Amicus Curiae Brief — CITGO Asphalt Refining Company, et al., Petitioners v. Frescati Shipping Company, Ltd., et al.

No. 18-565

IN THE

Supreme Court of the United States

CITGO ASPHALT REFINING COMPANY; CITGO

PETROLEUM CORPORATION; CITGO EAST COAST OIL

CORPORATION, Petitioners,

v.

FRESCATI SHIPPING COMPANY, LTD.; TSAKOS

SHIPPING & TRADING, S.A.; AND UNITED STATES,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

BRIEF OF AMICI CURIAE THE AMERICAN FUELS &

PETROCHEMICAL MANUFACTURERS ASSOCIATION

AND INTERNATIONAL LIQUID TERMINALS

ASSOCIATION IN SUPPORT OF PETITIONERS

BRENDAN COLLINS

Counsel of Record

EDWARD D. GREENBERG

KRISTINE O. LITTLE

GKG LAW, P.C.

1055 THOMAS JEFFERSON STREET N.W.

SUITE 500

WASHINGTON, D.C. 20007

(202) 342-5200

BCOLLINS@GKGLAW.COM

Counsel for Amici Curiae

i

TABLE OF CONTENTS

Page

STATEMENT OF INTEREST ....................................1

ARGUMENT ...............................................................5

I.

The Third Circuit’s Decision Widens

the Rift between Circuits.......................8

II.

The

Third

Circuit’s

Decision

Imposes Unwarranted Obligations

on Charterers ....................................... 12

A.

Wharfinger and Charterer’s

Duty to Provide A Safe Berth

Should

be

Similarly

Construed .................................. 13

B.

The Third Circuit’s Rationale

Runs

Afoul

of

WellEstablished Admiralty Law

Policies ....................................... 15

C.

A Safe Berth Was Provided ...... 18

D.

The Third Circuit’s Decision

to Construe a Safe-Berth

Provision as Applicable to

Navigable Waters in the

General Vicinity of the Wharf

Is

Unfair

and

Invites

Uncertainty ............................... 21

CONCLUSION .......................................................... 23

ii

TABLE OF AUTHORITIES

Page

Cases

Atkins v. Fibre Disintegrating Co.,

2 F. Cas. 78 (E.D.N.Y. 1868) (No. 601), aff’d, 85

U.S. (18 Wall) 272 (1873) ..................................... 10

City of Milwaukee v. Illinois,

451 U.S. 304 (1981) ........................................ 17, 18

Contship Containerlines, Ltd. v. PPG Indus., Inc.,

442 F.3d 74 (2d Cir. 2006) ................................... 17

Excel Shipping Corp. v. Seatrain International

S.A.,

584 F. Supp. 734 (E.D.N.Y.1984) ........................ 17

Japan Line, Ltd. v. United States,

1976 A.M.C. 355 (E.D. Pa. 1975), aff’d 1977

AMC 265 (3d Cir. 1976) ....................................... 19

Nautilus Motor Tanker Co. v. Naughton,

862 F. Supp. 1260 (D.N.J. 1994), aff’d 85 F.3d

105 (3d Cir. 1996)................................................. 19

Norfolk S. Ry. Co. v. Kirby,

543 U.S. 14 (2004) .......................................... 11, 18

Orduna S.A. v. Zen-Hoh Grain Corp.,

913 F.2d 1149 (5th Cir. 1990) .................... 9, 10, 11

People of State of California v. S/T Norfolk,

435 F. Supp 1039 (N.D. Cal. 1977) ...................... 14

Sea-Land Service, Inc. v. The Purdy Co. of

Washington,

1982 A.M.C. 1593 (W.D. Wash. 1981) ................. 16

iii

Senator Linie GMBH & Co. KG v. Sunway Line,

Inc.,

291 F.3d 145 (2d Cir. 2002) ........................... 15, 16

Serrano v. United States Lines Corp., 238 F. Supp.

383 (S.D.N.Y. 1965).............................................. 17

Sims v. Chesapeake & O. Ry Co., 520 F.2d 556

(6th Cir. 1975) ...................................................... 14

Smith v. Burnett,

173 U.S. 430, 433 (1899) ................................ 13, 20

Sonat Marine Inc. v. Belcher Oil Co.,

629 F. Supp. 1319 (D.N.J. 1985), aff’d 787 F.2d

583 (3d Cir. 1986)................................................. 20

Trade Banner Line, Inc. v. Caribbean Steamship

Co.,

521 F.2d 229 (5th Cir. 1975) ................................ 20

Statutes and Regulations

Carriage of Goods by Sea Act,

46 U.S.C. § 1300 et seq. ........................... 15, 16, 17

The Oil Pollution Act of 1990,

33 U.S.C. § 2701 et seq. ................................... 2, 22

Treatises

International Convention for the Unification of

Certain Rules of Law Relating to Bills of

Lading, Article 4 § 3, 120 LNTS 187, 51 Stat.

