Carmack v CMR – a comparison

In the United States, interstate motor and rail transport of all property other than household goods, is governed by the Carmack Amendment to the Interstate Commerce Act (Carmack).

Carmack is the sole statutory authority governing any issue that may arise in connection with the loss, damage or delay to goods being shipped in interstate commerce. Consequently, Carmack preempts any common or statutory law, such as breach of contract or negligence, which might otherwise govern the resolution of a cargo claim.

The attached report was produced by our Kennedys CMK team. It provides a detailed overview of the legal position in the US for all parties with an interest in the interstate movement of cargo. It also provides a helpful comparison of the CMR and Carmack regimes, which we have summarized below.

The comparison

Shippers, freight forwarders and insurers who are customarily involved with shipping merchandise subject to the CMR Convention will be comforted to note that, if an issue arises with cargo being shipped interstate, there are the similarities in the scope and substance of the two regimes.

The similarities

  • Both CMR (subject to exceptions) and Carmack provide that the carrier is liable for any loss or damage during transport. 
  • Both CMR and Carmack have provisions dealing with the period for filing notice of claims and filing of suit. 
  • Carmack requires the issuance of a bill of lading. The form of bill of lading is not specified by the statute and can vary widely. This lack of uniformity often contributes to problems in determining whether the shipper has been properly notified of the carrier's limitation of liability in satisfaction of the three part test (as detailed in the attached article). CMR stipulates that any consignment note issued must contain certain information. A standard format consignment note has developed. However, CMR will apply regardless of the absence or irregularity of such a document.
  • Carmack allows a claimant to sue any one carrier or several carriers at the same time. This includes carriers involved in the chain of custody while the shipment was in transit regardless of whether that carrier was ultimately responsible for the claimed loss. Under the CMR, the claimant may bring proceedings against the first contracting carrier, the last carrier or the carrier responsible for the loss or damage. The claimant may bring proceedings against several of these at the same time. 
  • Neither Carmack nor CMR expressly provide for legal fees. Because of the mandatory application of Carmack, there is no recourse to state law to obtain legal fees. However, in CMR cases there may be opportunities to obtain legal fees under the law of individual states.

The differences

  • Carmack applies to both road and rail transport; CMR only applies to carriage by road.
  • The carrier’s liability under Carmack is statutorily absolute whereas under the CMR there are some defences to liability available to the carrier.
  • The CMR's time bar provisions are mandatory and cannot be amended by agreement between the shipper and the carrier (although time extensions can be mutually agreed), while Carmack merely sets minimum standards that can be increased or waived by agreement.
  • Under Carmack a claimant has two years within which to commence an action.  The CMR provides a one year time limit for proceedings to be commenced against the carrier (or three years if willful misconduct can be established).
  • In addition to the one year time bar, the CMR contains a number of provisions for notice of loss or damage to be provided to the carrier. The notice period will depend on the nature of the loss or damage and whether it is apparent. The substantive information filed is fairly basic and need not be as thorough as that required by Carmack. The minimum time for filing notice of a claim under Carmack is nine months.
  • The CMR provides a fixed limit of liability based of 8.33 SDRs per kilogram, which can only be broken in the event that willful misconduct can be proven by the claimant. However, freight charges and additional costs arising from the carriage can also be recovered. In some contracting states these additional charges can include customs duties, survey fees and other such charges.
  • The parties can agree alternative limits but only in accordance with the formalities set out in Articles 24 and 26. Carmack, however, permits the limitation to be established by the carrier in its tariff or contract of carriage terms, or by express agreement with the shipper (subject to the three-part test outlined in the attached article). Carmack limitation is not stipulated by the statute and can vary widely.

Read the full report here

Read other items in the Marine Brief - September 2017