Enforceability of a Himalaya Clause
A “Himalaya” clause. I just learned what this type of provision is called. A Himalaya clause attempts to extend limitation of liability provisions including forum selection provisions to persons other than the contracting party. Aquachile, Inc. v. Williams, 47 Fla. L. Weekly D30c (Fla. 4th DCA 2021).
Regarding a Himalaya clause’s enforceability:
Himalaya clauses are construed, according to general principles of contract interpretation, “by their terms and consistent with the intent of the parties.” The court must determine whether the plain language of the contract as a whole reflects an intent to extend limitations of liability to the party seeking protection. Any ambiguity must be construed against the drafter.
Factors to be considered in determining whether a party qualifies for protection under a Himalaya clause include (1) the nature of the relationship between the party seeking protection and the contracting party, and (2) the nature of the services provided by the party seeking protection compared to the contracting party’s responsibilities under the contract.
Aquachile, supra (internal citations omitted).
By way of example, in Aquachile, a cruise passenger got sick after eating fish. She sued an entity in Broward County, Florida that originally sourced the fish. The entity had sold the fish to another company before it was then sold to the cruise line. However, the passenger’s ticket contained a forum selection provision that required the passenger to sue the Carrier in Miami Dade County. The word “Carrier” was broadly defined to include “the vessel, the operator, and related entities and individuals.” Moreover, the ticked provided, “The exclusions or limitations of liability of Carrier set forth in the provisions of the Ticket Contract, as well as all rights, defenses, or immunities set forth herein, shall also apply to and be for the benefit of agents, independent contractors, concessionaires, and suppliers of Carrier….” Aquachile, supra. This was the Himalaya clause – the clause extended benefits and defenses to non-parties to the ticket contract.
The entity that sourced the fish moved to transfer the lawsuit to Miami Dade County based on the Himalaya clause. The trial court, as affirmed by the appellate court, found that the Himalaya clause could not be enforced by the entity that sourced the fish.
Applying the factors above, the appellate court explained that the entity that sourced the fish was not a direct supplier to the cruise line and had an indirect relationship with the cruise line. The Himalaya clause “cannot be reasonably read to extend protection to an indefinite chain of indirect suppliers…that have little to no relationship with [the cruise line].” Aquachile, supra. Also, the entity that sourced the fish was not “engaged in the type of maritime activity that one would reasonably expect to be covered by the ticket contract.” Id. (And, “[t]o the extent the Himalaya clause is ambiguous as applied to the plaintiff’s suit against [the defendant], the [trial] court properly construed it against [the defendant].” Aquachile, supra.
Please contact David Adelstein at [email protected] or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.
