Amicus Curiae Brief — S/S Salvador v. Berisford Metals Corp.

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

ge _

S/S SALVADOR, her engines, boilers, etc., and

A/S IVARANS REDERI,

Petitioners,

—against—

BERISFORD METALS CORPORATION,

Respondent.

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAE

AND BRIEF AMICUS CURIAE OF STAR SHIPPING A/S

IN SUPPORT OF PETITION FOR A WRIT OF CER-

TIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

LEROY S. CORSA

Atiorney for AMICUS CURIAE

STAR SHIPPING A/S

40 Wall Street

New York, New York 10005

(212) 344-4700

SANDRA R.M. GLUCK

LENORE E. MCQUILLING

WALKER & CORSA

Of Counsel

TABLE OF CONTENTS

PAGE

ee I Ss bo kh eG N oN web awe edo a kene as il

Motion of Star Shipping A/S for Leave to File Annexed

Brief Amicus Curiae in Support of Petition For A Writ

of Certiorari to the United States Court of Appeals

Pe ee I OE i ek werseneweskadeeae es Vv

Brief of Amicus Curiae Star Shipping A/S

Statement of Interest of Amicus Curiae......... l

Argument

POINT I

The Development and Significance of Con-

tainerization and Multimodal Transportation 2

POINT II

Marine Bills of Lading and Container/Multi-

IE IO 6 a. oh oie wk ee bode eee 4

POINT III

The Decision Beiow Is In Conflict With Past

and Continuing Efforts By Carriers and Ship-

pers To Achieve A Uniform, Simplified and

Predictable Set of Rules to Govern Interna-

RCI ERUIIOUOEIOD ook ne nk cc ce cence 10

Ee re ee en Le a ]4

TABLE OF AUTHORITIES

Cases: PAGE

Elgie & Co. v. S.S. S.A. NEDERBURG, 599 F. 2d 1177

(2d Cir. 1979), cert. den. 444 U.S. 1072 (1980) ...... 12, 13

Grant v. Norway, 10 C.B. 665, 138 Eng. Rep. 263 (C.P.

BGS E) oo 5 cui a cue deca eee 12

Japan Lines v. County of Los Angeles, 441 U.S. 434

CIDTS) «oo cn dccuvaohes eed bee ste nal 2

Photo Production Ltd. v. Securior [1980], 1 All E.R.

Soe CPE.) ss 0s eda ub 6 ae 0 ce ee ee 1]

Pollard v. Vinton, 105 U.S. 7 (66H)... ....4.<544400045 12

Portland Fish Co. v. States Steamship Co., 510 F.2d 628

bo he A! | es Ce ry i3

Schooner Freeman v. Buckingham, 59 U.S. (18 How.)

G2 (EGOS. 6 ovina s a ca dees sea eee 12

Suisse Atlantique Societe D’Armement Maritime S.A. v.

N.V. Rotterdamsche Kolen Centrale, [1967] A.C. 361

CPL} one ca scaws bo 50040 ee 1]

The Lady Franklin, 75 U.S. (8 ‘Wall) 325 (1868) ....... 12

Westway Coffee Corp. v. M/V NETUNO, 675 F. 2d 30

(2d Cin. FOGZ).... «cca ue bale xo i 6

Treaties:

International Convention for the Unification of Certain

Rules Relating to (Ocean) Bills of Lading (The Hague

Rules) June 29, 1937, 51 Stat. 233, T.S. 931, 120

LL... 2595, 97, 83... .o5 006 vi, 10, 11

iil

PAGE

Statutes:

The Carriage of Goods by Sea Act, 46 U.S.C.

ad ss gu sce a ace 4 04G ada WON v1

ES ee a ra eer 4,5,6

AER PRE erg ae Pe 8

REA a ea a aa vi, Vili, 11

The Pomerene Act 49 U.S.C.

ee Cee cae a aS yk 04 6a 66 a Aa SA ES 6, 12

CLEA Le ahha 4 5 Ck dn 04480850 E OA 6, 13

a en ran vk RK aka ee 4k 88 OSs 12

Unfair Contract Terms Act of 1977 (England)......... 1]

Uniform Rules and Conventions:

Uniform Customs and Practice for Documentary

Credits, 1.C.C. Publication No. 400 (1983) ......... 8, 10

Uniform Rules for a Combined Transport Document,

1.C.C. Publication No. 298 (1975, reprinted 1980)... 10

Guide to Incoterms, I.C.C. Publication No. 320 (1979) . 8

Convention of International Multimodal Transport of

Goods, U.N. Doc. TD/MT/CONF/i6 (1980) ....... 9, 10

Other Authorities:

Bissel, The Operational Realities of Containerization

and their Effect on the “Package” Limitation and the

“On-Deck” Prohibition: Review and Suggestions, 45

ee PED og ccc aka des ube at vasswues 1]

Coote, The Second Rise and Fall of Fundamental

ns ee PE, PGs sk cb shes acasaeness 1]

iV

PAGE

Driscoll and Larsen, The Convention on International

Multimodal Transport of Goods, 57 Tul. L. Rev. 183

POE Ad kAnCA a NSS SRE ROR eis e454 CSS aes 2

Hearings Before the Committee on the Merchant Marine

and Fisheries, House of Representatives, 68th Con-

gress, 2d Session, January 28/29, 1925............. 10, 11

Murray, History and Development of the Bill of Lading,

Ly ote fo GM | Peer ee ee eee eee 13

Note, Containerization and Intermodal Service in Ocean

Shipping, 21 Stan. L.R. 1077 (1969)............. vil, 3, 11

Report from Committee of Merchant Marine and Fish-

eries, Report No. 2218, 74th Congress, 2d Session

SRK Saas Ok RTS RES RARE K ER PERK A WERT ERASE 1]

Simon, The Law of Shipving Containers, 5 J. Mar. L.

CA: er REP a ok G545 55h ek eek eee eee es 2

Thuong and Collison, Jn Search of a Coherent Policy on

International Intermodal Transportation, 16 J. Mar.

We ge Me og). | ar eee er eee ee Vi

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No.

-

S/S SALVADOR, her engines, boilers, etc., and

A/S IVARANS REDERI,

Petitioners,

—against—

BERISFORD METALS CORPORATION,

Respondent.

—$~ o>

MOTION OF STAR SHIPPING A/S FOR LEAVE TO

FILE ANNEXED BRIEF AMICUS CURIAE IN SUP-

PORT OF PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

To the Justices of the Supreme Court of the United States:

Pursuant to Rule 42 of the Rules of the Supreme Court, Star

Shipping A/S (hereinafter “Star” or “Amicus Curiae”) hereby

moves this Honorable Court for leave to file the annexed brief

as Amicus Curiae in support of the Petition for a Writ of

Certiorari to the United States Court of Appeals for the

Second Circuit. Consent to the filing of the brief was sought

from, but not granted by respondent Berisford Metals Corpo-

ration.

Star is a Norwegian-based shipping organization which

operates a fleet of over 40 vessels, the majority of which are

designed for containers and unitized cargo. Star offers a

multimodal liner service for containerized cargo between Japan

and the United States and between Europe and the United

\ Vi

States. This service includes, in addition to ocean carriage,

“microbridge” and “minibridge” transportation.

Under this comprehensive transportation system, container-

ized cargo may be shipped overland from such points as

Tokyo, Kobe or Nagoya (Japan) to be loaded aboard a Star

vessel at Osaka or Yokohama; thence transported by sea to

Tacoma, Washington and, finally, inland, by rail or truck, to

any one of more than thirty-five U.S. cities. In its European

trade, Star also provides a “feedering” service to transport

containerized cargo by water aboard a “feeder” vessel for

eventual shipment to the United States aboard a “mother”

vessel Operating out of such ports as Antwerp, Gothenburg

and Le Verdon.

In the capticned proceeding, the Second Circuit Court of

Appeals has ruled that an ocean carrier’s liability for a bill of

lading misrepresentation, however innocent, concerning the

quantity or weight of cargo is to be that of an insurer. The $500

per package limitation of the ocean carrier’s liability for

damages, which by treaty and implementing statute’ applies

“in any event”, is not to be applied in this event. To avoid

imposition of insurer’s liability in circumstances where an “on

board” bill of lading is issued, ocean carriers must at the very

least weigh every container at shipside immediately before it is

loaded on board.*

I The term “microbridge” is used to describe an arrangement under

which shipments are picked up from the shipper’s premises and/or

delivered directly to the consignee’s premises or other inland points.

“Minibridge” service provides for overland transportation from one

port to another. (Thuong and Collison, /n Search of a Coherent Policy

on International Intermodal Transportation, 16 J. Mar. L. & Com.

397, n.1).

to

Section 4(5) of the Carriage of Goods by Sea Act (“COGSA”), 46

U.S.C. § 1300 et seq. (1936) implementing the “International Conven-

tion for the Unification of Certain Rules of Law Relating to (Ocean)

Bills of Lading” (The Hague Rules), signed at Brussels on August 25,

1924, 51 Stat. 233, T.S. 931, 120 L.N.T.S. 155, 157, 183 (June 29,

1937).

