Defense Counsel Journal - International Association of Defense ...

The Global Supply Chain Page 421hereby agrees to indemnifyand hold Lilly harmless againstand from any and all claimsarising from any breach ordefault in the performance ofany obligation on Supplier'spart to be performed under theterms of the agreement, orarising from any act, neglect,fault, or omission of Supplieror of its agents, employees,visitors, invitees, or licenseeand from and against all costs,attorney's fees, expenses, andliabilities incurred in or aboutany such claims or any actionagainst customer by reason ofsuch claim. Supplier, uponnotice of Lilly, shall defendsame at Supplier's expense. 33Sea Freight. Claims based upon freighttraveling by sea are treated differently.For losses litigated within the UnitedStates, The Carriage of Goods By Sea Actgoverns. The statute provides an avenueto shift the burden of a loss to the carrier.The Fifth Circuit described the complexshifting of burdens of proof:Initially, the plaintiff mustestablish a prima facie case bydemonstrating that the cargowas loaded in an undamagedcondition and discharged in adamaged condition. “For thepurpose of determining thecondition of the goods at thetime of receipt by the carrier,the bill of lading serves asprima facie evidence that the33 Eli Lilly, 615 F.3d at 1314-1315.goods were loaded in thecondition therein described.” Ifthe plaintiff presents a primafacie case, the burden shifts tothe defendants to prove thatthey exercised due diligence toprevent the damage or that thedamage was caused by one ofthe exceptions set forth insection 1304(2) of COGSA,including “perils, dangers, andaccidents of the sea or othernavigable waters” and “latentdefects not discoverable bydue diligence.” If thedefendants show that the losswas caused by one of theseexceptions, the burden returnsto the shipper to establish thatthe defendants’ negligencecontributed to the damage.Finally, “if the shipper is ableto establish that the[defendants'] negligence was acontributory cause of thedamage, the burden switchesback to the [defendants] tosegregate the portion of thedamage due to the exceptedcause from that portionresulting from the carrier's ownnegligence.” 34To the extent the purchaser cansatisfy its burden of proof and avoid theapplication of any exception, thepurchaser will pass the burden of the lossto the shipper.A second treaty that may come intoplay in the course supply chain disputes is34 Steel Coils, Inc. v. M/V Lake Marion, 331F.3d 422 (5th Cir. 2003).