233 (Aug. 25, 1924) .............................................. 15

United Nations Convention on the Carriage of

Goods by Sea, Article 12, UN Doc.

A/CONF.89/13 (Hamburg, 31 March 1978) ........ 15

iv

Other Authorities

Despoina Aspragkathou, The Asbatankvoy

Charterparty Clauses for the Commencement

of Laytime-Interpretation under England and

American Law,

40 J. MAR. L. & COM. 133 (2009) ............................9

Grant Gilmore & Charles L. Black, Jr., THE LAW

OF ADMIRALTY (2d Ed. 1975) ................................ 11

J Bond Smith, Jr., Time and Voyage Charters:

Safe Port/Safe Berth,

49 TUL L. REV. 878 (1975) .................................... 11

1

STATEMENT OF INTEREST 1

Amici, The American Fuels & Petrochemical

Manufacturers Association and The International

Liquid Terminals Association, are adversely affected

by the Third Circuit’s decision to impose absolute

liability on charterers or shippers such as the amici,

who enter into contracts for the marine transport of

goods, including oil and petrochemical products. 2

The decision does not merely impact the Petitioner,

but all parties who enter into vessel charter

agreements using standard forms that provide that

the charterer shall procure a “safe place or wharf”

that the vessel can “proceed thereto, lie at, and

depart therefrom always safely afloat.”

The matter arises from a voyage charter

agreement – a maritime contract for the carriage of a

cargo of crude oil by ship – between Star Tankers

Inc., 3 a time charterer or chartered owner of the M/T

1 Pursuant to this Court’s Rule 37.6, Amici hereby state no

counsel for any party authored this brief in whole or in part and

no person other than the Amici, their members, or their counsel

made any monetary contribution intended to fund the

preparation or submission of this brief. Amici also state that

pursuant to this Court’s Rule 37.2(a), counsel of record received

timely notice of the intent to file this brief and all parties have

consented to its filing.

2 Such

contracts are referred to as “charter agreements” or

“charter parties” and the shippers are referred to as

“charterers.”

3

Frescati Shipping Co. (“Frescati”), the titled Owner of the

Athos who is the Plaintiff here, contends that it is a third-party

2

Athos I (“Athos” or “Vessel”), and Citgo Asphalt

Company

Refining

Company

(“CARCO”

or

“Charterer”).

An oil spill occurred in the Delaware River on

the evening of November 26, 2004, when the ATHOS

allided with a hidden anchor that had been

abandoned

in

Federal

Anchorage

No.

9

(“Anchorage”). The allision occurred when the Vessel

was in Anchorage.

Remediation of the incident was administered

in accordance with The Oil Pollution Act of 1990

(“OPA”), 33 U.S.C. §§ 2701-2761. Frescati, as the

owner of the Vessel that discharged the oil, was

designated as the “responsible party” for the clean up

in the first instance. Frescati was able to limit its

liability and to obtain reimbursement above a certain

amount from the OPA’s Oil Spill Liability Trust

Fund (the “Fund”). Frescati applied for exoneration

from liability under a provision in OPA allowing such

exoneration if the incident was the sole fault of

another party – here the party that discarded the

anchor that allided with the Vessel. Frescati later

inexplicably withdrew this claim. Petition for a Writ

of Certiorari (hereinafter “Pet.”) at App. D 284a n.6.

Subsequently, Frescati and the United States

(“Government”), who administers the Fund, decided

to join forces and pursue a recovery from CARCO, by

implicating it as the party responsible for the allision

and spill.

beneficiary of the voyage charter agreement’s safe-berth

provision.

3

The American Fuels & Petrochemical

Manufacturers

Association

(“AFPMA”)

and

International Liquid Terminals Association (“ILTA”)

have members who are stakeholders in the maritime

transportation, storage and oil refining and

petrochemical industries. And they have an interest

in the proper allocation of responsibilities under

maritime law. As such, they believe it is important

to inform the Court of their views and the reasons

why they support Petitioner CARCO in this matter.

Members of the amici are similarly situated as

CARCO, and their operations will be adversely

impacted if the Third Circuit’s decision is not

reversed.

AFPMA (formerly the National Petrochemical

and Refiners Association) is a national trade

association whose members include approximately

400 companies, including virtually all United States

petroleum refining and petrochemical manufacturing

capacity. AFPMA members supply consumers with a

wide variety of products that are used daily in homes

and businesses. Many AFPMA members operate

marine terminals. As such, they often act both as

wharfingers and as shippers of cargo under charter

agreements.

