Stuff = load box; Strip = unload box; Box = container Admiral and Tariff originate from Arabic. Admiral comes from Amir-al-bahr, which means commander/ruler of the sea. Zheng He was the greatest explorer in history. The name of the most infamous case in U.S. cargo law is SKY REEFER, which made forum selection clauses and arbitration clauses legal, and the cargo damaged in that case was citrus/oranges/clementines. A central registry is open to the public, maintained by the government and shows all bills of lading, common in China and Russia, not common in Europe and U.S. Its main advantages are that it is a comprehensive source of information and provides easier access for all parties, which promotes trade. Its main disadvantages are that it lacks privacy because it can be accessed by almost anyone, including hackers and the possibility of theft is significant (hacking), especially of trade secrets. Also, government taxes, government steals your well-earned money. Cant corner the market, governments know what youre doing. A carrier registry, on the other hand, is between only banks and the carrier and is operated by the carrier on the carriers own server. Its main advantages are that it gives the shipper privacy so that no one can see what trades she is making and it decreases chances of theft. It is also a good way to avoid taxes. Can corner the market and no one knows what youre doing, can disguise it easily. Its main disadvantages are that it is not a comprehensive source of information, it can take longer for another party to trade down a bill of lading, it has lack of searchability by other parties and potentially hinders trade. Companies do everything to avoid doing business with companies using central based registries. Companies that go with carrier based registries are doing better. If privacy were most important to my client, I would recommend a carrier registry. @Global Trades biggest competitor is BOLERO. EFT: Electronic Funds Transfer. EDI: Electronic Data Interchange. A slot charter is an agreement between two or more containership operators in the same geographic trade to share space on each others ships. A slot is generally 1 TEU (twenty-foot equivalent unit). A slot charter has a slot-hire charterparty or MSCA (master slot charter agreement) between the actual carrier and the participating carrier. The participating carrier issues a B/L to the cargo interest. The participating carrier is the carrier in relation to the cargo interest and generally the MSCA will have a clause that says that the actual carrier is not a carrier for the purposes of the cargo interest. The cargo interest will have to sue the participating carrier, and if it is something for which the shipowner/actual carrier should be liable, then the participating carrier will sue the actual carrier. Two Bs/L should be back-to-back. The problem that containership operators quickly notice that containers are expensive and must call at every port every week to get best deal for customers, sometimes twice a week. Shanghai probably generates enough boxes that it can fill your ship twice a week. NOLA, have 4,000 TEU and NOLA only has 1,000 boxes, thats dead freight, not worth it to send ship. So containers to have market share are sending ships that dont have enough cargo. Like airlines, used to have direct flights everywhere, only 10 passengers with 150 seat plans, so changed everything to have planes full. Same thing with containerships, have to fill the containerships. Stupid for Maersk, MSC, OOCL and Evergreen to come into NOLA twice a week. So got together and every one of them is in a pool and the actual carrier for a particular ship for a particular port call (take turns), S/O. Maersk ship comes in doesnt just have Maersk boxes, has OOCL, MSC, Evergreen boxes, etc. Monopoly. Rather than all four container line companies having to send two ships a week to NOLA, just take turns coming in and load one anothers cargo. But the customer in Shanghai, doesnt know that. Only deal directly with OOCL, never know what ship their box is going on. Cargo shipper B always dealing with MSC. Cargo shipper C always dealing with Evergreen, etc. But three weeks out of four, his cargo isnt going on the Evergreen ship, its going on MSC or OOCL or Maersk ship. MSA, Master Service Agreement. If everything is done right and every one of them have the same contract and Bs/L terms, it turns out beautifully. But if one of them has different Bs/L, causes problems. Only one B/L but Slot Charter Master Service Agreement that links all of them together and all companies are supposed to issue identical Bs/L and not compete with another, so as far as the customer knows, only dealing with Evergreen or MSC. Cutting each others grass, you dont cut my grass, I dont cut your grass; you start cutting my grass, I start cutting your grass. Have to figure out what scheme youre under and if C/O have to look for a way through these defenses, otherwise Sky Reefer to Korea, China, Greece no hope of package limitation, Himalaya Clause will cover everyone, including train wreck, truck crash, limited to $500. Dont want to be limited to $500 if C/O, want to get full value, know all the contracts. All of them are supposed to be solvent and all of them are supposed to know of each other. Have bonds, so if MSC is sued because carrier, ship is unseaworthy, but its Evergreens ship, so now have to pay customer because of your ship. MSA, Evergreen says MSC sorry, well pay claim, well cover you for anything you have to pay to cargo plaintiff. But if Evergreen goes bankrupt, performance bond. But gigantic huge loss, whole containership goes down. Benefits everybody, so no scheme to get rid of slot charter system. Can slot charter system enter NVOCC. Have Evergreen use a bunch of NVOCC and goes to cargo shipper D. Can have a combination of NVOCC and a slot charter scheme. So have to be able to trace out all the documents and be sure you know everything and how the parties relate before you give an opinion because you may think under NVOCC B/L you have a good claim, but all you have is B/L 2, you need all Bs/L and contracts. Slot charter system solves problem of having too many ships and too little cargo in a port. The NVOCC is a Non-Vessel Operating Common Carrier. This is a common carrier by water that does not operate the vessel on the ocean voyage but holds itself out as a common carrier through the maintenance of tariffs and the advertisement and solicitation of cargo. In the NVOCC situation, 2 bills of lading are used: one between the S/O and the NVOCC and one between the NVOCC and the C/O. The NVOCC is a hybrid: in relation to the C/O, the NVOCC is the carrier and in relation to the S/O, the NVOCC is the cargo interest. Unique hybrid. Both systems, NVOCCs and slot charters are used to facilitate transportation (to make stuffing/stripping, loading/discharge, easier and to get cargo moving faster). The big difference between the two systems is that NVOCC has two bills of lading and the slot charter system has an MSCA and one bill of lading. Malcolm McLean started the containerization movement. He was a redneck from North Carolina who got tired of dealing with labor unions and knew a ship earns money only when shes at sea, and learned that in using containers, the loading and discharge time onto the ship was significantly reduced. Decided to put trucks on the ship and get around laborers. His first containership (and the first ever) was the IDEAL X (a converted tanker) and McLean created Sea-Land Service (no longer in existence because Asia disregarded U.S. patent law and stole McLeans idea; Maersk took over Sea-Land), which was a containerization service. Containers are in 20 and 40 TEUs because McLean decided for them to be. 1956. Multimodal transportation maximizes efficiency and profit. It facilitates stuffing, stripping, handling, stowage, discharge, and changing from one form of transportation to another because of its standardized containers. It minimizes pilferage, damage to the cargo, handling, time spent loading onto ship and discharging from ship and exposure to the elements. Hard for stevedores to steal cargo (old system, pallets shrink-wrapped in plastic and could be ripped open; standard loss for cargo was 10% VIG in U.S.). Standardization, commonality between different modes of transportation. One container fits on truck, train, ship, etc. A Through Bill of Lading covers the entire transportation of goods, from the manufacturers warehouse to the consignees doorstep. Whereas an old bill of lading only covered the ocean voyage tackle-to-tackle, a Through B/L covers everything: stuffing boxes, loading onto ship, the ocean voyage, discharge, stripping boxes, and any inland transportation that is involved. An old B/L had to have a B/L issued for every carrier in the each leg of the voyage. A Through B/L allows one B/L to cover the entire transportation. A Through B/L generally has a Clause Paramount (incorporating C/P), a very broadly written Himalaya Clause (to cover all parties handling the cargo), and an On-Deck Liberties Clause (allowing carrier to stow cargo with his discretion). COGSA has to be extended to Through B/L contractually. The ship ratification doctrine states that when a vessel sails with cargo on board, it is deemed to have ratified the B/L, even if that B/L was improperly issued, so ship liable herself in rem but S/O not liable in personam. Backdoor way to get to S/O. Want to get Letter of Undertaking, LOU. This is a method in the U.S. for cargo to get recovery when it cant pursue the shipowner directly, to sue the vessel in rem and thus, sue the shipowner. The seminal case involving the ship ratification doctrine is Cactus Pipe. Under American Argosy, it isnt always effective in the NVOCC situation. In that case, the court held that ratification is only applicable in the C/P situation because shipowners have no control over what NVOCCs do because there may be thousands of NVOCCs and they can just take a burner phone for all of their transactions and if they get in trouble, throw it in the river and never think about it again. What a cargo lawyer should do is look through all documents and see if the S/O knew about the NVOCCs B/L and what kind of control she had over the NVOCC. If she had control, then it is possible that it could be found to have been ratified. To make it that it does apply, show S/O knew what NVOCC was doing, but not going to apply automatically. A Himalaya clause extends the protections of COGSA to non-carrier third-party handlers of goods in a cargo situation. Under Canon, to be effective in all circuits of the U.S., the Himalaya Clause should show a clear intent to extend all of the COGSA protections to a readily identifiable group, it must be specific and particularly define the parties. To extend maximum protection over the most entities and to be effective in all circuits, the basic terms of a B/L Himalaya Clause should read: All rights, defenses, and limitations available