The Court of Appeals acknowledged (but did not go so far as to

agree with) defendants’ argument that an ocean carrier cannot be

Vii

As a multimodal/container carrier, it is of vital interest to

Star that this Honorable Court be apprised of the severely

adverse impact which this decision will unquestionably have on

the profitable use of containers for ocean carriage and on the

continued development of an efficient, cost-effective multimo-

dal transportation system. The tremendous savings which the

“container revolution” has brought about in the form of

reduced handling and labor costs, lower freight rates, increased

protection against pilferage and damage to cargo, and greater

profitability for vessels because of reduction of time spent in

port* will simply be lost if the decision below stands. The

decision can also be expected to critically interfere with the

burgeoning development of multimodal container transporta-

tion, the great benefit of which, inter alia, is to reduce delivery

time by permitting the transfer of containers from one mode to

another with little delay for handling.°

expected to open and tally the contents of each and every container

(Petition, p. 16a). However, in light of the Court’s most general

statement that defendants were “. . . responsible for verifying the

contents before loading the containers and issuing a clean onboard bill

of lading” (id.), it does not appear that the Court intended to limit the

duty of the carrier to weighing the container immediately prior to

loading. Amicus Curiae believes that very few, if any, ports have scales

available at shipside. If it had not been possible for defendants herein

to have re-weighed the containers at the terminal gate, whether by

reason of scale malfunction, terminal congestion or otherwise, defen-

dants presumably would have been required to strip the containers in

order to verify their contents.

4 Note, Containerization and Intermodal Service in Ocean Shipping,

21 Stan. L.R., 1077 (1969) at pp. 1087-88.

5 Id. at p. 1091. In the operation of Amicus Curiae, where, for

example, the first “!eg” of the carriage is by railroad, the container will

not normally be weighed before being placed on the train. The

container will be off-loaded from the train at the railhead inside the

port container terminal and wil! be loaded aboard a Star vessel for

ocean carriage without being weighed or opened. Under the holding of

this case, the ocean carrier, to protect itself from insurer’s liability tor

misrepresentation, must weigh or strip and tally each and every

container upon receipt and before loading it on the vessel. This

additional handling will increase the possibility of damage to or theft

of the cargo. And if each container must be stripped, tallied and

repacked because scales are not available, it will be /ess efficient to

transport cargo in containers than break-bulk.

Vill

In declining to apply the unequivocal language of COGSA’s

§ 4(5) “in any event” to the facts of the captioned proceeding,

the Court of Appeals has not only deviated from the text of an

international treaty; the Court has also fundamentally erred in

failing to recognize that the issuance of a clean “on board” bill

of lading for containerized cargo is a very different matter than

the issuance of one for break-bulk cargo which can be loaded

and tallied simultaneously. It is the purpose of Amicus Curiae

to treat of the error in the decision below from the perspective

of a participant in multimodal container transportation. Ami-

cus Curiae respectfully submits that it is appropriate for this

Court to consider the broader implications of a case which

threatens to most seriously undermine deveiopments in the

very forefront of shipping technology.

Accordingly, Amicus Curiae respectfully requests leave to

file the annexed brief.

Dated: New York, New York

May 22, 1986

Respectfully submitted,

/s/ LEROY S. CORSA

LeRoy S. Corsa

Attorney for Amicus Curiae

Star Shipping A/S

40 Wall Street

New York, New York 10005

(212) 344-4700

Sandra R.M. Gluck

Lenore E. McQuilling

WALKER & CORSA

Of Counsel

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No.

sii

S/S SALVADOR, her engines, boilers, etc., and

A/S IVARANS REDERI,

Petitioners,

—against—

BERISFORD METALS CORPORATION,

Respondent.

>

MOTION OF STAR SHIPPING A/S FOR LEAVE TO

FILE ANNEXED BRIEF AMICUS CURIAE IN SUP-

PORT OF PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

STATEMENT OF INTEREST OF AMICUS CURIAE

Amicus curiae Star Shipping A/S (hereinafter “Star” or

“Amicus Curiae”) operates a fleet of over 40 ocean-going

vessels, offering a multimodal liner service for containerized

cargo in the Far East, Europe and the United States. The

multimodal aspect of Star’s operation includes, in addition to

ocean carriage, both “microbridge” and “minibridge” ser-

vices. '

Amicus Curiae, together with a@// participants in the con-

tainer/multimodal transportation system, have a vital interest

l These terms are defined at p. 2, f.n. 1 of Amicus Curiae’s motion

for leave to file this brief to which the Court is respectfully referred.

in the decision rendered by the Second Circuit Court of

Appeals in the captioned proceeding. It is the purpose of this

brief to apprise this Honorable Court of the far-reaching and

highly adverse impact this decision can be expected to exert on

the container/multimodal “revolution” which has been of such

great benefit to shippers, shipowners and inland carriers alike.