Member companies with terminals

along the Delaware River and its tributaries include

Monroe Energy and PBF Energy.

See:

http://www.afpm.org/ for more information.

ILTA is composed of 80 member companies

that own and/or operate about 1,000 bulk liquid

storage terminals in 37 countries. In the U.S., ILTA

members operate in all 50 states.

Member

companies with terminals along the Delaware River

4

and its tributaries include Buckeye Terminals, LLC,

Contanda LLC, Kinder Morgan Energy Partners,

L.P., Magellan Midstream Partners, L.P., MIPC,

LLC, Plains All American Pipeline, L.P., and Sunoco

Logistics Partners, L.P. See: http://www.ilta.org/ for

more information.

Amici consider the matter before the Court to

be of critical importance not only to their commercial

operations,

but

also

to

the

appropriate

administration of the U.S. marine transportation

system.

The duties and responsibilities of the

participants in the marine transportation industry

must be consistently applied and uniformly enforced.

Amici object to the Third Circuit’s imposition

of absolute liability on charterers entering into

charter agreements for damages that may occur

during the voyage, even absent any negligence on the

part of the charterer. This decision creates a further

split among the circuits, 4 disregards Supreme Court

authority holding that a safe-berth provision in a

charter agreement does not constitute a warranty,

ignores well established, codified maritime law that

shippers should not be held liable absent negligence

or fault on their part, and introduces uncertainty

into amici’s operations.

For these reasons, amici have a direct,

substantial, and vested interest in the outcome of

4

The Second Circuit and now the Third Circuit impose

absolute liability on charterers under charter party agreements

with safe-berth clauses. The Fifth Circuit requires a showing of

a lack of due diligence on the part of the shipper before

imposing liability.

5

this litigation.

The Third Circuit’s decision is

contrary to sound law and policy and, if left to stand,

will have far reaching consequences. Amici want to

inform the Court why the decision is wrong and how

the industry will be impacted.

ARGUMENT

The Third Circuit’s decision interprets

commonly used ASBATANKVOY charter forms

which state in relevant part that vessels “shall

proceed, as ordered on signing Bills of Lading, direct

the Discharging Port(s) or so near them as she may

safely get (always afloat) and deliver said cargo.”

The ASBATANKVOY forms further provide that the

vessel shall load and discharge at any safe place or

port “which shall be designated and procured by the

Charterer [i.e., the shipper] providing the Vessel can

proceed thereto, lie at, and depart therefrom always

safely afloat . . . .”

The Third Circuit’s decision interpreting the

so-called

“safe

berth”

language

in

the

ASBATANKVOY forms exacerbates the split of

authorities between the federal circuits by imposing

absolute liability upon charterers, even where they

exercise appropriate due diligence.

Imposing

liability without fault on charterers has enormous

adverse consequences on international trade. The

Third Circuit decision also ignores Supreme Court

precedent dating back almost a century and half,

where the Supreme Court affirmed a lower court

holding that a charter agreement’s safe-berth

provision does not constitute an absolute warranty

on the part of the charterer.

6

The Third Circuit’s decision is internally

inconsistent, holding that a wharfinger satisfies its

obligation to provide a safe berth when it exercises

due diligence but imposing strict liability upon a

charterer who designates the use of the same berth

regardless of fault. No logical rationale is offered, or

exists, however, as to why a wharfinger who offers a

safe berth is held to a standard of due diligence, but

a charterer who designates the same safe berth

should be deemed to have assumed an absolute duty

to prevent harm to the vessel. Indeed, to the extent

that the requirement of due diligence could be

different for a charterer and a wharfinger, it logically

would be the wharfinger, who operates the terminal,

of whom a greater diligence would be expected, not

the charterer who merely designates a berth where

its cargo should be shipped. This is especially the

case as the vessel master has the absolute obligation

not to dock at a berth that he or she deems to be

unsafe.

Reading the safe-berth provision of the charter

agreement so as to impose strict liability on a

shipper absent any negligence on its part also runs

contrary to the policy goals reflected in the Carriage

of Goods by Sea Act of the United States (“COGSA”).

COGSA, which reflects not only nationwide but

worldwide standards governing the maritime

shipment of cargo, expressly provides that shippers

cannot be held liable for loss or damages sustained

by a carrier or a vessel absent a showing of

negligence and that contracts providing to the

contrary should be deemed void. Reading the safeberth provision of the voyage charter contract to

7

impose liability under these circumstances, where

CARCO was not negligent, runs flatly contrary to the

policy goals of COGSA and other international

maritime conventions, which bar holding a shipper

liable for damages to vessels absent a finding of

wrongdoing.