under COGSA shall be extended to all servants, agents, and independent contractors of the carrier, including but not limited to stevedores, ocean transportation intermediaries, inland carriers, etc. For more information on the extent of COGSA protections, please contact X. To make sure C/P terms are incorporated into the B/L, look to Son Shipping. The B/L should mention the C/P expressly by: (1) name and date of the C/P, when it was signed, (2) the parties involved in the C/P, and (3) the place where the C/P was signed. It is also helpful to provide a website where the entire C/P can be found. Abalone held that reference in the B/L to C/P date alone can be sufficient to bind the innocent holder of the B/L, especially with significant parties since they are on notice to know C/P is incorporated by date alone. In Himalaya Clause, whether Slot Charter Scheme or NVOCC, want it to include all people touching your cargo and if possible, name them. Extends protection to every handler of COGSA protections in B/L, specifically $500 per package or per CFU limitation. Protections of COGSA $500 extend to all of the carriers, contractors, subcontractors, inland carriers, whether rail or road, including but not limited to X Company, Y Company, Z Company, Warehouse M, Warehouse N, all warehousemen, Transit Shed A, Transit Shed B, etc. Go to this link to learn more and see complete terms of B/L and FAQ or call 222-222-2222 for more information. Include hyperlink to B/L. Want to make sure that all your inland carriers are protected. When you are the S/O and trying to craft document, want to make sure railway carriers and trucking carriers, stevedoring company, warehouses that you use, transit sheds that you use, everything is protected under Himalaya Clause so your limitation is $500 and their limitation is only $500. MSDS is a Material Safety Data Sheet, which is issued by a shipper to a carrier when the shipper wants to transport hazardous materials. The MSDS sets out the dangers of the cargo and how it is to be properly handled, stowed and cared for throughout the voyage. The cargo shipper should provide one to the vessels officers because if it does not, its a real jack*** (with no regard to the well-being of the crew, normally Philipinos) and will be (under 49 CFR if in the U.S.), held liable for any damage to other cargo, the ship, and the crew as a result of those hazardous materials. As in Hooker Chemical, could be liable criminally for misrepresenting the cargo. EIR is an abbreviation for Equipment Interchange Receipt. It is used in multimodal/container transportation and is issued at every point where cargo switches hands from one carrier to another carrier, land and sea. The EIR states that condition of the cargo and container. This helps lawyers determine where damage occurred during the voyage. One Fair Opportunity case is SAVA. Under COGSA, a shipper must have the fair opportunity to declare a higher value of the cargo or the shipowner cant use the COGSA $500 package limitation. To determine if the doctrine has been violated, one should look for a space on the face of the B/L for the shipper to declare a higher value and should also look for a clause that says if the shipper does not choose to declare a higher value, then COGSA $500 package limitation will apply. A blank square on the face of the B/L is sufficient, as is a recitation of the terms of COGSA. Tariff provisions incorporated in B/L may be sufficient notice. A deviation is a voluntary and unreasonable departure from the customary route for profit which results in loss or damage to cargo. Its significance is that it causes the one who deviates to lose all of the COGSA protections. However, if the deviation occurs to save life or property, it is typically considered reasonable. Cases involving deviation include ROMERAL and American Starch. The principle differences between the Rotterdam Rules and COGSA/Hague-Visby are that the Rotterdam Rules has less defenses, a longer statute of limitations, a higher limitation amount, and it treats unseaworthiness as immaterial. Rotterdam Rules probably will never be adopted. Loading/stowing instructions given for hazardous cargo: tell vessels officers to ship pursuant to the regulations, ensuring that the cargo is stored above deck to account for any possible release of vapors. Whenever there are two conflicting hazardous goods shipping standards, always go with the more stringent standard so you dont get in trouble. Especially if shipping to or from the U.S., need to use the CFR rather than IMDG Code because the Coast Guard will not accept compliance with the IMDG Code unless there is also compliance with the CFR. ICA is an abbreviation for Inter-Club Agreement. Its purpose is to eliminate lawyers and provides that either the shipowner or charterer must properly adjust and pay damages depending upon when the damage to the cargo occurred, it is a predetermination of liability. These agreements are typically between large international P&I Clubs, such as Skuld, Gard, American, UK, etc. Rather than pay a whole bunch of lawyers, scheme for automatic payment. If cause of damage is seawater wetting, presumed to be S/Os fault, Owners Club will pay for the seawater claim and charterers and sub-charterers wont pay. If cause of damage something charterer is responsible for, e.g. hiring stevedores, ICA says charterers P&I will pay because theyre the ones in control of the loss. Automatically no lawyers. Most cargo claims are handled and adjusted just between the Clubs and the P&I Clubs claims people. A placard is for hazardous cargo. It is a sign that states what kind of cargo is inside of a container. Because containers are closed/locked, the stevedores must rely on the placards to know how to handle and stow the cargo. Hazardous cargo must be placarded to ensure proper stowage, compliance with the IMDG Code and the CFR, and safety of the crew, other cargo, and the ship. Isnt words, is picture. Cargo plaintiff must establish good order/bad order, GOBO, then vessel interest defendants must establish due diligence to make vessel seaworthy or that damage resulted from a 1302(2) excepted clause. Pomerene Act 80110: Multiple people with bills of lading asking for delivery of the cargo, under the Act, required to deliver cargo to the lawful holder of the B/L. Does the same thing as GML with competing claimants (GML, went to elders and elders said deposit cargo in warehouse and well sort it out here and dont delay ship). Common carrier brings civil action to interplead all known claimants to the goods or require those claimants to interplead as a defense in an action brought against the carrier for non-delivery. Deliver the goods to a warehouse and ask the court to bind the goods and hold them and let the parties sort it out in front of the judge but the ship should not be delayed while the claimants squabble and carrier should not have to put up security for non-delivery since she brought the goods to the warehouse. If its organic cargo that could go bad, ask just for permission to sell goods and deposit profits with court. 80116: Criminal penalties When B/L is issued, saying this cargo in this condition was put on the ship. Banks need a clean B/L. Act says if shipowner issues clean B/L when she knows the cargo is compromised, she gets jail time and/or hefty fines. Lawyer is also liable for criminal penalty (GML shipowner liable because shipowner always liable when somebody makes a mistake). P&I Clubs insure cargo against the cargo damage through cargo insurance, purchased by cargo shipper. P&I Clubs will not pay for fraudulently clean bills of lading. Tell client to call P&I Club and ask if it will insure the shipowner and the Club will say no. Harter Act applies before stuffing and after stripping. COGSA applies tackle-to-tackle, after stuffing and before stripping. Unless otherwise agreed to by the shipowner and cargo interest to extend COGSA. COGSA one-year statute of limitations. Shipowner must provide notice within 3 days, written record, after damaging event. Delivery is not defined by COGSA/Harter Act. Delivery is defined by agreement of the parties through B/L, Contract of Affreightment, C/P. Harter Act Actual delivery: transfer of full possession and control of the cargo to the consignee of his agent. Consignee has duty to accept cargo even if damaged, unless damage is so extensive as to render the cargo practically valueless. But then consignee has duty to notify carrier of damage and non-acceptance. Constructive delivery: (1) discharge (cargo unloaded/stripped), (2) to a fit and proper deck/wharf/terminal, (3) cargo segregated by B/L, marks so as to be readily accessible, (4) notice of arrival given by S/O to C/O, (5) reasonable time given to consignee to pick up the cargo after notice. A backdoor way in the U.S. to involve the shipowner is to sue vessel in rem because the vessel, by sailing, is deemed to have ratified B/L, SEA STAR. But AMERICAN ARGOSY, generally no in rem liability if NVOCC issues B/L. Never issue opinion letter until you have reviewed and understand all the charter parties and the B/L, the interrelationship of the C/P Cargo Damage, Clause Paramount, Excepted Perils/Owner Responsibility, Bill of Lading Authority, and Arbitration/Forum Selection/Choice of Law Clauses and B/L terms and whether B/L incorporates C/P or vice versa, FARLAND. Harter Act applies to damage that occurs while cargo is in shipowners custody or control. Statute of limitations is laches, reasonable amount of time, generally one year after discovery of damage. No limitation of liability, whatever damages cargo can prove. Exceptions, only if S/O exercised due diligence to make vessel seaworthy, then: error in navigation/management, sea perils, act of gods, enemies/pirates, inherent vice, insufficient packaging, seizure, loss due to cargo owner negligence, loss resulting from attempting to save life/property at sea. S/O loses exceptions if any failure to exercise due diligence to make vessel seaworthy, even if unseaworthiness not causally related to loss. Harter Act receipt to delivery applies if carrier or agent accepts custody of the goods before loading. COGSA receipt by carrier applies at actual loading aboard vessel may be extended by contract agreement between S/O and C/O. COGSA S/O responsibility ends at discharge (tackle-to-tackle) but COGSA incorporates Harter Act delivery term: triggers COGSA 3 day notice and one year claim limitation. COGSA applies to damage that occurs tackle-tackle, while aboard ship or on ships cargo gear, unless extended by contract. Does not apply to deck cargo or live animals. Statute of limitations is one year after delivery. Cargo must notify S/O in writing of damage within three days of delivery or loss GO/Bo prima facie evidence presumption. Limitation of liability, provable damages up to $500 per package or Customary Freight unit. Exceptions, regardless whether S/O exercised due diligence to make vessel seaworthy: error in