ARGUMENT

POINT I

THE DEVELOPMENT AND SIGNIFICANCE OF

CONTAINERIZATION AND MULTIMODAL

TRANSPORTATION

The development and rapid growth of containerization’ in

the shipping industry has been described, with reason, as a

“revolution” akin to the invention of the steam engine.’ U.S.

shippers and carriers have been active participants in this

“revolution.”*

The tremendous benefits of containerization accrue to ship-

pers, inland carriers and ocean carriers. It has been estimated

that placing goods in a container permits the shipper/exporter

- A container has been described as “. . . a permanent reusable

article of transport equipment . . . durably made of metal, and

equipped with doors for easy access to the goods and for repeated use.

It is designed to facilitate the handling, loading, stowage aboard ship,

carriage, discharge from ship, movement and transfer of large number

of packages simultaneousiy “y mechanical means to minimize the cost

and risks of manually pr -essing each package.” Simon, The Law of

Shipping Containers, 5 J.Mar.L. & Com. 507, 513 (1974), cited by this

Court in Japan Lines v. County of Los Angeles, 441 U.S. 434, 436, n.1

(1979).

3 Simon, The Law of Shipping Containers, supra at p. 507.

4 In 1982, there were two million containers in use worldwide, approx-

imately half of which were U.S.-owned (Driscoll and Larsen, The

Convention on International Multimodal Transport of Goods, 57 Tul.

L. Rev. 183 at p. 198 (December, 1982).

3

to reduce packaging costs by more than one-third.° And

because the packaging can be reduced, the weight of the

shipment is similarly reduced so that the shipper pays less

freight.° The packaging can be done in a fashion which secures

even delicate cargo.’ Finally, the shipper, by containerizing the

cargo, provides substantial protection against pilferage.*

For ocean and inland carriers, the most obvious benefit of

containerization is the reduction of handling costs. It has been

estimated that stevedoring expenses for break-bulk cargo are in

excess of five times the cost for similar containerized cargo.”

For the ocean carrier, this reduction in stevedoring time is also

significant because it permits the vessel to spend fewer days in

port:

An efficient container ship spends less than 25% of its

time in port, compared to 60% for the conventional ship.

Port fees are reduced, but more important, the ship is

able to increase the number of voyages per year as well as

its annual tonnage. . .”!°

Most significantly, containerization is the basic building

block of a multimodal transportation system:

The theory of intermodal transport is based on the con-

solidation of several break-bulk units into a single inter-

changeable transportation unit that can be carried via a

combination of several modes of transportation under a

5 Note, Conéainerization and Intermodal Service In Ocean Shipping,

21 Stan..R. 1077 at pp. 1087-88 (1969).

6 Id.

7 This feature is most significant for those customers of Amicus

Curiae who utilize the Star container service for shipment of elec-

tronics (from Japan) and wines and spirits (from Europe).

8 Note, Containerization and Intermodal Service In Ocean Shipping,

supra.

9 Id.

10 Jd. at p. 1088.

4

single shipping document and a single freight charge

from the shipper’s warehouse to the consignee’s ware-

house. The container is the interchangeable transporta-

tion unit which it was hoped would prove to be the

integrating element of an intermodal transportation

system.’!

As one commentator has noted, because multimodal transpor-

tation reduces and simplifies a shipper’s export documenta-

tion, smaller shippers, who might otherwise be deterred from

entering export trade because of the difficulties of contracting

with several carriers and dealing with multiple bills of lading,

are encouraged to ship their goods abroad.”

It is respectfully submitted that the decision of the Court

below is essentially out-of-step with, and will seriously under-

mine the efforts of the U.S. shipping industry to develop an

efficient and effective multimodal transportation system.

POINT Il

MARINE BILLS OF LADING AND CONTAINER/

MULTIMODAL SHIPMENTS

In its undue emphasis on statements concerning quantity and

weight in a marine bil! of lading, the Court of Appeals failed

to give due emphasis to the fact that a bill of lading, though

issued on the form of the ocean carrier, is almost always

prepared by the shipper (or his agent).'> This fact assumes

great significance for containerized cargo when it is considered

1] Bissel, The Operational Realities of Containerization and their

Effect on the “Package” Limitation and the “On-Deck” Prohibition:

Review and Suggestions, 45 Tul. L. Rev. 902, 910 (1971).