Imposing absolute liability upon a charterer

based upon a safe-berth provision in the charter

agreement while simultaneously recognizing that the

same entity acting as a wharfinger cannot be held

liable absent a showing of negligence, is particularly

inappropriate here where the allision at issue did not

occur in the wharfinger’s facility but instead on

federally maintained navigable waters where vessels

anchor to await entry into a number of terminals

located along a stretch of the Delaware River.

Because there is no duty on the part of a wharfinger

to protect against harm to vessels occurring in

adjacent waters, imposing liability upon a charterer

for damages for a purported violation of a safe-berth

provision lacks any legitimate basis. Quite simply,

here the berth designated by the charterer was safe;

the unknown, and unknowable, danger was in

adjacent navigable waters.

The Third Circuit’s reliance upon the fact that

the allision occurred 300 yards away from the wharf

as grounds for finding a breach of the safe-berth

provision highlights the ad hoc nature of the court’s

ruling. The Third Circuit’s decision provides no

guidance as to what the magic number might be as

to how far away a danger might lurk in waters

adjacent to the terminal and still be the

responsibility of the charterer. Would the safe

8

berth’s absolute liability obligation apply if the lost

anchor happened to be a thousand yards away, or

maybe two miles away, as opposed to three football

fields? In either event, the Vessel still would have

been within Federal Anchorage Number Nine. See

infra at 19.

The inability of maritime parties to rationally

address the risks now imposed by the Third Circuit’s

decision is further highlighted by the fact that there

are numerous wharfs along the area of the Delaware

River where the allision occurred. Determining

which wharfinger would have the duty to provide a

safe berth for adjoining areas would be impossible.

Quite simply, such a ruling creates tremendous

uncertainty for charterers and wharfingers as there

is no way to determine whether they are assuming

potentially hundreds of millions of dollars of

damages based upon the serendipity of how far away

from a wharf an unknown and unknowable hazard

may lurk or which wharf that a vessel may seek to

call.

I.

The Third Circuit’s Decision Widens the

Rift between Circuits

The Third Circuit’s decision imposing strict

liability against charterers widens a circuit conflict

on an important issue of maritime law. The decision

below that a safe-berth provision in the

ASBATANKVOY forms 5 imposes strict liability on

The ASBATANKVOY charter party agreement forms are one

of the most widely used charter forms for tanker voyages.

Despoina Aspragkathou, The Asbatankvoy Charterparty

5

9

innocent charterers conflicts directly with Fifth

Circuit holdings that such provisions merely impose

a duty of due diligence. Failure to address this rift

will be detrimental to maritime commerce, create

uncertainty for shippers and carriers, and impose

unwarranted liability on charterers.

Safe-berth clauses, such as the one at issue,

are standard in maritime charter contracts. Here,

the clause at issue provides that CARCO was to

designate a “safe place or wharf” where the Vessel

“could proceed thereto, lie at, and depart therefrom

always safely afloat.” Pet. at App. B 88a-89a.

When confronted with this type of language,

the Fifth Circuit has held that language in a charter

agreement providing that the charterer should

designate “safe discharging berths [the vessel] being

always afloat,” does not impose liability without fault

against the charterer. Orduna S.A. v. Zen-Hoh

Grain Corp., 913 F.2d 1149, 1156, n. 6 (5th Cir.

1990). The Fifth Circuit explained that although its

decision was contrary to Second Circuit authority,

commentators have strongly criticized those

decisions.

Id. at 1156. The Fifth Circuit also

recognized that the vessel master on the scene is in a

position to judge the safety of a particular berth. Id.

The court further reasoned that requiring negligence

as a predicate for the shipper’s liability does not

increase the risk that the vessel will be exposed to an

unsafe berth. Id. Instead, because courts have

interpreted a safe-berth clause to free the master

Clauses for the Commencement of Laytime-Interpretation under

England and American Law, 40 J. MAR. L. & COM. 133 (2009).

10

from any obligation to enter into an unsafe port or

berth, “it is by no means necessary that they be given

the quite different meaning of creating an

affirmative liability of charterer to ship, in case of

mishap.” Id. (citations omitted).

In making its decision, the Fifth Circuit

recognized that the Supreme Court’s affirmance of

Atkins v. Fibre Disintegrating Co., 2 F. Cas. 78

(E.D.N.Y. 1868) (No. 601), aff’d, 85 U.S. (18 Wall)

272 (1873), supported its holdings.

There, the

district court had rejected the argument that a safeberth provision in a charter agreement amounted to

a warranty. Id. at 79. On appeal of a jurisdictional

issue, the Supreme Court affirmed, holding that it

found no reason to differ with the merits of the

district court’s decision. 85 U.S (18 Wall) at 299.