navigation/management, sea perils, acts of god, enemies/pirates, inherent vice, insufficient packaging, arrest/restrain of princes, strike, quarantine, act of omission of shipper of owner of goods, inadequacy of marks, latent defects in ship not discoverable by due diligence, loss due to cargo owner negligence, loss resulting from attempting to save life/property at sea, fire (unless caused by actual fault of owner), and Q Clause. If no exception, S/O can still win if S/O exercised due diligence and was not otherwise negligent. Alleged unseaworthiness must be causally related to loss. COGSA applies to Bs/L if COGSA is incorporated by reference, regardless of where voyage takes place. Applies to C/Ps if Clause Paramount. COGSA requires common carrier to issue B/L for goods. B/L is receipt for goods, contract of carriage, evidence of condition of goods at delivery to carrier, and may be a document of title. Common carrier has non-delegable duties and obligations to cargo to exercise due diligence to make ship seaworthy, properly man and equip the vessel, make all parts of vessel fit and safe for preservation and carriage of cargo, and load, stow, and discharge the cargo in the same order and condition as when received, Orient Trader. Carrier has duty to properly load, stow, carry, keep, care for and discharge goods carried. Carrier is excepted from liability if any exceptions apply or exercised due diligence to make ship seaworthy. If the vessel departs from the contracted voyage it will lose, except in certain emergency situations (reasonable deviation, to save life/property at sea), all of the exceptions. Once the shipper/receiver shows good order on delivery to the carrier (via a clean B/L) and bad order upon delivery, GO/BO, the carrier must show it exercised due diligence to render vessel seaworthy and otherwise was not at fault, or that the cause of damage was a direct result of one of the listed exceptions, in order to be exonerated from the loss. JALAVIHAR: error in navigation exception unconditional as to due diligence to make vessel seaworthy or as to point in time, before or after voyage commencement. Who can be sued for cargo damage? Entity that issued B/L (party in actual privity of contract with C/O) and S/O where master has signed B/L and Vessel in rem (vessel considered juridical person and can have liability even if S/O does not; once vessel sails with cargo aboard, vessel deemed to have ratified B/L and considered carrier) and Stevedores, carrier, or other entities that may have caused the damage (Himalaya Clause in B/L or C/P may extend COGSA defenses and $500 package limitation to those entities). First thing as an attorney to determine is whether the case is worth it to take. The most cargo lawyer is going to make for cargo damage is 20% of the value of the cargo. P&I defense lawyers are going to get 10%. The most important thing in a cargo case is how much is the cargo worth and whats the size of the claim? Want about $1 million case to take to trial. Arbitration can be just as expensive as trial. Want to settle the case. Quick and dirty settlement, better to settle 50/50 in almost every single case. However, shipowners and insurers arent reasonable and want to teach lessons and not settle. Error in navigation is when a deck officer makes a mistake. An error in management is when an engineer makes a mistake. Courts much stricter against S/O for error in management, very hard to win error in management defense case if S/O, court inclined to say lack of due diligence to make vessel seaworthy at or prior to the commencement of the voyage. Client must keep client informed to avoid malpractice and must send client updated letters throughout case. Go from general to specific. Put the client in the picture. Set out the facts and then give a straightforward opinion. To win the case: Number 1 thing you want is independent witnesses (not on crew, not someone who helped put fire out, not someone on ship, etc., somebody who doesnt care about cargo or ship). Number 2, ships witnesses (including ships log books, biased). Number 3, expert witnesses (prostitutes because if paid enough, will say just about anything). Number 4, burden of proof (least important). GML bailment Quaker Oats. Ordinary negligence standard. Bailee if in effective custody and control of the cargo. Prima facie case: C/O demonstrates it gave cargo to vessel interests, cargo not loaded or returned. Vessel interests then must show: cause, how loss/damage occurred and vessel interests not negligent. Shipper delivers goods to carriers wharf weeks before shipment, arguably bailment. Under GML, bailment is the delivery of goods or personal property to the bailee in trust, under an express or implied contract, which requires the bailee to perform the trust and either to redeliver the goods or otherwise dispose of the goods in conformity with the purpose of the trust.Bailment does not arise unless delivery to the bailee is complete and he has exclusive possession of the bailed property, even as against the property owner. Most commonly used in warehousing. When cargo comes to rest, when cargo is in warehouse or container yard, possible GML bailment situation. Cargo wants GML bailment because get all damages it can prove, no COGSA $500 package limitation. Want to look at Bs/L and all contracts and if theres a gap, GML bailment may apply. The JALAVIHAR General average, due diligence, error in navigation, error in management Coal. Mississippi River. JALAVIHAR was loading coal at an electrical facility, going to shift anchorage and go to another port call. Going to top around to go down river but tugs were improperly positioned and the vessel smashed into barge fleet on the opposite side of the river. Foggy weather and getting worse; should have stayed at the terminal or gone upriver to the anchorage once they knew they couldnt make the turn, shouldnt have continued turning, they just wanted to go home. As a result of this case, USCG will tell vessels must stay at dock if the weather is worsening. The error in navigation/management defense applies both before and after the voyage has commenced. If the S/O successfully uses this COGSA exception and is thus not liable under COGSA, the C/O must contribute to general average for any repairs needed on the vessel. S/O at fault is not able to collect general contribution from C/O. Once carrier has shown accident caused by error in navigation/management, it is entitled to general average from C/O unless C/O shows that vessel was unseaworthy and that unseaworthy condition was concurrent cause of accident. Esteemed Hugh Straub and Professor Butterworth argued this case for vessel. Taisho Marine Sea peril Look to physical force of the wind and sea, the geographical location, the time of the year, the foreseeability of the weather, whether other ships in the same area suffered damage, the nature and duration of the storm, and whether the storm could have been avoided. Stereo equipment in container on container ship. Ship flooded with seawater due to strong weather conditions. Looked to Sabine Howaldt factors: extent of structural damage to vessel, extent of any speed reduction, extent of any cross-seas, how far the vessel was blown off course, and to what extent other vessels in the same storm experienced cargo-related damage. Need extreme sea conditions and need damage to cargo and damage to ship. Need Beaufort Force 10 or above. Must show properly maintained equipment. Need speed reduction. Best case for S/O asserting sea peril defense. S/O has to show freedom from negligence (improper lashings, equipment rusted). S/O must show freedom from negligence. Tecomar Sea peril, burden of proof Germany to Mexico. Vessel mysteriously disappeared along with cargo. Dead men tell no tales. Cargo can show GOBO, burden shifts to S/O. S/O claims loss was caused by peril of sea and alternatively, they exercised due diligence in making the ship seaworthy at the commencement of the voyage using survey, classification reports, etc. Burden shifts to C/O to prove ship unseaworthy. Difficult to prove if ship is at the bottom of the sea. S/O does not have to show freedom from negligence, just sea peril. Act of God: any sudden overwhelming unexpected force that overcomes careful precautions of good seamen and seaworthy vessel. Force majeure. Yawata Sea peril Scrap metal. Going to Japan. Not Beaufort Force 10 or above. Ship sank but survivors. Testified storm wasnt so bad. Captain turned and went into storm and could have went stern to the seas until storm passed but turned back into seas, presumably after calling head officers who dont care about the crew just want cargo to get to the port as fast as possible. Not error in navigation, unseaworthy condition because office got involved and made decision. Discovery in cargo case, want e-mails and phone logs back and forth between ship and port call captain. Terman Foods Good order/bad order, GOBO A cargo claimant establishes a prima facie case of liability upon proving that the cargo was received by the carrier in good condition and delivered out in bad condition. A clean B/L issued by the carrier is prima facie evidence the goods were received as described and creates a rebuttable presumption that the goods were received in good condition. Once the claimant establishes a prima facie case of liability, the burden shifts to the carrier to prove that it exercised due diligence to make the vessel seaworthy or that the damage resulted from an excepted cause in COGSA. If the carrier is unable to rebut claimants prima facie case, the carrier is liable for all damages. If the carrier is able to rebut claimants prima facie case of liability, the burden shifts back to the claimant to prove the carrier was negligent and that the carriers negligence was at least a concurrent cause of the damage. If the claimant is able to prove at least concurrent negligence, the burden shifts back to the carrier to prove that portion of damages caused by an exception as against caused by negligence. The carriers failure to differentiate causes of damage renders the carrier liable for the entire damages, The Vallescura. Frozen chicken, went bad because it defrosted because refrigerator compressor busted and couldnt keep the chicken cold enough. Not enough that the S/O said classification society said ship was good and got the necessary repairs so satisfied due diligence. Court is strict if any cargo handling equipment is broken, going to find carrier liable and cargo owners going to be able to successfully make a recovery. S/O didnt get ship repaired because of money. Court wants to give as much money as possible to the C/O. Damages issue: value of the cargo in the port of destination or port of loading if damaged there and deduct salvage value. As carrier, want good surveyor to get best possible salvage value for cargo. Responsibility of carrier. Cargo doesnt care about surveyors because if the cargo is valued at $0, then they get $1 million, if thats