign-arbitration clause imposes potentially prohibitive costs on the shipper, who must travel—and bring his lawyers, witnesses, and exhibits—to a distant country in order to seek redress. The shipper will therefore be inclined either to settle the claim at a discount or to forgo bringing the claim at all. The foreign-law clause leaves the shipper who does pursue his claim open to the application of unfamiliar and potentially disadvantageous legal standards, until he can obtain review (perhaps years later) in a domestic forum under the high standard applicable to vacation of arbitration awards.
Although the policy undergirding the doctrine of stare decisis has its greatest value in preserving rules governing commercial transactions, particularly when their meaning is well understood and has been accepted for long periods of time,
The Court assumes that the words "lessening such liability" must be narrowly construed to refer only to the substantive rules that define the carrier's legal obligations. Ante, at 534-535. Under this view, contractual provisions that lessen the amount of the consignee's net recovery, or that
In my opinion, this view is flatly inconsistent with the purpose of COGSA § 3(8). That section responds to the inequality of bargaining power inherent in bills of lading and to carriers' historic tendency to exploit that inequality whenever possible to immunize themselves from liability for their own fault. A bill of lading is a form document prepared by the carrier, who presents it to the shipper on a take-it-or-leave-it basis. See Black, The Bremen, COGSA and the Problem of Conflicting Interpretation, 6 Vand. J. Transnat'l L. 365, 368 (1973); Liverpool Steam, 129 U. S., at 441. Characteristically, there is no arm's-length negotiation over the bill's terms; the shipper must agree to the carrier's standard-form language, or else refrain from using the carrier's services. Accordingly, if courts were to enforce bills of lading as written, a carrier could slip in a clause relieving itself of all liability for fault, or limiting that liability to a fraction of the shipper's damages, and the shipper would have no recourse.
Even if the value of the shipper's claim is large enough to justify litigation in Asia,
More is at stake here than the allocation of rights and duties between shippers and carriers. A bill of lading, besides being a contract of carriage, is a negotiable instrument that controls possession of the goods being shipped. Accordingly, the bill of lading can be sold, traded, or used to obtain credit as though the bill were the cargo itself. Disuniformity
The Court's reliance on its decision in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), is misplaced. That case held that a domestic forum selection clause in a passenger ticket was enforceable. As no carriage of goods was at issue, COGSA did not apply to the parties' dispute. Accordingly, the enforceability of the ticket's terms did not implicate the commercial interests in uniformity and negotiability that are served by the statutory regulation of bills of lading. Moreover, the Carnival Cruise holding is limited to the enforceability of domestic forum selection clauses. The Court in that case pointedly refused to respond to the concern expressed in my dissent that a wooden application of its reasoning might extend its holding to the selection of a forum outside of the United States. See id., at 604. The wooden reasoning that the Court adopts today does make that extension, but it is surely not compelled by the holding in Carnival Cruise.
The majority points to several foreign statutes, passed by other signatories to the Hague Rules, that make foreign forum selection clauses unenforceable in the courts of those
Lurking in the background of the Court's decision today is another possible reason for holding, despite the clear meaning of COGSA and decades of precedent, that a foreign arbitration clause does not lessen liability. It may be that the Court does violence to COGSA in order to avoid a perceived conflict with another federal statute, the Federal Arbitration Act (FAA), 9 U. S. C. § 1 et seq. (1988 ed. and Supp. V). The FAA requires that courts enforce arbitration clauses in contracts—including those requiring arbitration in foreign countries—the
Unfortunately, in adopting a contrary reading to avoid this conflict, the Court has today deprived COGSA § 3(8) of much of its force. The Court's narrow reading of "lessening [of] liability" excludes more than arbitration; it apparently covers only formal, legal liability. See supra, at 551-552. Although I agree with the Court that it is important to read potentially conflicting statutes so as to give effect to both wherever possible, I think the majority has ignored a much less damaging way to harmonize COGSA with the FAA.
Section 2 of the FAA reads:
This language plainly intends to place arbitration clauses upon the same footing as all other contractual clauses. Thus, like any clause, an arbitration clause is enforceable, "save upon such grounds" as would suffice to invalidate any other, nonarbitration clause. The FAA thereby fulfills its policy of jettisoning the prior regime of hostility to arbitration. Like any other contractual clause, then, an arbitration clause may be invalid without violating the FAA if, for example,
The correctness of this construction becomes even more apparent when one considers the policies of the two statutes. COGSA seeks to ameliorate the inequality in bargaining power that comes from a particular form of adhesion contract. The FAA seeks to ensure enforcement of freely negotiated agreements to arbitrate. Volt, 489 U. S., at 478-479. As I have discussed, supra, at 543-544, 550, foreign arbitration clauses in bills of lading are not freely negotiated. COGSA's policy is thus directly served by making these clauses illegal; and the FAA's policy is not disserved thereby. In contrast, allowing such adhesionary clauses to stand serves the goals of neither statute.
The Court's decision in this case is an excellent example of overzealous formalism. By eschewing a commonsense reading of "lessening [of] liability," the Court has drained those words of much of their potency. The result compounds, rather than contains, the Court's unfortunate mistake in the Carnival Cruise case.
I respectfully dissent.
Michael F. Sturley filed a brief for the American Steamship Owners Mutual Protection and Indemnity Association, Inc., et al. as amici curiae urging affirmance.
"The carrier and his customer do not stand upon a footing of equality. The individual customer has no real freedom of choice. He cannot afford to higgle or stand out, and seek redress in the courts. He prefers rather to accept any bill of lading, or to sign any paper, that the carrier presents; and in most cases he has no alternative but to do this, or to abandon his business." 129 U. S., at 441.
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it shall not be lawful for the manager, agent, master, or owner of any vessel transporting merchandise or property from or between ports of the United States and foreign ports to insert in any bill of lading or shipping document any clause, covenant, or agreement whereby it, he, or they shall be relieved from liability for loss or damage arising from negligence, fault, or failure in proper loading, stowage, custody, care, or proper delivery of any and all lawful merchandise or property committed to its or their charge. Any and all words or clauses of such import inserted in bills of lading or shipping receipts shall be null and void and of no effect." 27 Stat. 445, 46 U. S. C. App. § 190.
This section was rendered obsolete by § 3(8) of COGSA, a broader prohibition that invalidates clauses either "relieving" or "lessening" a carrier's liability.46 U. S. C. App. § 1303(8), quoted supra, at 543.
"`Any dispute arising under this Bill of Lading shall be decided in the country where the Carrier has his principal place of business, and the law of such country shall apply except as provided elsewhere herein.' " Indussa Corp. v. S. S. Ranborg, 377 F.2d 200, 201 (CA2 1967).
"One other fact requires special note. The shipowners stress the consensual nature of the ["Both-to-Blame"] clause, arguing that a bill of lading is but a contract. But that is so at most in name only; the clause, as we are told, is now in practically all bills of lading issued by steamship companies doing business to and from the United States. Obviously the individual shipper has no opportunity to repudiate the document agreed upon by the trade, even if he has actually examined it and all its twenty-eight lengthy paragraphs, of which this clause is No. 9. This lack of equality of bargaining power has long been recognized in our law; and stipulations for unreasonable exemption of the carrier have not been allowed to stand. Hence so definite a relinquishment of what the law gives the cargo as is found here can hardly be found reasonable without direct authorization of law." (Citations omitted.)