~ Note, Containerization and Intermodal Service In Ocean Shipping,

supra, at p. 1090.

13 This arrangement is implicitly recognized in COGSA’s § 3(3) which

requires the ocean carrier to issue a bill of lading containing informa-

tion “. . . as furnished in writing by the shipper.”

that containers are often packed and seaied by the shipper and

so delivered to (or picked up by) the ocean carrier.

The decision of the Court below, holding an ocean carrier

liable without benefit of the $500 per package limitation of

liability for any misrepresentation concerning quantity or

weight on the bill of lading, creates an absolutely unworkabie

Situation for ocean carriers transporting containers whose

contents they have never inspected. Whenever the shipper of a

pre-packed and sealed container proffers to the ocean carrier a

bill of lading and requests that it be “issued”, the possibilities

for “misrepresentation” are rife. To avoid becoming subject to

insurer’s liability for such misrepresentation, the carrier must

open the container upon receipt, strip and tally its contents,

and then repack the container, all the while risking that this

increased handling will damage the goods; that they will not be

repacked as the shipper intended; or that the goods may simply

be stolen. It goes without saying that if the ocean carrier does

what the Second Circuit Court of Appeals indicates it must do

to protect its per package limitation, the effect would be to

destroy all of the benefits conferred by containerization.

Can a carrier protect itself by simply weighing the container

when the bill of lading details not only weight but also quantity

(for example, the number of cartons or packages contained

therein)? The decision of the Second Circuit Court of Appeals

is most unclear.’

It is also possible that shipowners will attempt to simply

delete all references to quantity and weight, in reliance on

§ 3(3)(c) of COGSA which provides, in relevant part:

14 As noted at p. 3, f.n. 3 of the Motion of Amicus Curiae for leave to

file this brief, the Court of Appeals’ general statement that the

shipowner must verify the contents of a container before issuing a bill

of lading therefor indicating quantity and/or weight does not limit the

carrier’s responsibility to weighing. It is not clear what would have

been the result in this case if the thieves had replaced the stolen ingots

with a “cargo” of equal weight. The bill of lading would still have

misrepresented the quantity of cargo (i.e. 100 bundles of tin ingots).

6

That no carrier, master or agent of the carrier, shall be

bound to state or show in the bill of lading any...

number, quantity or weight which he has reasonable

ground for suspecting not accurately to represent the

goods actually received, or which he has had no reason-

able means of checking. 46 U.S.C. § 1303(3)(c).

It is certainly questionable, however, whether mere receipt of a

sealed container furnishes sufficient basis for suspecting that

the shipper has not accurately represented the goods. And

since the carrier can always open the container (however costly

and risky that may be), guaere whether the carrier “. . . has

had no reasonable means of checking” within the meaning of

COGSA’s § 3(3)(c). Finally, and most importantly, deletion of

all information in the bill of lading concerning quantity and

weight would likely not permit the bill to be negotiated. Why

would a buyer agree to a documentary sales transaction if his

document of title makes no reference to the quantity of goods

he has purchased?

Nor is it likely that shipowners could avoid the drastic

consequences of the decision below by inserting words in the

bill of lading (in a situation where the container is packed and

sealed by the shipper) such as “shipper’s load, count and

stow”.!°

The foregoing discussion demonstrates that, although the

misrepresentation dealt with by the Court of Appeals in the

captioned proceeding pertained to the “on board” statement

on the bill of lading, there is no logical reason that the Court’s

decision would not also be applied to misrepresentations on

“received for shipment” bills of lading. As a result, ocean

15 Interestingly, the Pomerene Act, 49 U.S.C. §§ 81 ef seqg., would

appear to permit just such a reservation in the case of shipper-packed

containers (49 U.S.C. § 101). The Pomerene Act only applies, how-

ever, to outbound shipments. As far as inbound shipments are con-

cerned, the Second Circuit Court of Appeals has held that “shipper’s

load and count” reservations on a bill of lading, even for shipper-

packed and sealed containers, are basically meaningless. Westway

Coffee Corp v. M/V NETUNO, 675 F. 2d 30 (1982).

carriers will expose themselves to increased liability whenever

they issue bills of lading containing particulars concerning

quantity and weight for cargo which has been packed into

containers by the shipper.

The only certain means by which an ocean carrier can

preserve its per package limitation is to pack every container

itself or to open, strip and tally every pre-packed container. In

either event, containerization becomes a burden, not a benefit.