how much the cargo is worth on the market. If valued at $100k after damage, get $900k. Fire and Other COGSA Defenses Under the Fire Statute, the carrier is exonerated unless the fire is caused by the design or neglect of the owner. Design or neglect means the same as actual fault or privity under COGSA. Number 1 priority: Safety of life and limb. Number 2: Saving the ship. Number 3: Saving the cargo. Number 4: Saving the environment. Fire Statute is strongest defense for S/O, hardest burden of proof for C/O to overcome. C/O must prove the cause of the fire, that S/O had privity and knowledge of the cause (difficult because C/O doesnt have man on ship like in old days). If C/O can prove S/O didnt properly train crew how to fight fire, maybe can win. GOBO proven by C/O, S/O claims fire, back to C/O to prove that the fire started as a result of personal design or neglect of the S/O or that S/O made mistakes in some aspect of the fire fighting which caused the damage to be greater (efforts, equipment, proper training, etc.). Nissan Fire Fire burden of proof 9th Circuit Refrigerated ship. Fuel fitting was improperly connected even though no outward indicia that pipe was not connected properly, no way for anybody to know that it wasnt even though inspected by various people. Came loose and engine room fire resulted, ship lost power, all refrigeration was gone and damage to refrigerated cargo. Cargo says GOBO (spoiled cargo), S/O says fire and court had S/O prove personal due diligence, no personal owner fault in whatever it was that caused the fire, some personal failure that caused the improper fitting. Extra step. LESLIE LYKES Fire burden of proof 5th Circuit (majority with 2nd Circuit; C/O shows GOBO, S/O says fire, C/O shows some personal owner design or neglect which either caused the fire or kept it from being extinguished, no duty of S/O to prove seaworthiness). The burden is on the cargo claimant to prove the cause of the fire and actual fault and privity of the carrier (as opposed to other carrier defenses, in which the burden is on the carrier). Tata Latent defect A latent defect applies to the ship, not cargo, a flaw that could not be discovered by due diligence. Rudder falls off in middle of ocean. Salvage law old vestige of GML, if you salved persons ship and cargo, entitled to claim up to 50% of it. In salvage case, whether cargo has to contribute to salvage award depends on COGSA. If there is a New Jason Clause and B/L and C/P invoke COGSA/Hague-Visby, cargo doesnt have to contribute. S/O has to come up with some defense or else she will pay the full award. S/O has to pay some of the salvage and the C/O has to pay some of the salvage award, unless the C/O can prove that if there has been cargo damage, S/O would be liable under COGSA or Hague Visby (lack of due diligence). Lack of due diligence or latent defect. Risky to argue as S/O latent defect because admitting ship is unseaworthy, unseaworthy because of latent defect. C/O has to rebut unseaworthiness and argue lack of due diligence. Holy Trinity of cases about latent defect. IF C/O, argue JALAVIHAR (failure to detect a latent defect before voyage commencement is best characterized as lack of due diligence) and Louis Dreyfus. If S/O, argue Tata. American Tobacco Inherent vice Any existing defects, disease, decay or the inherent nature of the commodity which will cause it to deteriorate with a lapse of time. Turkish and Greek tobacco. Planned voyage was in cool weather, no need for ventilation because five week voyage. WWII so ship couldnt leave because Germans would attack so ship requisitioned by government. Spontaneous combustion of the tobacco, hot and humid condition with organic cargo so it catches fire. Inherent vice good defense for S/O (in addition to fire). The Niel Maersk also inherent vice case to rely on as S/O. C/O GOBO, S/O says inherent vice. C/O must show failure to properly care for the cargo. Properly stowage for the planned voyage. But for actual voyage, improper stowage, must have refrigeration and better ventilation. But when cargo was loaded, S/O didnt know war was going to break out and ship requisitioned. Bache Insufficient packaging Look to custom and practice of packing and stowing. Balancing act required under the facts and circumstances of each case. If goods are packed in the customary manner, will be presumed that the carrier was responsible for the damage. But if the carrier can prove that the packing was insufficient, it will be exonerated. Carrier cannot rely on custom if the custom is shown to be improper. Rubber. From Thailand and Malaysia and Brazil to Russia. Cargo rejected because it was crushed and twisted from not shipping it in strong wooden boxes (shipped in bales and bottom bales crushed). Failure to properly stow by S/O or insufficient packaging by C/O. Court looked to industry standard, industry for shipping rubber. If standard is to ship it in boxes, then ship it in boxes and S/O not liable. If standard to put it in bales and use rattan, then do that and C/O not liable. Insufficient packaging by C/O. Lykes Strike The carrier must have clean hands to avail itself of this defense. It must avoid a strike bound port if possible and must take all reasonable steps to care for the cargo even if strike bound. Whole wheat flour. Texas to Poland. Weevils in cargo. Fumigated, S/O gave clean B/L but vessel couldnt continue voyage on railcars because of strike of the marine engineers for two months. Regular voyage from Texas to Poland four weeks, cargo good for that trip but fumigation wore off because of strike and weevils and rats re-infested wheat. S/Os duty to care for cargo exists even when there is a strike, must still regularly monitor the cargo and call C/O about what to do with cargo (unload it, sell it, re-fumigate, etc.). S/O lawyer should call C/O lawyer and split the cost 50/50 to save $20 million cargo. If C/O doesnt want to negotiate, go to court to get cargo sold and pay for fumigation. Lekas Restraint of princes Must be unforeseeable and the carrier must properly care for the cargo to the extent possible. Cheese and oil. Restraint of princes rarely comes up. Cargo suffers because restraint of princes. C/O argues S/O should have discharged cargo in Aden and sold it. S/O says didnt know going to be delayed and supposed to be in convoy and couldnt leave convoy to sell cargo. Quaker Oats v. TORVANGER Q clause Q Clause establishes a demanding burden on the carrier to prove it was free from contributing fault. Catch-all defense for the carrier. Tetrahydrofuran, bleaching chemical. From Japan. Damaged because too much peroxide content. Uses Q Clause, none of the other exceptions apply but S/O says did nothing wrong. Could have argued inherent vice. Any time S/O argues Q Clause, C/O should be very happy because its hard exception to prove and unlikely to win. S/Os duty to properly load, stow, and carry. Should not have put the cargo in half-full tank because it will slosh. Receipt and Delivery (by Carrier/Vessel Owner) Mackey Receipt in lighterage situation Lighter operation offshore, not tied to dock. Coffee. Mississippi River. Cargo got wet from storm while cargo was being loaded onto vessel, one lighter capsized. Carrier is the one who decided where to position the lighters and how the cargo was going to be handled. C/O argues cargo in custody and control of the carrier. Cargo arranged for lightering, its their cargo and lighters were insufficient, all cargos stuff and control. But in terms of where and when lightering operation occurred, speed of operation, etc. under control of carrier. Even though COGSA is tackle-to-tackle, when we talk about concept of receipt of cargo by S/O and delivery by S/O to cargo receiver, point of view is of carrier. What courts look at is did the S/O have custody and control of the cargo? Look at contracts, interview everyone about who was doing what, who directs where lighters and barges going to be tied up, etc., look at whole operation. When is receipt and when is delivery? When did the cargo damage occur? How was the cargo damaged and when? If its found wet inside the ship hold, more than likely its carriers fault, S/Os fault. If its damaged in the lighter hold, likely C/Os fault, presumed didnt provide adequate lighter barges. United Fruit Receipt, bailment situation Rolled oats. Illinois to NOLA wharf to Guatemala. Strike delayed shipment. Humid and warm in warehouse. C/O trying to save money with shipment by not putting it in proper warehouse (temperature controlled) but C/O doesnt tell carrier to move cargo to temperature-controlled warehouse. Became mildew-infested. Should have sold it. Could have argued inherent vice, strike clause, Q Clause, insufficient packaging. Had they packaged oats in plastic, would have been unaffected. Carrier signed delivery receipt, then put in carriers warehouse. Contract applied, which said receipt occurs unless there is a labor strike. Not necessarily direct custody and control, not necessarily tackle-to-tackle, have to look at all circumstances and determine whether it is reasonable to hold carrier liable. Carrier could argue bailee under GML but dangerous because lose COGSA exceptions and $500 limitation. Argue that package is pallet of oats and pallet worth more than $500. Have to know youre going to win before making GML argument because C/O can recover anything that it can prove in damages. Lykes Whole wheat flour. Carrier likely liable regardless of strike because didnt uphold duty to properly, load, stow, carry, and discharge cargo. Cargo was on vessel already in process of being shipped, as opposed to being in warehouse. S/O waited to give a report to C/O, inspecting cargo, noticing problems, but no effort to inform C/O. S/O always going to argue United Fruit, C/O always going to argue Lykes. METTE SKOU Cargo damage before and after receipt In the cargo of packaged goods, including containers, a clean B/L signifies only apparent good condition of the cargo based on an external inspection. If the perishable or intrinsic nature of the cargo is unrevealed to the carrier in a sealed package or container then the claimant has the burden of proving actual good condition of the cargo upon delivery to the carrier, Mondial, can be proved through circumstantial evidence, Fuente Cigar. Case of the yams. NY to Venezuela. Stowage plan to store 13 tiers high. Should be in special ventilating cardboard boxes with holes, but wrapped yams in paper and put them in sealed cardboard boxes. Done by S/O and put them in engine room, hot place. Not properly discharged by stevedores. Cooked yams and mashed them up, put them in frozen warehouse, big mess. S/O defenses inherent vice, insufficient packaging, negligence of shipper. C/O argues failure to properly load, stow, handle. Carriers burden to show how many cases were damaged due to shippers fault, due to stevedores fault, due to carriers fault, and if he cant do that, then carrier responsible for all damages. Caemint Receipt, packaged