Based upon all of those considerations, the

Fifth Circuit concluded that:

We agree with commentators cited

above that no legitimate legal or social

policy is furthered by making the

charterer warrant the safety of the

berth it selects. Such a warranty could

discourage the master on the scene from

using his best judgment in deterring the

safety of the berth. Moreover, avoiding

strict liability does not increase risk

because the safe berth clause itself gives

the master the freedom to take his

vessel into an unsafe port.

11

Orduna S.A. at 1157. 6

The split noted above between the Second and

Fifth Circuits regarding the meaning of a safe-berth

clause in a charter agreement is compounded by the

Third Circuit’s decision below. Absent clarification

by the Supreme Court, this conflict regarding an

important issue of maritime law will remain

unresolved, undermining the vital goal of a uniform

application of maritime law. 7

6 One of the foremost commentators, Grant Gilmore & Charles

L. Black, Jr., THE LAW OF ADMIRALTY, 204-05 (2d Ed. 1975),

observed that “there is no reason in policy or interpretation, for

holding the charterer liable for ship’s damages on the basis of

the safe port and safe berth clauses.” In so recognizing, the

treatise further suggested that: “It is to be hoped that the

Supreme Court will one day . . . reaffirm the principle of the

Atkins decision, confining charterer’s liability to the case

wherein his special knowledge or actions make it reasonable to

charge him.” Id. at 207. Other commentators similarly have

observed that if the law is to afford basic fairness to both

charterer and owner, decisions imposing strict liability on the

charterer should be reconsidered. J Bond Smith, Jr., Time and

Voyage Charters: Safe Port/Safe Berth, 49 TUL L. REV. 878

(1975).

The Third Circuit’s suggestion that its approach of imposing

strict liability absent fault on the part of charterer promotes

uniformity of maritime law “along the mid-Atlantic seaboard”

highlights the need for Supreme Court review. Pet. at App. D

303a. Important questions of maritime law require uniform

national application, not decisions based on the state, seaboard

or federal circuit where the shipments occur. See, e.g., Norfolk

S. Ry. Co. v. Kirby, 543 U.S. 14, 29 (2004) (vindication of

maritime policies demands adherence to uniform federal rules

of law). The Third Circuit fails to explain what standards

7

12

II.

The Third Circuit’s Decision Imposes

Unwarranted Obligations on Charterers

Amici respectfully submit that the Third

Circuit’s decision – that sound policy reasons

warrant imposing strict liability on charterers rather

than an obligation to exercise due diligence – lacks

merit. The Third Circuit’s reasoning is predicated

upon a finding that when a wharfinger invites a

party to use its dock facilities it is agreeing to use

due diligence but when the same wharfinger (as a

charterer) designates a safe wharf in a charter

agreement, it is assuming an absolute obligation to

protect against any harm regardless of fault. Such a

holding cannot withstand scrutiny.

Further,

interpreting the language of a safe-berth clause as

imposing liability without fault runs contrary to

well-established admiralty precedent, including

COGSA and other international conventions, which

expressly adopts as a matter of maritime policy that

shippers should not be held liable for damages to a

vessel or carrier absent a showing of negligence on

their part. In choosing to read the language of a

safe-berth clause as imposing strict liability, the

Third Circuit ignores this sound public policy and

invites confusion in maritime law.

would apply to a shipment of goods from Louisiana to New

Jersey or vice versa.

13

A.

Wharfinger and Charterer’s Duty to

Provide A Safe Berth Should be

Similarly Construed

The law has been well established for over a

century that a wharfinger does not guarantee the

safety of vessels coming to his wharf but instead is

only bound to exercise reasonable due diligence in

assessing the condition of the berths, and if there is

any known dangerous obstruction to give notice of its

existence to vessels about to use its berths. See

Smith v. Burnett, 173 U.S. 430, 433 (1899). Here,

the Third Circuit recognized as much in its initial

decision holding that a wharfinger is not a guarantor

of a visiting ship’s safety but instead is only bound

“to use reasonable diligence in ascertaining whether

the berths themselves and the approaches to them

are in an ordinary condition of safety for vessels

coming to and laying at the wharf.” Pet. at App. A

26a. The Third Circuit, in its second decision,

reaffirmed the holding in this regard, stating that “a

wharfinger’s duty is to use reasonable diligence to

ascertain whether the approach to its berth is safe

for an invited vessel.” Id.

No logical rationale exists for imposing

differing, and more onerous, standards on a

charterer than on a wharfinger with respect to its

efforts to provide a safe berth for vessels,

particularly when the assurances being provided are

identical. In this regard, amici often wear two hats.

One as a shipper (or charterer) and one as a

wharfinger.

