Web alert: Hurricane Sandy Qualifies as 'Act of God'; US COGSA Defence Successful

In the recently decided Lord & Taylor LLC v. Zim Integrated Shipping Services, Ltd[1], the United States District Court for the Southern District of New York ruled in favour of the defendant Zim by holding that Hurricane Sandy, which made landfall on 29 October 2012, was an ‘Act of God’ under the United States Carriage of Goods by Sea Act 1936 (COGSA).

In anticipation of the arrival of Hurricane Sandy, Zim focused their hurricane preparations predominately on securing cargo from anticipated winds. However, it was ultimately the storm surge breaching the bulkhead at the terminal, and not high winds, that caused the majority of the damage to the containers belonging to the claimants Lord & Taylor. Lord & Taylor then brought suit under COGSA to recover the costs for their damaged goods. In response, defendant Zim raised an Act of God defence based on the widely varying reports of the hurricane’s severity, expected path, and anticipated storm surge.

For an Act of God defence to succeed under COGSA, the carrier needs to prove that the damage was caused by an unexpected natural event and could not have been prevented by the exercise of reasonable care. Hurricanes that cause ‘unexpected and unforeseeable devastation’ are considered to be classic Acts of God. Further, whether a hurricane is determined to be an Act of God or not is based upon its foreseeability and the reasonableness of the defendant’s actions in response to that foreseeability.

The Court believed, in this case, that weather predictions prior to the hurricane’s landfall lacked sufficient reliability but that Zim had taken reasonable precautions based on the available information. Accordingly, the Court found that Zim was entitled to the Act of God defence, was not negligent, and thus not liable for the cargo damage.

While the Act of God defence is often invoked, it is rarely successful. Lord & Taylor LLC v. Zim Integrated Shipping Services, Ltd shows that despite the amount of weather information available from TV, radio, and smartphone apps, weather prediction still has a long way to go and the Act of God defence remains viable in our modern age.

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[1] Lord & Taylor LLC v. Zim Integrated Shipping Servs., Ltd., 2015 (S.D.N.Y. June 8, 2015)