canned goods situation If the damage could have resulted from a hidden defect at the time of shipment then plaintiff must prove that the cargo was in good condition upon delivery to the carrier. Canned corned beef. Brazil to L.A. Labeling on cans damaged by mildew. Some mildew occurred in inland transit sheds owned by C/O. C/O did not establish GO because preexisting mildew on some cans. Cite if S/O. A clean B/L is not dispositive and can be rebutted by evidence and carrier showed mildew before it was delivered. Even though S/O issues clean B/L, S/O not necessarily going to lose, not dispositive. Can be rebutted if S/O can prove packaged goods inside where they couldnt see there was preexisting damage. The proposition is that under the good order/bad order burden of proof, the goods are only considered in apparent good order, and the burden still lies with the shipper to prove through real or circumstantial evidence that the goods were is actual good order when received by the carrier. Caemint. GOBO, carrier not responsible for interior. Canned beef. LA/LB and San Francisco, load Brazil. Raining. C/O cite Mette Skou and S/O cite Caemint. Clean B/L only means that the outside package is good, C/O shouldnt necessarily rely on GOBO. S/O not liable for things it cant see. C/O should do a salvage sale to mitigate the damage. Could also do recoupering, run cans through a hot bath, strip the labels off and re-label them. Surveyor will determine best economical options. Bally Receipt/delivery, containerized cargo Shoes and leather goods. Italy to NY. Court said S/O not liable for loss since C/O didnt give notice within three days of loss. Even though cargo was in container and contract was manufacturers shed to delivery on truck, that was all S/O had to do and after that, C/Os problem. C/O can come forward with evidence that it was a loss in carriers possession even if they didnt give notice timely but here, C/O suffered loss. Simple way to tell when the loss occurred: weigh the box. Weigh it at manufacture facility, weigh it as load port, weigh it the moment it comes off the ship, weigh it when it leaves the carriers facility and goes to trucker shed, consignees warehouse. Going to get paid by the S/O at the top of the shipping cycle. If its at the bottom of the shipping cycle, not going to get paid. Must know where your client is on the shipping cycle and where the opponent is on the shipping cycle. Trough: excess in capacity, freight costs fall to the equivalent of vessel operating costs, negative cash flow and selling inefficient fleet, selling prices for ships lower. Recovery: supply and demand move toward equality, freight charges increase, surpass operating costs, cash flow improves steadily. Peak: shipping freight rates become high, double/triple amount of operating costs, supply and demand almost completely equal, most shipping fleet in operation, cash flow quite high. Collapse: supply levels begin to exceed demand, freight rates decline, ships slow down their operations. Socony Delivery liquid cargo, oil Oil. Venezuela to NYC to England to France to Germany. Water contamination. Must check shore tanks, top, middle and bottom samples to make sure no extra water. Carriers duty to theethe it every day to fulfill duty to load, stow, carry, and discharge cargo. Lack of three-day notice is not dispositive when cargo establishes GOBO. Burden shifts to S/O who cannot demonstrate unseaworthiness or exception. But C/O should still earn prejudgment interest, almost always granted in maritime cargo cases. Want to cite when suing carriers as C/O for prejudgment interest. Sample, sample, sample, analyze, analyze, analyze. Harbert Counterpoint to Socony. Delivery, steel pipe cargo, lack of notice Carrier cannot depend on C/O three-day notice period to win a trial. Steel water pipes with concrete cladding. Going to Abu Dhabi. Damage from snaking pipes out of ships hold and banging and landing on trucks and taking them out to job site, lot of bending and ends of pipes damaged due to physical handling. Notice is rebuttable presumption and if cargo damaged when delivered by carrier, in bad order when delivered, can still win even if late with notice if C/O can affirmatively prove that. Cite this as C/O suing carrier. Could have argued insufficient packaging. Farrell Lines Proper delivery, custom of the port Even though port regulations said not proper delivery until inside warehouse, court said no, only when C/O has physical custody and control. HELLENIC DESTINY Proper delivery, custom of the port When is proper delivery in a third-world country with a lot of theft? Look to physical custody and control. S/O makes proper delivery of cargo when she delivers it to a fit and proper wharf, properly segregated, labeled, and ready for pickup by the cargo consignee and she gives them reasonable time to pick up the cargo and if they dont pick up the cargo, after constructive delivery, for the cargo interest to deal. Charter Party/Bill of Lading Relationship Dont want to be a carrier because will be liable. Dont want to be cargo owner because duty to properly package cargo and if not, can damage ship and cargo and liable for additional damage. Use agents to disguise their relationships. Every time you have problem: (1) Whos the S/O? (2) The vessel? (3) Head charterer? (4) Sub-charterer? (5) Time charterparty. (6) Voyage charterparty. B/L names shipper and receiver or receivers agent. Each contract, B/L, C/P may call for a different arbitration and forum selection/choice of law clause. Sue everyone. Identity of carrier is crucially important. As C/O best place to litigate is America or London, recently Singapore because adopting English law and efficient. S/O, want to go to Greece or China. GLORIA COGSA carrier, vessel owner or charterer Is the C/P incorporated into the B/L? Soybean cargo. NOLA to Costa Rica. Wet, short, slack cargo. To protect the count, count bags as they are loaded. Wet bags at warehouse and on ship. Bad hatch covers vs. rain? Test for saltwater. C/O establish GOBO. S/O could argue improperly packaged, better to use rip-stop bags, but used hooks. Sue everyone. S/Os arent always carriers. Must look at contracts. 5th Circuit for the first time said that in COGSA, carrier can be S/O or charterers and can be a number of owner entities or charterer entities. Language in COGSA is inclusive, owners and charterers can be carriers. If time charterer and want to escape liability, have to put in C/P that expressly says you will not accept liability and if the carrier does not police the B/L and C/P then carrier will indemnify S/O, need indemnity clause that makes carrier liable for everything that occurs while vessel is in carriers care. If S/O, want to have ship captain sign B/L saying not binding S/O but acting solely as agent and representative of charterer. Magic language in indemnity clause and S/O wont be liable. When the charterer signs for the master and indeed has authority to do so, S/O is COGSA carrier. The proposition is that the charterer must have actual or apparent authority from the S/O to sign a B/L for the master, which binds the S/O to the B/L. GLORIA. Soybeans going to Costa Rica. Load port, NOLA, discharge port Costa Rica. Rainwater wetting. Apparent and actual authority, who was the agent acting for? Can be multiple carriers for the ship in America, not like China. So sue everyone and make sure you have all C/Ps. Son Shipping Incorporation of charter party into B/L Short delivery of fuel. Because B/L had name of party, place of C/P, etc. put them on notice that there was a C/P out there, even though back of B/L says Hague Visby and COGSA, and front says B/L carried pursuant to C/P terms, that puts carrier on notice of C/P so one year limitation is not controlling. Between sophisticated parties, especially when talking back and forth, time bar is a reasonable time. B/L says Hague Visby/COGSA applies. C/P incorporated into B/L because has the place, date, and the parties and that is sufficient to put the cargo consignee on notice that there is a C/P and rights may not solely be in COGSA but may also be subject to the C/P contract. Back of B/L has Clause Paramount mentioning COGSA/Hague-Visby. In B/L, COGSA $500 package. C/O doesnt want COGSA $500. In C/P get actual damages whatever cargo can prove. Dont want to limit damages, want to go to London Arbitration and get paid whatever damages are. C/O lawyer, and B/L seems like COGSA $500, look to see if theres an agreement that C/P terms control instead. If S/O, want COGSA $500 and dont want to get around all of that. The proposition is that to effectively incorporate a C/P into the B/L you usually must reference the date of the C/P, the place of the C/P, and the parties to the C/P. The cargo in the case was fuel oil and the issue in the case was whether the charter party was effectively incorporated into the B/L. Toro Shipping Incorporation wrinkle, notice to consignee Tropical hardwood logs. S/O said captain wont sign B/L unless C/O puts that it is subject to C/P, that S/O has lien on cargo and on freight for unpaid charter hire. Cargo receiver doesnt know anything about this dispute. Innocent cargo receiver, why should he pay for the charterer not paying the S/O the charter hire? Poor innocent cargo receiver not bound by the C/P. Similar to Son Shipping because C/P expressly mentioned, look at history of parties (whether previous Bs/L mentioned C/P, liens on cargo/freight for unpaid charter, etc.). If cargo receiver purchased cargo before the issue and had no notice and no way to know about the clause, unlike Son Shipping which said C/P in Purchase Agreement and cargo receiver knew when it purchased the cargo that it would be subject to C/P. Cargo receiver here didnt know of change before, bought cargo before the B/L was issued, so shouldnt be bound. First thing when you get a cargo case, put on an electronic hold so you get e-mail traffic between parties and if you can establish an ongoing course of dealing, that parties always know whats happening, that C/P is always incorporated, thats one situation. If parties never know whats happening, thats another situation. Toro modifies Son Shipping. When cargo consignee pays price full in advance in good faith and no knowledge and C/P incorporation done subsequently and no history of C/P incorporation, C/P will not be deemed part of the B/L and cargo will not be bound. S/O trying to protect herself from unpaying charterer by incorporating C/P into B/L. But to guarantee payment from the charterer, she also could have gone to the port of discharge but dont let ship discharge until charterer pays S/O. Cant do that in U.S. because law, illegally holding cargo. Go to middle of the sea with no jurisdiction and stay there until charterer pays, commercial solution. FARLAND C/P incorporated B/L with Clause Paramount Steel coils damaged. To Japan. Important to know who is the agent acting for when it issues B/L and orders stevedores to act. Carrier did not