And it is certainly not only—or even primarily—the ocean

carrier that will suffer the consequences. It is the shipper’s

gcods which will be subject to increased handling; and it is the

shipper who will inevitably bear the increased costs which will

necessarily be incurred if ocean carriers comply with the

directive of the Second Circuit Court of Appeals in order to

avoid insurer’s liability.

Misrepresentations concerning “on board” bills of lading,

with which the decision below is specifically concerned, consti-

tute an obvious risk whether containers are stuffed by shippers

or packed by ocean carriers. In either event, it is not only

common but usual for containers to remain at the terminal for

more than 24 hours between the time of receipt and the time of

loading on board the vessel. As in the case at bar, they may not

even be in the custody or control of the ocean carrier during

that period of time.

The Second Circuit Court of Appeals has ruled that ship-

owners nave a minimum duty to weigh containers at shipside

immediately before loading. Amicus Curiae submits that there

are few, if any, ports in the world which have facilities for

weighing containers at shipside. As a result, containers will

have to be transported back to the container terminal entrance

(or wherever the terminal scales are located) prior to being

loaded aboard ship. This might well require moving surround-

ing containers in order to isolate the container which is to be

loaded. It is no exaggeration to say that such a procedure is so

impractical and costly that ocean carriers simply will not do it.

Rather, they will risk imposition of insurer’s liability which will

then be passed on to shippers and consignees in the form of

increased freight. It is the small shipper, for whom container-

ization and multimodal transportation has been a boon, who

will bear the true burden of the decision in this case.

It is important to note that the ocean carrier may not refuse

to make an “on board” representation on a bill of lading as he

can with respect to the quantity or weight of the goods. Under

COGSA’s § 3(7):

After the goods are loaded, the bill of lading to be issued

by the carrier, master or agent of the carrier to the shipper

shall, if the shipper so demands, be a ‘shipped’ bill of

lading. . . 46 U.S.C. § 1303(7).

An “on board” statement is also required for marine bills of

lading under the Uniform Customs and Practice for Docu-

mentary Credits, 1.C.C. Publication No. 400 (1983), Article 26

(a)(ii) and (c)(iii).'° Nor can ocean carriers avoid an “on

board” statement on a multimodal bill of lading by providing

for “intended vessel.”"”

16 As the Court of Appeals noted, an “on board” bill of lading is often

required oy the underlying sales agreement between shipper and

consignee (Petition, p. 13a). In “FOB”, “C.1.F.” or “C&F” contracts,

the risk of loss of or damage to the goods is transferred from seller to

buyer at the ship’s rail (Guide to Incoterms, 1.C.C. Publication No.

320 11979] pp. 22-28).

17 Article 26(c)(iii) of the Uniform Customs and Practice for Documen-

tary Credits, supra, provides that banks will reject a document which:

“contains the indication ‘intended’ or similar qualification in relation

to the vessel and/or the port of loading unless such document bears an

on board notation in accordance with Article 27(b) and also indicates

the actual port of loading”. However, if a documentary sales trans-

action does not require a marine bill of lading, Article 25 provides that

banks may accept transport documents which indicate either “taking in

charge” or “loading on board”. Thus, the ocean carrier must issue an

“on board” bill of !ading for a multimodal shipment. The decision

below, by imposing insurer’s liability for “on board” misstatements,

will inevitably force ocean carriers to increase their freight and there-

fore, reduce the competitive position of ocean carriers vis-a-vis other

carriers who need not issue “on board” bills of lading.

9

The Court of Appeals’ imposition on ocean carriers of

liability without benefit of the $500 per package limitation for

misstatements in “on board” or “received for shipment” bills

of lading will be particularly onerous in a multimodal shipment

situation. In the multimodal operations of Amicus Curiae,

where pre-carriage is often by rail or barge, containers are

usually not weighed before being placed on the railroad/barge.

The containers are then off-loaded at the port container

terminal where they remain for at least 24 hours before being

loaded aboard a Star vessel. They are not customarily weighed

at the container terminal either upon receipt from the railroad/

barge'® or immediately prior to being loaded. Bilis of lading

issued for the cargo are invariably prepared by the shipper’s

agent who is in the best position to furnish particulars concern-

ing quantity and weight.

To comply with the decision in this case, Star and other

carriers similarly situated would have to ensure, at the very

least, that every port container terminal used by their vessels

install weight scales at railheads and stringpieces in sufficient

number that every container entering such terminal can be

weighed upon entry and immediately prior to loading. Even if

this were possible (and there is certainly no guarantee that port

terminals the world over would agree}, it would destroy all of

the benefits of containerization/multimodal transport dis-

cussed earlier in this brief.