In both instances, assurances are

provided that the vessel can safely enter and exit the

14

berth. In the language of the ASBATANKVOY form,

this is framed as the ability to proceed to the port,

“lie at, and depart therefrom always safely afloat.”

In acting as a wharf operator, the same assurance is

provided to nautical invitees, i.e., a berth that can be

safely entered and exited. 8 There is no valid reason

that the same assurances that the same party

provides as charterer of the vessel when inserted into

a charter agreement, somehow transforms the

charterer’s obligation from that of exercising due

diligence to one of an absolute warranty. Indeed, the

decision of the court in People of State of California

v. S/T Norfolk, 435 F. Supp 1039, 1048 (N.D. Cal.

1977), is instructive in this regard. There, the state

of California sued a charterer (who was also a

wharfinger) for damages arising from an allision

between a vessel and a bridge. In denying liability,

the court followed the well-established authority

cited above in concluding that the wharfinger had no

liability because it had satisfied its obligation to

exercise reasonable diligence in furnishing a safe

berth from which the vessel could enter and exit. Id.

In rejecting the claim against the wharfinger in its

capacity as charterer, the court further observed that

to the extent due diligence obligations between a

charterer and wharfinger should be applied

differently, logically it would be the wharfinger, who

operates the facility, of whom a greater diligence

would be expected.

Here, the Third Circuit’s

8 See, e.g., Sims v. Chesapeake & O. Ry Co., 520 F.2d 556, 561

(6th Cir. 1975) (wharfinger’s duty is to furnish safe means of

egress and ingress to berthed ships).

15

analysis turns that logical conclusion upside down by

imposing an absolute liability on the charterer while

simultaneously and (correctly) holding that the

wharfinger is not liable absent a showing of lack of

due diligence.

B.

The Third Circuit’s Rationale Runs

Afoul of Well-Established Admiralty

Law Policies

The Third Circuit’s decision imposing liability

without fault against charterers runs afoul of the

policy goals reflected in maritime law, including

COGSA.

COGSA, which was enacted in 1936,

governs “all contracts for the carriage of goods by sea

to or from ports of the United States in foreign

trade.” 46 U.S.C. § 1312. COGSA “represents the

codification of the United States’ obligations under

the International Conventions for the Unification of

Certain Rules of Law Relating to Bills of Lading [the

Hague Rules],” and “applies ex proprio vigore to all

contracts of carriage if goods by sea between the

ports of the United States and the ports of foreign

countries.” Senator Linie GMBH & Co. KG v.

Sunway Line, Inc., 291 F.3d 145, 153 (2d Cir. 2002).

The language of COGSA was lifted almost bodily

from the Hague Rules of 1921, as amended by the

Brussels Convention of 1924. Id. at 158. 9

9 International Convention for the Unification of Certain Rules

of Law Relating to Bills of Lading, Article 4 § 3, 120 LNTS 187,

51 Stat. 233 (Aug. 25, 1924) (“Hague Rules”); see also United

Nations Convention on the Carriage of Goods by Sea, Article 12,

UN Doc. A/CONF.89/13 (Hamburg, 31 March 1978) (“the

Hamburg Rules”).

16

COGSA is the central statute in commercial

admiralty governing over $200 billion worth of

American foreign commerce annually.” Id. at 168-69.

COGSA applies independently of the terms and

provision of a particular bill of lading where the

carriage by sea involves foreign trade. Sea-Land

Service, Inc. v. The Purdy Co. of Washington, 1982

A.M.C. 1593 (W.D. Wash. 1981). It is designed to set

forth uniform rules for the allocation of risk between

shippers and carriers in contracts for the shipment of

goods. Senator Linie GMBH & Co. KG at 153.

COGSA’s goal is to “foster international uniformity

in sea-carriage rules and allocating risks between

shippers and carriers in a manner that is consistent

and predictable.” Id. One important aspect of the

Hague Rules and its United States counterpart is the

standardization of liability. Id. at 158. Thus, “in

essence the purpose of these laws is to allow

international maritime actors to operate with greater

efficiency and under a mantle of fairness.” Id.

COGSA legislators appear to have been intent on

preserving international consensus embodied in the

language of the Hague Rules. Id. at 159.

COGSA expressly provides in 46 U.S.C. §

1304(3) that: “The shipper shall not be responsible

for loss or damages sustained by the carrier or the

ship arising or resulting from any cause without the

act, fault, or neglect” of the shipper. This provision

reflects a well-considered policy decision that

shippers should not be deemed liable for damages

17

that are not avoidable by due diligence. 10

As

reflected by § 1304(3)’s plain terms, it has been read

as abolishing common law warranties and requires

that a carrier prove actual fault or neglect on the

part of a shipper in order to recover damages or be

indemnified.