satisfy the duty to properly carry and stow cargo because instead of shackling the coils in, used hooks to tighten turnbuckle and loosened up and hooks came loose and no more lashing. Lykes, ongoing duty to care for cargo and mitigate damages. Real bad actors were charterers so charterers should indemnity S/O because S/O didnt do anything wrong. If not sure of differences between COGSA and GML, carriers responsibilities under GML would be violated here because of how badly treated the cargo was. No indication that charterers intended to have new contract and COGSA controls and new C/P not implicated. When time charterer, you have duty to stow and lash cargo and cant hide behind agent or subcontractor, have to pay C/O, and have to pay C/O first and if you have beef with subcontractor, do that in separate claim. Biggest issue in C/P cases: identity of the carrier. If you dont identify the carrier and sue the right person, a year and a day after the cargo claim should have been made, its proscribed. Under COGSA/Hague-Visby, if you dont sue the right carrier, its fine, you can sue everyone in an American court and make amendments later. Another issue in C/P cases: agency principles. Most tasks done in connection with the movement of goods internationally is done by subcontracts. Very rarely do you have an ocean shipper who controls every aspect of the shipping process. In almost all cases, have logistics chain and several different service providers, all kinds of subcontractors. Usually its an agent who issues the B/L, often agent signs contract, often agent responsible for bad act. Identify agent who screwed up and who that agent is working for. Agency himself rarely will be liable in the U.S. because an agent for a disclosed principle is not liable, the principle herself is liable. As quick as you can as a cargo plaintiff, need as much documentation as possible and make C/P tree: whos head time charterer, voyage charterer, and all of the subsequent sub-charterers, cargo owners, receivers, shipowners, etc. once you identify the person who most likely caused the damage, go back to the easy principles: GOBO, exceptions, due diligence to make vessel seaworthy, etc. P&I Clubs created the Inter-Club Agreement (ICA) to avoid carriers turning on each other and each getting lawyers. Lowest charterer in the chain usually the person with a direct connection with the shippers. Shipowners go to brokers, brokers identify time charterers, time charterers are in a region and know the market and have connections with cargo owners. Time charterer doesnt want to deal with crew hiring so going to look for a voyage charterer or a sub time charterer, with more connections with cargo actually in the port. Voyage charterer has close link with cargo shippers in the port but dont want to deal with sub company, so sub it out to sub voyage charterer, will sub it out to sub-sub voyage charterer, who actually is the company owner. Facilitating transportation and getting cargo as quickly as possible. Cargo shipper and cargo receiver wants to bring a claim. Expensive if every charterer gets a lawyer. Inter-Club Agreement makes it easy. Damage due to faulty ship? When there is seawater wetting, automatically 100% shipowner unless clear and convincing evidence charterers did something to contribute to that. Not going to lawyer up, just going to assess all seawater damage against P&I Club for shipowner. Who causes handling damage? Stevedores. When cargo turns up lost or damage, is the fault of the shipowner or subcharterer? Subcharterer. All P&I Club wants to know who had the contract with the stevedoring company. Cactus Pipe B/L issued in C/P context binds vessel Steel tubing. Damage in hold before unloading, portions of cargo undelivered. Cactus Pipe sailed from Greece to Texas. This case stands for the ship ratification doctrine. In this case, the charterer did not have actual or apparent authority to sign for the master. However, the court found that although the S/O was not liable in personam because the ship sailed with the goods, the ship ratified the B/L. Here, the S/O filed claim of ownership on a vessel that was arrested. If the S/O would not have done this, it may have been able to escape any liability. Cactus Pipe. Ratification of ship. Lawyer forgot to get LOU but S/O filed in rem claim of owner, C/O wouldnt have ever recovered anything. Never issue in rem claim of owner unless youve also issued LOU. JASMINE Intent to incorporate COGSA via B/L into C/P Language in voyage C/P that COGSA is to be incorporated in all Bs/L issued under voyage C/P does not incorporate COGSA into voyage C/P. Steel cargo in India loaded during monsoon season. Cargo stored outside. COGSA was not imported into the C/P. Just because B/L says cargo carried subject to COGSA does not change C/P terms between charterer and S/O. B/L issued only going to have effect to third-party consignee. But charterer and S/O made agreement pursuant to C/P, not pursuant to B/L. If innocent B/L holder not party to C/P can have a claim adjudged under COGSA. Under C/P carriage, when voyage charterer still holds the B/L, B/L has not been negotiated or sold to a third-party, parties bound by C/P not B/L, B/L just receipt. SKY REEFER B/L foreign arbitration terms upheld Citrus. Morocco to New England. B/L called for Tokyo arbitration. Overruled Indussa, shipper couldnt reduce liability especially by putting arbitration provision in B/L, such clauses were unenforceable and abhorrent to COGSA/Hague-Visby (still in English courts). Because Congress passed Federal Arbitration Act more recently than COGSA, court bound to give effect to that later passed Act and that Act says give effect to arbitration clauses. Changed the face of maritime law in America. Court now gives effect to arbitration clauses. GOLDEN CHARIOT B/L did not properly incorporate C/P Sugar cargo. Contaminated by glass. Ineffective incorporation of C/P into B/L. Even when parties are close and have prior relationship, incorporation must be express and unequivocal. Need date, parties, significant information to incorporate C/P into B/L. Follows Son Shipping. Strict standard. Whether proper party at interest has brought the suit depends on who has title to the goods at the time the accident/loss happens and what is the language of the cargo policy. Proper party who should have brought suit was person who had title to cargo at the time of the damage, proper party at interest. Also want look at the cargo insurance policy and its terms; if the cargo insurance policy is broad, broad language and incorporates claims brought by cargo shipper, cargo receiver, and any intermediaries of B/L, B/L is the same as a check. If policy more restrictive, outcome may be different. Abalone B/L did properly incorporate C/P Steel. Bulgaria to NOLA. Dont just look at C/P and B/L, have to look at original, underlying international purchase sales agreement to see what was shipped on the sales agreement. Broadens Golden Chariot, need date, parties, significant information to incorporate C/P into B/L. All they needed was the date to incorporate C/P into B/L. Date alone is sufficient when you have sophisticated entities constantly importing and exporting, date alone is sufficient to put the parties on notice. Where C/P has been incorporated into B/L, has broad language and says all disputes touching on this C/P, then everybody goes to arbitration. Third-party consignees can be bound by C/P language. If C/P language is very broad, even third parties must go to arbitration. When you have a case, look to see what benefits your client the most. If you have the date, place, time, everything, you should be happy and can use either Golden Chariot or Abalone. If you only have the date, or place, or parties, argue Abalone. Fit your case into the case that helps you the most. Salim Oleochemicals Doubts/ambiguity favor arbitration Non-signatories to C/P or B/L can be involved in arbitration. Where you have a case when cargo plaintiff is trying to name everyone under the sun to avoid arbitration, cite this case because non-signatories, even third parties, to C/P can be forced into C/P. Cargo Interests Obligations (Hazmats, Placarding, STC, Special Instructions) S/O is usually suing C/O in these cases, 95% of all cargo cases are C/O suing carrier but here, carrier suing C/O. alleging the cargo damaged the ship not the ship damaged the cargo. Hooker Chemical Sulfur dichloride. MSDS: Material Safety Data Sheet, how to handle cargo and put out fires, etc. Need proper dunnage between cargo drums. If you stuff the container, you eat the container, especially when its a hazardous good. If you stuff it, you eat it. Court didnt buy argument that carrier should inspect every container that goes on the ship. Would take too much time to inspect every container on the ship, defeat the entire purpose of multimodalism. Burden on shipper/manufacturer to properly latch cargo. Shipper responsible for notifying the carrier, not carrier responsible for inquiring to the shipper. Hooker Chemical. Sulfur dichloride. Hazardous cargo. S/O can sue C/O. Discharge port Rotterdam, chucked container into the sea off ship. Two types of hazardous cargo cases: (1) nobody knows about this chemical, no one knew it was bad, even guys in product development in the lab, no idea that when cargo was heated this type of temperature and exposed to this type of shaking that it would explode; carrier doesnt know, cargo manufacturer doesnt know, cargo shipper doesnt know, but people die. Generally, cargo shipper held liable. Policy reason for that is that the cargo shipper is in the best position to know the danger. The ocean carrier isnt in the business of developing chemical products, just moving product from point A to point B so U.S. courts will assign liability under COGSA to the manufacturer of the chemical. (2) People know its dangerous. E.g. magnesium, cause violent reaction when it mixes with water. Creates fire and can burn right through the bottom of the container and keep going and burn hole in bottom of ship. If shipping violently reacting metals, ocean carriers charge a lot of money because very dangerous. So cargo shipper develops trade names, dont ship it as magnesium, as direct reduced iron, you develop trade name, ship it as Evergreen No.1, SS95, on B/L it says SS95. U.S. Code, Title 49, and IMDG Code requires put common shipping name on B/L, fairly identify goods and hazards thereof. If cargo lawyer, two-prong test in U.S.: (1) what does the carrier know (is the carrier lifting a cargo that it has reason to know might be hazardous, is the carrier knowingly taking on this hazardous cargo); (2) if the shipper had provided a warning, would it have made any difference? As carrier lawyer, have to work with witnesses to be strong in their deposition, relied on B/L, shipping documents, all thats required by Title 49 and IMDG Code so no effective knowledge in operations department or on the ship that shipper was trying to ship hazardous