GKG Law Submits Amicus Brief to the Supreme Court Addressing Third Circuit Decision in Frescati v. CARCO
In November 2018, GKG Law, on behalf of the American Fuels & Petrochemical Manufacturers Association (AFPMA) and the International Liquid Terminals Association (ILTA), submitted an amicus brief to the United States Supreme Court on petition for a writ of certiorari. AFPMA and ILTA have members who are stakeholders in the maritime transportation, storage and oil refining, and petrochemical industries. The primary issue being addressed by the petition and the brief is the Third Circuit’s decision in Frescati v. CARCO holding a charterer (or shipper) strictly liable for damages arising under a charter party agreement (a form of maritime contract involving the marine transport of goods). If the Supreme Court grants certiorari it would resolve a split among the circuits as to how to interpret what is known as a “safe berth” clause in charter agreements.
The matter arose when, on November 26, 2004, a vessel owned by Frescati allided with a hidden anchor that had been abandoned by an unknown party in the Delaware River. The allision occurred in a federal anchorage (where vessels essentially park while waiting to enter a wharf) approximately 300 yards from the vessel’s intended berth. The allision resulted in an oil spill. Frescati, as the vessel owner, originally was designated as the party responsible for the cleanup.
Subsequently, Frescati and the United States, which administers an industry-funded reserve designated for clean-up of damages resulting from such spills, pursued recovery against CARCO (who was both the vessel charterer and the owner of the wharf where the vessel was destined). Frescati and the United States asserted that as the shippers of the goods, CARCO was liable for the allision and subsequent oil spill because CARCO had breached the “safe berth” provision under the charter agreement. Despite recognizing that, as the shipper of the cargo, CARCO could not have foreseen or prevented the damage that occurred, the Third Circuit interpreted the “safe berth” language in the shipping contract to hold the shipper of the cargo strictly liable for the resulting oil spill. In doing so, the Third Circuit imposes a heightened standard on shippers of maritime cargo, as opposed to vessel owners and operators, and creates tremendous uncertainty for charterers and wharf owners, like amici, who may be found liable through no fault of their own for hundreds of millions of dollars in damages.
The full amicus brief can be read here.