Excel Shipping Corp. v. Seatrain

International S.A., 584 F. Supp. 734, 747

(E.D.N.Y.1984); Serrano v. United States Lines

Corp., 238 F. Supp. 383 (S.D.N.Y. 1965) (rejecting a

reading of § 1304(3) that shipper was liable for

personal injuries caused by the explosion of a tire on

board the vessel due to failure to establish

negligence).

In construing whether the public policies

reflected in COGSA for the shipment of goods should

apply or whether maritime common law should be

adopted, this Court has stated that where the issue

of federal statutory or federal common law governs,

“we start with the assumption that it is for Congress,

not federal courts to articulate the appropriate

standard to be applied as a matter of federal law.”

City of Milwaukee v. Illinois, 451 U.S. 304, 317

(1981). Thus, “when Congress addresses a question

This codification of the rule that shippers not be held liable

for damages absent a showing of negligence is not applied to the

shipment of inherently dangerous goods when the shipper fails

to provide notice of the cargo’s potentially dangerous

characteristics. See 46 U.S.C. § 1304(6). Consistent with the

plain language of section 1304(6), courts do not apply strict

liability against the shipper when the carrier is aware of the

cargo’s dangerous properties.

See,

e.g.,

Contship

Containerlines, Ltd. v. PPG Indus., Inc., 442 F.3d 74, 77 (2d Cir.

2006).

10

18

previously governed by a decision rested on federal

common law the need for such an unusual exercise of

lawmaking by federal courts disappears.” Id. at 315.

Here, in construing the language in safe-berth

clauses in a fashion that imposes strict liability on

shippers absent any showing of negligence, the Third

Circuit ignores well founded policy decisions

reflecting a refusal to impose liability on charterers

such as CARCO absent a showing of negligence. 11

C.

A Safe Berth Was Provided

Because the allision at issue did not occur on

the wharfinger’s terminal (or on the means of ingress

and egress thereto) but instead on a federally

maintained area where vessels anchor before

entering any number of ports located along a stretch

of the Delaware River, the safe-berth provision in the

charter agreement could not have been violated.

The Third Circuit recognizes that the allision

occurred squarely within Federal Anchorage Number

Nine. Pet. at App. D 284a. The Anchorage, which is

where vessels anchor while awaiting cargo or orders

or awaiting accommodation at a number of wharves

along the Delaware River, was dredged and is

maintained by the Federal Government’s Army

11 In Kirby, the Supreme Court held that COGSA applied to not

only the ocean bound transportation of goods moving on

through bills of lading but to the inland portion of such

transportation as well. In so holding, the Court recognized the

nation’s fundamental interest in promoting maritime commerce

through the uniform application of federal maritime law. 543

U.S. at 29. The same policy considerations warrant granting

certiorari here.

19

Corps of Engineers (the “Corps”). Id. at 285a. The

Corps conducts hydrographic surveys and dredges as

necessary to maintain the Anchorage’s depth. Id.

The Anchorage is 2.2 miles along the Delaware River

Channel. Id. Further, “Congress has charged the

Secretary of the Army and the Chief of Engineers

with the responsibility of seeing the navigable

waterways remain unobstructed and safe for

navigation.” Japan Line, Ltd. v. United States, 1976

A.M.C. 355, 364 (E.D. Pa. 1975), aff’d 1977 AMC 265

(3d Cir. 1976).

In this case, the charterer designated as a safe

berth a roughly triangular-shaped area comprising

the waters of the berth footprint and the “immediate

access areas next to it where vessels enter and exit

the footprint.” Pet. at App. D 286a. As reflected

above, the allision did not occur in what has been

designated as CARCO’s area of responsibility but

instead occurred squarely within the Anchorage.

It is well established that wharf owners are

not responsible for maintaining navigable waterways

or for damages occurring thereon. In Nautilus Motor

Tanker Co. v. Naughton, 862 F. Supp. 1260 (D.N.J.

1994), aff’d 85 F.3d 105 (3d Cir. 1996), a vessel

owner attempted to impose liability upon the

terminal when its vessel was caught in currents,

pushed out of the Federal Channel, and grounded on

rocks in shallow water. Although the location was

only approximately 125 feet off the berth at the

terminal, the court rejected the claim, emphasizing

that a wharf owner “does not guarantee the safety of

vessels coming to its docks.” Id.

20

Numerous other courts, including the

Supreme Court, recognize that there is no duty on

part of wharfinger to provide a berth with safe

surroundings other than an entrance and exit, or to

warn that hazards exist in its vicinity. Smith, 173

U.S. at 433.; Trade Banner Line, Inc. v. Caribbean

Steamship Co., 521 F.2d 229, 230 (5th Cir. 1975).