cargo without letting us know; had we known, we may not have even taken it on our ship and even if we had taken it on, we would have put it on the very top, very front, to minimize heat and water ingress. NY Court held that if you can prove the company at any level had any notice whatsoever that the product might be hazardous, then the shipowner could no longer say Im carrying it without knowledge. Warning signs to let people know there are hazardous materials inside and what kind. Also to alert firefighters so they know how to fight it. Hazardous material placarding on outside. NICOLAOS Scope of duty to warn about hazardous materials. HTH. Georgia to Australia. Cargo interest 85% liable for failure to warn, stevedores 15% liable because only ones using organic material (cut up wood dunnage with chainsaws) and that possibly caused the fire. Cant just look to see what cargo interests knew and what warning they gave, but what did the carrier know and what warning did the carrier give? If stevedore lawyer, point finger at C/O for failure to warn and ships officers for failure to supervise and failure to warn. If listed material in IMDG Code and Title 49, carrier liable if hazardous, duty to supervise. C/O supposed to provide MSDS and warning. Carrier also supposed to look at MSDS and stevedores also supposed to look at MSDS. Court will look at who read the MSDS, who knew or should have known that what they were doing was wrong and thats where liability falls. If carrier cannot prove cause of loss and it had no liability, under COGSA cargo cases and Vallescura, even if evidence C/O did something wrong, S/O did something wrong, but if carrier cannot allocate liability, carrier eats all liability. In hazardous cargo cases, all three generally liable: carrier, cargo, stevedore. ASIAFREIGHTER Arsine gas. Didnt properly placard container, says miscellaneous cargo, should have been poisonous gas. Ship personnel took no special precautions. All parties liable, most liable company that stuffed container. Carrier cant say didnt know about it. Borgships SDIC. No one knew it would have a violent reaction, even though tested clean bill of health. U.S. to England. Nothing in MSDS to warn crew that if you expose SDIC to high heat like cutting torch heat, it will trigger reaction. When no one knows how dangerous this stuff is but it turns out to be dangerous, court looks to cargo shipper, because in the best position to know about the dangers and even though it did all the normal things it should do, still liable. Mere compliance with Title 49 or IMDG Code not enough. Virtually strict liability standard. TOKYO SENATOR Opposite as Borgships. TDO, nobody knew hazard was exothermic reaction. Cargo interests not liable because nobody knew that TDO could produce an exothermic reaction. General rule under COGSA is that a shipper shall not be responsible for loss or damage sustained by the carrier or the ship without the act, fault, or neglect of the shipper. But COGSA also provides that the shipper of goods of an inflammable, explosive, or dangerous nature shall be liable for all losses out of resulting from such shipment when the carrier has not consented with knowledge of their dangerous character. A shipper that knowingly ships hazardous cargo without disclosing the hazardous nature of the cargo to the carrier will be liable for damage that results regardless of whether it otherwise exercised due care. Does not, however, impose an absolute warranty on the part of the shipper as to the safe nature of its cargo. A shipper is chargeable only with that knowledge that is actually or constructively within its possession. S/O going to argue Borgships. C/O going to argue Tokyo Senator. Multimodalism (Statute Overlap, Himalaya Clause, Liberties Clause) Containerization immediately took out the Bs/L and other shipping documents. House-to-house or Through B/L instead of being tackle-to-tackle, it would be for the entire transportation, from manufacturer to store, encompasses land, sea, truck, rail, etc. Advantages of multimodalism: prevents theft, keeps cargo from getting damaged from elements, less time to stuff and strip boxes. Disadvantage of multimodalism: container ships move and stuff so fast, trouble getting documents to receiver in time to take possession of cargo and that slowed things down. So computers were used to issue shipping documents through e-mail. Problem is that many people dont trust electronic transfer of documents. Document key in containerization: EIR, Equipment Interchange Receipt. New type of carrier invented with multimodalism, NVOCCs. Old way, Freight Forwarders (cargo consolidator). Non Vessel Owning/Operating Common Carriers. Not brick and mortar companies that people have a lot of confidence in and can sue, indispensable to container industry. Loosely regulated in U.S. SEALAND EXPRESS If the B/L extends COGSA to post-discharge activity, courts will uphold it and carrier will generally benefit by the $500 package limitation. Varnishing machines. France to Houston to Mexico. Logistics route was taken off track because of highway construction, follows detour signs and has to go under bridge unplanned for, truck got scalped and cargo destroyed. Through bill of lading so this was maritime case even though it was in the middle of San Antonio. C/O wants to apply Texas state law, general common law so cant limit liability, get all damages. S/O wants to apply COGSA for $500 package limitation. Argument that if COGSA applies, this would be deviation and no $500 limitation. Court said not deviation because deviation only applies to vessels and this was error in navigation. This really wouldnt be deviation anyway because deviation is for profit and truck driver was doing what was reasonable because roads were closed. Also could get around $500 limitation by arguing this is not per package cargo, this is weight cargo and have to go by customary freight unit, how heavy is it. Court went with one package but C/O must argue not per package but by CFU because able to get more damages if COGSA applies. SEALAND EXPRESS. Varnishing machine from France to discharge port Houston to Mexico by rail so not stolen on quay. Bridge too low. Deviation, error in navigation defense. Through B/L. Canon Xerox machines, copiers. Container slid off chassis of train and damaged, levers unhooked. Through bill of lading so maritime case even though this was in the middle of Georgia. Himalaya clause at issue here. Himalaya clause, development of multimodal industry, extends protections of COGSA to all people involved in the chain, protects all transportation providers in logistics chain. Mannesman Oxygen compressor and instrument rack. Germany to Indiana. Because COGSA only applies from the time goods are loaded onto the ship until the time the cargo is released from the ships tackle at port, Harter Act applies to the period between the discharge of the cargo from the vessel and proper delivery (discharge of cargo upon a fit and customary wharf, segregate it by B/L and count, put in place accessible to consignee and give consignee reasonable opportunity to get it). Harter Act reaches to the point at which goods are loaded onto the vehicles of an inland trucker, whether hired by shipper or carrier. No $500 limitation under Harter Act. NVOCCs, Freight Forwarders, and Bills of Lading AMERICAN ARGOSY Tools. NY to Yemen. The in rem liability of a ship is a fiction; the reality is that the S/O, not the vessel, pays the judgment. S/O cannot be said to have ratified the B/L, one cannot ratify an unauthorized agreement of which one is wholly unaware. B/L issued by NVOCC so S/O not held to have ratified B/L. Expanding the doctrine of ratification to cover Bs/L issued by NVOCCs would undermine the policy that the carriers liability is limited to $00 per package unless the nature and value of such goods have been declared by the shipper before shipment and inserted into the B/L and that Bs/L constitute prima facie evidence of cargos value and preserves carriers ability to appraise its potential liability and to obtain appropriate insurance. A carrier insures itself against improvident B/L issued by time charterer, single entity, and it would be expensive (increase cost of shipping) and perhaps impossible to obtain such protection against the acts of each of the hundreds of shippers and middlemen who book freight on each voyage. The relationship of the NVOCC to the vessel is too insubstantial to permit adoption or application of the ratification doctrine based solely on the carriage of goods. NATHANEL Electric heaters. Germany to Israel. Containers damaged during storm, cargo found wet, rusted. NVOCC is a common carrier for the purpose of determining its liability under COGSA. Thus, NVOCC has the same liability to the consignee as a common carrier. If you just leave original B/L that says will be heard in U.S. or London arbitration because in America or London going to be fair and pay the cargo claimant something but in Korea or Greece, pay cargo claimant nothing. If you have two Korea forum selection clauses, bulletproof. But as S/O if not controlling what the NVOCC is doing, may be issuing American FSC and now theres problem. Cargo shipper sues NVOCC, can NVOCC be held liable to cargo interest? Javelin (Nathanel), yes. NVOCC has no money and cant be found easily, just smash the phone and never heard of again. CHO YANG Paper embosser. England to CA. Supports Sky Reefer, forum selection clause for Korea valid because NVOCC acting as agent for shipper and ratified the B/L. NVOCC has put in American FSC and disappeared. Is S/O exposed? Able to use FSC of Korea or exposed by NVOCCs mistake, is ship exposed to American standards? Cho Yang case, no, not going to do it. No evidence that the S/O knew what NVOCC was doing. Slot Charterers Claim Limitation, Interclub Agreement SAVA Steel coils. Rust damage. Spain to NOLA. Fair opportunity. S/O trying to limit to $500 but coils worth significantly more. Esteemed Mac Miller argued this case, poor cargo shipper never had fair opportunity to declare higher value. Cant take COGSA $500 limitation if you dont allow C/O opportunity to declare higher value, if he had the opportunity, would have declared $5,000 per package value but he wasnt given that opportunity. Requires that shipper be allowed to increase the cargos valuation above $500 per package because of Supreme Court precedent which held consistently that only when a common carrier grants its shippers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge can a carrier lawfully limit recovery to an amount less than the actual loss sustained. To benefit from the $500 per package limitation of COGSA, carrier must present prima facie evidence that it afforded shipper an opportunity to avoid the limitation by declaring a higher value, consisting of a provision in either the B/L or carriers tariff. Insurance companies are normally bringing these cases vs. the ship. No one really feels sorry for cargo