In 1980, multimodal transportation was the subject of a

United Nations Convention which considered, inter alia, the

specific problem of misrepresentations in multimodal transport

documents.'” Article 11 thereof provides that a carrier’s lia-

18 The procedure where pre-carriage is by truck is slightly different in

that the truck normally will pass over weight scales located at the

terminal gates, so that the weight of the containers being carried can

easily be ascertained.

19 Convention on International Multimodal Transport of Goods, U.N.

Doc. TD/MT/CONF/16(1980), reproduced in Driscoll and Larsen,

The Convention on International Multimodal Transport of Goods, 57

Tul. L. Rev. 193 (December, 1982).

10

bility for false information in a multimodal transport docu-

ment is to be without benefit of a per package limitation of

liability only if the document is issued “. . . with intent to

defraud”. It is respectfully submitted that the Convention

recognizes what the Second Circuit Court of Appeals in this

case did not: that to penalize ocean carriers for innocent or

negligent misstatements on bills of iading will undermine the

continued development of multimodal/container transporta-

tion.

POINT Il

THE DECISION BELOW IS IN CONFLICT WITH PAST

AND CONTINUING EFFORTS BY CARRIERS AND

SHIPPERS TO ACHIEVE A UNIFORM, SIMPLIFIED

AND PREDICTABLE SET OF RULES TO GOVERN

INTERNATIONAL TRANSPORTATION

The Convention on International Multimodal Transport of

Goods, the Uniform Rules for a Combined Transport Docu-

ment” and the Uniform Customs and Practice for Documen-

tary Credits, supra all represent a substantial, continuing effort

to streamline international commerce and transportation. This

effort is not, however, of recent origin. The Hague Rules,

implemented by the U.S. and other maritime nations, were

designed to achieve the same end: the creation of a balanced

and predictable transportation system.”

20. ——«.C.C. Publication No. 298 (1975; reprinted 1980).

21 At Congressional hearings held in connection with the Hague Rules,

the Chairman of the I.C.C. Bill of Lading Committee emphasized that

. . the most important thing of all in international transportation

[is] to draw the line with reasonable honesty, trying to do reasonable

justice to all sides, but drawing the line at some place for-all countries,

so you could make some system possible. If the underwriter can insure,

the banker knows his righs, the carrier knows his risks and can cover

himself, you have a system. but when you have every nation with a

11

In failing to apply the clear words of COGSA’s § 4(5) “in

any event”, the Court of Appeals has rejected the past and

continuing efforts of the international shipping community to

achieve uniformity. And in describing defendant’s innocent

misrepresentation as a “fundamental breach” depriving it of

all defenses or limitations of liability in the contract of car-

riage, the Court has inappropriately interfered with the delicate

balance, achieved by the Hague Rules, of the competing

interests of shipper, carrier and consignee.”

A close reading of the decision below reveals that the Court

of Appeals has treated an innocent or negligent misrepresenta-

tion in an ocean bill of lading as giving rise to a cause of action

different law and every carrier with a different bill of lading, you have

absolute chaos.” Hearings before the Committee on the Merchant

Marine and Fisheries, House of Representatives, 68th Congress, 2d

Session, January 28/29, 1925.

This sentiment was echoed by the Secretary of State in 1936 when he

urged Congress to implement the Hague Rules without amendment:

“The uniformity in the laws of all maritime nations which it is sought

to advance by the adoption of the international rules concerning bills

of lading for the carriage of goods by sea as embraced in the

convention will be unattained, to the extent to which the provisions of

laws enacted by the U.S. or by other countries differ in detail from the

international rules.” Report from Committee of Merchant Marine and

Fisheries, Report No. 2218, 74th Congress, 2d Session (1936).

22 It is noteworthy that the doctrine of “fundamental breach” as a rule

of law ousting exculpatory or liquidated damages provisions in con-

tracts (which, at one time, was embraced by the English Court of

Appeals) has been severely criticized and was ultimately rejected by the

House of Lords (Suisse Atlantique Societe D’Armement Maritime

S.A. v. N.V. Rotterdamsche Kolen Centrale [1967] A.C. 361 (1966);

Photo Production Ltd. v. Securior [1980] 1 All E.R. 556). See, also,

Coote, The Second Rise and Fall of Fundamental Breach, 55 Austra-

lian Law L.J. 788.

In Photo Production, Ltd. v. Securior, the House of Lords was

particularly influenced by the passage of the Unfair Contract Terms

Act of 1977 by which the Engiish Parliament regulated the use of

exculpatory clauses in certain types of standard form contracts.

Amicus Curiae submits that the adoption of the Hague Rules by the

world community similarly removed the need for the judicial interven-

tionism which the opinion below represents.

