When the Carriage of Goods by Sea Act came into force in 1936, goods were shipped in bags, boxes and crates. Thereafter pallets were introduced for packing and moving cargo more efficiently inside each of which numerous boxes and bags are placed. Accordingly ship owners sought to restrict their liability for damage to goods in course of transshipment to $ 500 per pallet instead of per package. Some courts accepted this plea
of the ship owners.
At present cargo is shipped either in 20 feet or 40 feet containers. Ship owners insisted that in the circumstances their maximum liability for damage to cargo be limited to$ 500 per container since container is the package in international shipments now. In the scenario of divided opinion many courts upheld the contention of the ship owners.
However, cargo owners found the extension of said same cap of $ 500 on maximum damage claim even on each container basis extremely burdensome and oppressive.
In view of the above, the Hague Rules were amended in 1968 to introduce limitation of liability or claim for damaged cargo on the basis of ‘per kilogram’ instead of ‘per package’ basis. Many nations revised their laws in tune with such amendments removing the anomaly. However, the US Congress failed to change the law in that direction.