The duty of a terminal operator extends only to the

berth and to its approach, and not to adjacent areas.

Sonat Marine Inc. v. Belcher Oil Co., 629 F. Supp.

1319, 1326 (D.N.J. 1985), aff’d 787 F.2d 583 (3d Cir.

1986). 12

Given these facts, CARCO in fact did

designate a safe berth or wharf as required by the

charter agreement. Accordingly, there is no basis for

finding a breach of the safe-berth clause in the

charter agreement.

12 Although the Third Circuit allowed that established case law

reflects that a wharfinger is not obligated to ensure safe

surroundings or to warn of hazards in the vicinity of its

terminal, Pet. at App. D 312a, it nonetheless rejected the

analysis of the district court in its first decision which focused

on the obvious fact that the hidden anchor was not in the area

of CARCO’s control and which defined the approach to the

berth as the waters that a vessel “naturally would traverse” in

reaching the berth. Id. at 313a. Thus, it rejected authority

holding that the approach to a berth is limited to areas

immediately adjacent to the berth or within immediate access

to it. Id.

21

D.

The Third Circuit’s Decision to

Construe a Safe-Berth Provision as

Applicable to Navigable Waters in

the General Vicinity of the Wharf Is

Unfair and Invites Uncertainty

The Third Circuit’s decision extending a

wharfinger’s duty to areas in the general vicinity of

their berths creates an uncertain and unfair duty on

wharfingers and charterers. This new, undefined

duty undermines previously well-settled allocations

of responsibility, requiring that wharfingers assume

responsibility for their berths and areas immediately

adjacent thereto, which areas reasonably can be

known to and inspected by the wharfinger.

Here, the Third Circuit takes comfort from the

fact that although the area where the unknown

anchor was dropped was in the Anchorage, navigable

waters maintained by the Government, the anchor

was only 300 hundred yards from the CARCO

terminal. In rejecting well-established precedent

holding that wharfingers are liable only for waters

immediately adjacent to or within immediate access

to their berths, and instead to impose a duty on

wharfingers to ensure that navigable waters

anywhere in the general vicinity of the berths are

also risk free, the court imposes unfair obligations

on wharfingers (and charterers) and eliminates legal

certainty which is vital to maritime parties. The

Third Circuit provides no guidance as to how far into

the sea a wharfinger or charterer’s obligations

extend. There is no way of determining whether the

duty to ensure safe surroundings should be

22

measured in feet, yards, miles or beyond. The fact

that here there are numerous terminals in this same

stretch of the Delaware River which presumably

could fall with the scope of the expanded duty merely

compounds the uncertainty created by the Third

Circuit’s new legal standard.

The Third Circuit’s conclusion that a charterer

is in a better position to assess the risk associated

with a terminal than the master or a local pilot with

particular expertise regarding those waters is

particularly unsupported when a shipper or

charterer is not situated at the intended destination.

For example, the notion that a shipper from

Australia or Europe is better equipped to assess and

prevent damage to a vessel than a pilot who operates

regularly in the Delaware River is dubious at best.

Unless reversed, this would have enormous, adverse

consequences for shippers and charterers worldwide,

all of whom would be charged with knowledge of any

potential, hidden obstacles at terminals around the

world. While CARCO’s facility was located in the

area where this mishap occurred, many, if not most,

charter agreements are entered into by shippers

selling – rather than buying – products who are

thousands of miles distant from the intended

destination wharf. 13

13

Imposition of liability without fault against CARCO for

damages arising from an allision in navigable waters that was

not CARCO’s fault is particularly unfair and unwarranted here.

OPA provides that ordinarily owners of single hulled vessels

such as the Athos are responsible parties for oil spills. OPA

further established the Fund to pay for clean up when there is

no viable responsible party to do so, which Fund is financed by

23

CONCLUSION

For the foregoing reasons, amici request that

the petition for certiorari be granted.

Respectfully submitted,

BRENDAN COLLINS

Counsel of Record

EDWARD D. GREENBERG

KRISTINE O. LITTLE

GKG LAW, P.C.

1055 THOMAS JEFFERSON STREET N.W.

SUITE 500

WASHINGTON, D.C. 20007

(202) 342-5200

BCOLLINS@GKGLAW.COM

Counsel for Amici Curiae The American

Fuels & Petrochemical Manufacturers

Association and The International Liquid

Terminals Association

a tax on each barrel of oil imported into or processed in the

United States. CARCO and amici members pay into the Fund.

Indeed, although CARCO paid approximately $103 million into

the Fund between 1990 and 2004, the Third Circuit’s decision

dictates that although CARCO was not at fault here, it faces

potential liability of more than $140 million in damages for

which CARCO is not entitled to any reimbursement from the

Fund.