12

that is, in essence, separate from, or alternative to an ordinary

breach of contract cause of action.”

The Court of Appeals’ analysis appears to be a sequel to its

decision in Elgie & Co. v. S.S. S.A. NEDERBURG, 599 F. 2d

1177 (1979), cert. denied 444 U.S. 1072 (1980). In Elgie & Co.,

which involved a shipment from the United States, the Court

“applied” § 22 of the Pomerene Act, 49 U.S.C. §§ 81 ef seq.

and held that the carrier could not limit its liability for a

misrepresentation in the bill of lading because the Pomerene

Act does not contain limitation of liability provisions. As the

Court acknowledged in its decision in the case at bar (Petition,

p. 17(a), f.n. 4), the bill of lading in E/gie & Co. provided for

the application of COGSA to the entire period of time that the

goods were in the carrier’s custody. Thus, in Elgie & Co., the

Court of Appeals implicitly held that § 22 of the Pomerene Act

creates a separate cause of action to which COGSA defenses

and the $500 per package limitation of liability do not apply.

Amicus Curiae submits that Elgie & Co. was wrongly de-

cided and that the decision in the case at bar is similarly in

error. Section 22 of the Pomerene Act was enacted in response

to the line of authority, beginning with the English decision of

Grant v. Norway, 10 C.B. 665, 138 Eng. Rep. 263 (C.P. 1851),

holding that a carrier could not be liable for non-receipt of

cargo to a third-party who had relied upon a false representa-

tion in a bill of lading that the cargo had been loaded. These

decisions” proceeded on the theory that the issuer of the bill of

lading only had authority to issue bills of lading for goods |

actually loaded on board the vessel and could not bind the

vessel owner by false representations. As a result of the

enactment of § 22 of the Pomerene Act, a carrier was estopped

23 See, for example, the Court’s statement that plaintiff’s suit “. . . is

not based on the theft of the ingots or on Ivarans’ negligence but on

the carrier’s false representation that it loaded the 70 containers [sic]

on its ship.” (Petition, p. 17a).

24 For U.S. decisions, see Schooner Freeman v. Buckingham, 59 U.S.

(18 How.) 182 (1855); The Lady Franklin, 75 U.S. (8 Wall.) 325 (1868);

Pollard v. Vinton, 105 U.S. 7 (1881).

13

from arguing that a bill of lading was issued without its

authority in these circumstances, Portland Fish Company vy.

States Steamship Company, 510 F.2d 628, at p. 632 (9th Cir.

1974). See, generally, Murray, History and Development of the

Bill of Lading, 37 U. of Miami L.R. 689.

There is nothing in the legislative history of the Pomerene

Act or COGSA which justifies the E/gie & Co. holding that a

bill of lading misstatement gives rise to a cause of action which

is to be adjudicated without reference to the other terms of the

contract of carriage. Af most, application of the principle

codified by § 22 of the Pomerene Act gives rise to an estoppel

which precludes the carrier from denying (as against a holder

who was relied thereon) the receipt of cargo as described in the

bill of lading. Portland Fish Company vy. States Steamship

Company, supra.”

The Court of Appeals’ treatment of bill of lading misrepre-

sentations is in conflict with the basic goal of multimodal

transportation to establish a single contract between the ship-

per and multimodal carrier which can be enforced in accord-

ance with agreed upon principles of contractual liability.

Carving out a “misrepresentation” cause of action, but only

for quantity and weight on ocean bills of lading, cannot

possibly be reconciled with the creation of a uniform, multi-

modal contract of carriage.

25 Significantly, the Court of Appeals in Portland Fish, in response to

applications by ocean carriers to file Driefs amicus curiae concerning

the effects of this decision on containerization, stated: “Since the case

before us involves solely a bulk shipment subject to piece count, the

questions thus raised will have to wait another day for decision. We

intimate no opinion on them.” 510 F.2d at p. 634. Amicus Curiae

respectfully suggests that the “answer” can be found in § 21 of the

Pomerene Act (49 U.S.C. § 101) which relieves a carrier from liability

for non-receipt of cargo loaded by a shipper.

CONCLUSION

For the foregoing reasons, Amicus Curiae prays that a writ

of certiorari to the United States Court of Appeals for the

Second Circuit be granted.

Respectfully submitted,

LEROY S. CORSA

Attorney for AMICUS CURIAE

STAR SHIPPING A/S

40 Wall Street

New York, New York 10005

(212) 344-4700

SANDRA R.M. GLUCK

LENORE E. MCQUILLING

WALKER & CORSA

Of Counsel