Under the U.S. Carriage of Goods by Sea Act (COGSA), carriers are entitled to limit their liability for loss of or damage to cargo originating from, or destined for, the US to US$500 per “package”, but what constitutes a COGSA “package”? The word is not defined in the statute, triggering decades of endless litigation. Over time, US courts have adopted a mechanical approach, refusing to look beyond the face of a bill of lading to determine the intent of the parties and deciding a majority of these cases based solely on a figure shown in the “No. of Packages” column or a quantity of a unit of packaging (e.g. cases, cartons, boxes, pallets, containers, etc.) noted in the “Description of Cargo” column.
Signalling a departure from this approach, the U.S. Second Circuit Court of Appeals in HDI Global Insurance Co. v. Kuehne + Nagel, Inc., No. 25-531-cv(2d Cir. May 7, 2026) (judgment mandate entered after denial of motion for rehearing), issued a summary order, affirming a district court’s decision, holding that a carrier’s boilerplate COGSA “package” definition on the reverse side of a carrier’s sea waybill controlled the carrier’s limitation of liability rights, despite contrary indications on the front side of the sea waybill.
In HDI Global, a cargo of 480 cartons of electrical wire harnesses was secured on 24 pallets before being stuffed in a container for transport from a warehouse in the US to a discharge port in Spain. The front side of the sea waybill specified the quantity of the two units of packaging (480 cartons and 24 pallets). The cargo fell into the ocean while being loaded and became a total loss. The shipper filed suit against the carrier for full cargo value under the sea waybill. The carrier, in turn, sought to limit its liability to $500 “per pallet” pursuant to the carrier’s own definition of the term “package” contained in the carrier’s standard terms and conditions appearing on the reverse side of the sea waybill, which provided in part:
For limitation purposes under COGSA, it is agreed that the meaning of the word “package” shall be any palletised… assemblage of cartons which has been palletised… for the convenience of the Merchant, regardless of whether said pallet… is disclosed on the front hereof.
In deciding the COGSA package question in favor of the carrier, the Second Circuit in HDI Global explained that any indications as to number of packages found on the front side of a bill of lading do “not control… where it is plainly contracted by contrary evidence of the parties intent.” By applying the carrier’s own standard “package” definition to calculate the carrier’s COGSA package limit, despite the existence of conflicting statements regarding the packaging of the cargo appearing elsewhere on the sea waybill, the Second Circuit’s decision in HDI Global shines a modern-day light on COGSA’s US$500 per package limitation, opening a new door through which carriers can now exercise greater contractual control over their potential cargo liability exposure for shipments originating in or destined for the US.
In the wake of HDI Global, cargo underwriters are scrambling to settle pending cargo disputes in line with this decision, despite previously contested COGSA package limitation defences.
Carriers should promptly review their standard tariffs, bills of lading, waybills and other contracts of carriage, and modify these in accordance with the Second Circuit’s ruling in HDI Global.
Carriers should also promptly review the status of all pending cargo claims involving a shipment to or from the US to explore resolution of those claims at favorable levels in line with HDI Global.
Contact the Club to further discuss the impact of this decision.