underwriters. P&I Clubs and S/Os are great, must help S/Os. Have to have on B/L a special box to declare higher value, please see reverse terms about our Cargo Declaration Policy and on the reverse terms of the B/L need clause for fair opportunity. If you can show prior course of dealing and C/O knew about it, even though C/O didnt have a fair opportunity, COGSA should still apply. Advising carrier or NVOCC, what should you put in B/L? Fair Opportunity Clause. Front of B/L, says Excess Valuation Clause; back of B/L, says Fair Opportunity Clause, tracks language of court in this case. Royal Insurance Yacht. Dropped from vessel and destroyed. Terms of COGSA governed shipment by virtue of incorporation by the Clause Paramount of the B/L. On-board B/L, issued after yacht was loaded, was sufficient to provide fair opportunity to shipper to escape COGSA limitation by paying the higher charge so that carrier could avail itself of the limitation, especially where there had been course of dealing between parties using identical B/L. The carrier has the initial burden of producing prima facie evidence showing that it provided notice to the shipper that it could pay a higher rate and opt for a higher liability. This initial burden is met if the language of COGSA is printed legibly in the B/L, either by recitation or in language to the same effect. It is not enough merely to incorporate COGSA by reference. Actual possession of the B/L with the $500 liability limit is not required before a party with an economic interest in the shipped goods can be held to the limitation. Actual notice requirement to find fair opportunity is not that the B/L must be in the shippers hands before the cargo is loaded on the vessel but rather that the B/L clearly state the $500 limitation and the method for avoiding it. Sinbad Mobile stage and other equipment. Mobile stage trailer qualified as one package such that liability for damage to the stage should be limited to $500. The insurable value is relevant with respect to the amount of premium paid to the insurer for coverage of a particular shipment. The declared value is relevant in calculating the higher tariff rate paid to the carrier in order for the shipper to opt out of the COGSA $500 limitation on liability. The amount of insurance coverage sought by a shipper is not equivalent to a declaration of value for the shipment sufficient to satisfy the valuation and tariff requirements. Can have something really big, thats a package. If S/O properly defines package and customer has agreed thats what it is, can be limited to one container is one package. Courts will look for any exception, any argument, any excuse that its actually the contents, the boxes inside the container that are the packages. 2,000 boxes of shoes in one FEU (40 Equivalent Unit). How do we apply COGSA $500? Court looks at B/L and looks at how are the goods packaged. Argument could be made one package, because it says one FEU and another argument that it could be 2,000 boxes. Are the boxes loose, all packed separately or are the boxes put on a pallet, 200 boxes/pallet? 10 pallets in the container, the court is going to look for a way to split the baby. Plainly container isnt full of 2,000 loose boxes but unfair to limit the C/O to one container. So court will be inclined to go for the pallet at the package, so 10 packages. Back of B/L, different clauses, links that show if you put your cargo in our container, you are limited to $500 per package and by putting cargo on container, you agree to that. If customer does that consistently, court will say you agreed to that. If C/O want to argue 2,000 boxes inside that container. Can get $1 million or $500. MONCHEGORSK Tapioca starch. Thailand to Maine. Unacceptable moisture content. A deviation which unjustifiably exposes cargo to unanticipated risks is such a serious breach of the contract of carriage that the carrier must be deprived of the limitation of liability protection. On the other hand, to allow carriers to limit their liability when an unreasonable deviation causes damage to cargo not only would weaken carriers primary duty of care under COGSA but would render meaningless the distinction between reasonable and unreasonable deviations. Carrier must show that the deviation was reasonable under COGSA and if not, cannot take advantage of the $500 per package limitation. Causation is presumed if the deviation was unreasonable. ROMERAL Tractor. NOLA to Chile. Not unreasonable deviation for carrier to shift and restow tractor in order to move other cargo being handled in the port of Panama. B/L gave notice to shipper that vessel could make stops at its usual and customary or advertised ports of call. Also published its customary route. On-deck stowage did not constitute deviation from contract of carriage. Shipper with clean B/L, silent as to particulars of stowage either on deck or below deck, is entitled to presume that cargo is contracted for below deck storage. It is carriers burden to overcome that presumption with evidence of express agreement to the contrary or a port custom permitting on-deck stowage. Where a carrier can show that on-deck stowage is customary, there is no deviation and issue of reasonableness does not arise. Custom in the industry for oversized cargo to be stowed on a flat-rack placed on top of other containers on the deck of the vessel. Regularly made stops in Panama. Stops at customary ports of call, whether or not the B/L list those ports, cannot constitute deviations so long as the carrier has made those stops known to the shipper or the shipping community generally through advertisement, publication or other means. Custom that is customary in the trade is not a deviation from the contractual voyage because such contracts ordinarily presume that the parties will follow the customs and usages of the maritime trade. Liberty Clauses are unenforceable to the extent they authorize unreasonable deviations. Recent cases SAUDI HOUFF Six trailers containing Aircraft Arresting Systems. Maryland to India. A clause in a B/L allowing on-deck stowage is enforceable and not deviation rendering package limitation unenforceable if the shipper has notice through prior custom and practice that such stowage is used. Sompo Japan v. Norfolk Southern Carmack Amendment is a favorite among shippers because it imposes something close to strict liability on covered carriers and imposes upon receiving rail carriers and delivering rail carriers liability for damage caused during the rail route under the B/L regardless of which carrier caused the damage, unless carrier can show it was free of negligence and loss was caused by one of five excusable factors. Himalaya Clause possibly could extend to subcontractors defenses that would not be available to the issuing carrier itself, because a Himalaya Clause is simply a matter of contract. A common carrier may by special contract limit his common law liability but he cannot stipulate for exemption from the consequences of his own negligence or that of his servants. When an intermediary contracts with a carrier to transport goods, the C/Os recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed. While a shipper hired by a C/O to arrange transportation of cargo is not C/Os agent in the classic sense, it is nonetheless C/Os agent for the single, limited purpose of contracting with subsequent carriers for limitation on liability. Although an intermediary is not automatically empowered to be C/Os agent in every sense, when it comes to liability limitations for negligence resulting in damage, an intermediary can negotiate reliable and enforceable agreements with the carriers it engages. Atlantic Container Line v. Volvo Volvo cars. Germany to NY. Fire in cars. Carrier is party to Waybills because it is a carrier and the Waybills have a Himalaya clause, the parties to this B/L intend to extend its terms and conditions, including all defenses and limitations, to all parties who participate in its performance. Plain language of the Himalaya clause displays an intent to extend the terms and conditions of the Waybills, including all defenses and limitations, to all parties. By definition, carrier participates in the performance of the contract of carriage. Therefore, it is party to the Waybill and can invoke the forum selection clause, to hold otherwise that it cannot invoke the clause would frustrate the contract language and intent of the parties, entitled and required to sue in this district per forum selection clause. Mahmoud Shaban Rice. Contaminated by bugs after bagged. Where goods are received in sealed containers, clean Bs/L do not entitle plaintiff C/O to a presumption of the cargos good condition. Geographic deviation under COGSA is a departure from a customary route and is unreasonable when it substantially increases the exposure of cargo to foreseeable dangers that would have been avoided had no deviation occurred. Rice inspected before being bagged and loaded into containers by third-party surveyor, issued a health certificate, USDA issued health certificate, fit for human consumption. Clean onboard B/L. Insect infestation. Clean B/L did not suffice to show cargo was in good condition when carrier received them. Containers containing the bags of rice were sealed when B/L issued so no opportunity for carrier to observe defects inside the closed cargo containers, B/L reveals very little about the condition of the cargo and does not entitle C/O presumption of cargos good condition. Certificates of health insufficient to show cargo was in good condition when delivered to carrier because only examined samples taken before the rice was bagged and thus would have missed any contamination introduced later, the bags tied closed but not sealed airtight and sat in warehouses up to two weeks before being loaded, contamination could have occurred. Second round of inspections, at the time of loading, only examined outside of the bags and inside containers, would have missed any problems on inside of bags. COGSA package limitation does not apply where a carrier deviates unreasonably from the itinerary on the B/L. Not unreasonable deviation if its customary route and C/O on notice by B/L that transshipments would occur. C/O must also show that the deviation caused the damage to the cargo. Oilmar Fire and explosion resulting in damage to cargo on vessel. Cargo of carbon black feedstock, low-grade fuel oil residue. Fire caused by on-deck welding by crew. Fire Statute provides that the S/O is not liable for loss or damage caused by fire unless fire resulted from the design or neglect of the S/O, actual fault or privity of the carrier. The S/O or managing officers or agents in the case of a corporate owner must be personally negligent to be subject to liability under the Fire Statute. Negligence of the master, mariners, crew or other subordinates is not attributable to the S/O. Risk of explosion was foreseeable result of S/Os management.

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