Transportation

• Author: International Law Group

Fujitsu Limited, a Japanese corporation, shipped a container of silicon wafers from Narita, Japan to Ross Technologies, Inc. in Austin, Texas using Federal Express (FedEx). Ross rejected the goods in Austin and FedEx shipped them back via Memphis. FedEx did not prepare a new airway bill for the trip from Austin to Memphis and used an incomplete bill for the return to Japan. When it got the wafers back, Fujitsu noted that an oily substance covered the goods. Fujitsu reported the damage to FedEx who admitted that the damage occurred while goods were in their possession.

Plaintiff sued FedEx in federal district court, based upon breach of contract and negligence. FedEx contended that, under the Convention for the Unification of Certain Rules relating to International Transportation by Air (October 12, 1929, 49 Stat. 3000 (1934), 137 L.N.T.S. 11, reprinted in note following 49 U.S.C.S. Section 40105) (Warsaw Convention) governing international cargo shipments, it carried the cargo with a proper air waybill and was thus entitled to limitation on its liability to $9.07 per pound, or a total of approximately $1,200 for the entire shipment.

The lower court gave partial summary judgment to Fujitsu, finding that the bill did not comply with the requirements of the Convention and that the initial air waybill could not cover the shipment from Austin to Japan. The court found FedEx liable to Fujitsu for $726,640.

FedEx appealed complaining of a judicial misinterpretation of liability issues under the Convention. The U.S. Court of Appeals for the Second Circuit affirms. FedEx argued that it is not the Original Warsaw Convention, but rather the Warsaw Convention as modified by the international agreement referred to as the "Hague Protocol" that governs in this case. The latter would allow for limited liability protections for the defendant.

The issue of first impression is whether common law, the general savings statute, or customary international law governs whether a later treaty such as the Hague Protocol abates or extinguishes provisions of a prior treaty such as the Convention. Japan ratified the Hague Protocol in 1967, however it did not enter into force for the United States until March 4, 1999. The Warsaw Convention, as amended by the Hague Protocol, Article 9 "deprives carriers of the Convention's limited liability protections only if 'cargo is loaded on board the aircraft without an air waybill having been made out' or if 'the air waybill does...