Clause in a bill of lading or charter- party which stipulates that, in the event of
a collision between two ships where both are at fault, the owners of the cargo
must indemnify the carrying ship against any amount paid by the carrying ship
to the non- carrying ship for damage to that cargo. This clause arises because,
under American law, a cargo owner is not able to make any recovery from
the carrier for damage resulting from negligent navigation but may instead
sue the non- carrying ship which, in turn, seeks recovery from the carrying
ship in proportion to its fault. This would render a carrier indirectly liable for
a loss for which he is not directly liable to the cargo owner. The clause has,
however, been held to be invalid in the American courts when incorporated
into a contract with a common carrier.
