Petition for Writ of Certiorari — Mammoet Shipping B. V. v. Sky Shipping Ltd.

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98 204 JUL 301998

No. EME @E THE CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1998

MAMMOET SHIPPING B.V., MopUL CARRIERS

A.G. & Co. “TITAN SCAN” SCHIFFARTS

K.G., and M/V TITAN SCAN,

rm Petitioners,

Sky SHIPPING LTD.,

anit Respondent,

ITEL CONTAINER CORPORATION, ef al.,

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

ROBERT S. GLENN, JR.*

GEORGE M. EARLE

HUNTER, MACLEAN, EXLEY

& DUNN, P.C.

Post Office Box 9848

Savannah, Georgia 31412

(912) 236-0261

Attorneys for Petitioners

* Counsel of Record

De TASMAN SEARS a ORR A TPOS ADT DNATA NI

WILSON - Eras PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

QUESTION PRESENTED

Whether, with respect to a bill of lading to which the

United States Carriage of Goods by Sea Act (“U.S.

COGSA”), 46 U.S.C. 1300, et seg., applies ex proprio

vigore, the inclusion of a clause providing for “English

law to apply” unambiguously evidences the ocean carrier’s

consent to a liability limit higher than that provided

by U.S. COGSA and results in the application of Eng-

land’s Hague-Visby Rules where the clear language of the |

bill of lading requires the application of Japanese |

COGSA?

(i)

LIST OF PARTIES

The parties to the proceedings below are those set forth

in the caption. Pursuant to Rule 29.6 of the Rules of the

Supreme Court of the United States, petitioners have no

parent or subsidiary companies.

aK wea

at Fes

QUESTIONS PRESENTED ..

TABLE OF CONTENTS

BEE, SANE NRA igh enlist bnimaincbinininhxtibtinsibiiaiilenesitiocins

STATEMENT OF THE CASE ..........

Ae ee ee ween ween eeee

A. Statement Of Proceedings And Disposition In

The Courts Below

B. Statement Of The Facts

The first round of summary judgment

motions

The second round of summary judgment

EEE SEE GP ca Slee a yo eae we eee

The district court’s order and judgment

The appeal to the Eleventh Circuit Court of

(RES ES SUT IEE ES Ot CORO PP

lieth eee ee

Negotiation of the contracts of carriage........

a. The Candyline/Itel Booking Note and Bill

Ne a

b. The Candyline/Mammoet Booking Note

eS es

I an Hw

Siti as

TABLE OF CONTENTS—Continued

Page

REASONS FOR GRANTING THE PETITION

I. THE COURT OF APPEALS’ INTERPRETA-

TION AND APPLICATION OF U.S. COGSA

§$1304(5) PRESENTS AN IMPORTANT

QUESTION OF FEDERAL LAW UPON

WHICH DISTRICT COURTS HAVE

REACHED CONFLICTING RESULTS, THUS

REQUIRING GUIDANCE FROM THIS

0.) 1): aN CRa Ean Canes eE ere oe te Le re 13

A. Application of U.S. COGSA ........-..-s0-se-se--e-0 13

B. Increasing the liability limit “by agreement’’.. 14 |

C. Conflicting decisions of district courts ........... 15

Il. THE DECISION OF THE COURT OF AP- |

PEALS IS ERRONEOUS AND DEPARTS }

FROM THE ACCEPTED AND USUAL MAN-

NER OF RESOLVING THE ISSUE PRE- |

SENTED BY THIS CASE .......................000-...02-<- 19 |

A. “English law to apply” does not result in the

application of England’s Hague-Visby Rules.. 19

I FI coach sa siva seh da chines snpansinhinadinetigpich beng daminancent 23

Pg 1.11 eG Gee taiencrne Pen nein cameememe tr. >.> Faw la

rE a one etonsebnaiotimnnnbinaaneces 14a

IE, Sook on snore naccboagniaseananlacartionnions 16a

Pe a iti cecdneeinrteiieeseriecatenbecgiinianhionsiidinscadtnes 45a

Pe > 4 AER REN eT es PE OT or cians ae 47a ;

Pg 51) | Gh SER RRRRE ICIS O50 Oe Paes OE. = Ee 105a

TABLE OF AUTHORITIES

Cases Page

Associated Metals & Minerals Corp. v. M/V

ARKTIS SKY, 1991 A.M.C. 1499 (S.D.N.Y.

1991), rev’d on other grounds, 978 F.2d 47 (2d

tO + RUPE AS Te yet Shi ota aR ne a ae 17, 20

Associated Metals & Minerals Corp. v. M/V

LUMBE, 1998 A.M.C. 700 (D.N.J. 1991) _......... 18

Associated Metals v. M/V STAR SKARVEN, 1995

A.M.C. 505 (S.D. Fla. 1994) 000.0000. 18

Daval Steel Products v. ACADIA FOREST, 1988

ASC. 1660 (6. DN.Y. 1008) lk... 17

Francosteel Corp. v. The DEPPE EUROPE, 1990

A.M.C. 2062 (S.D.N.Y.. 2900). ocscccnccccccscscisscecccies. 17, 19

Francosteel Corp. v. M/V KAPETAN ANDREAS

G, 1993 A.M.C. 1924 (S.D.N.Y. 1998) ................ 15, 17

Francosteel Corp. v. M/V PAL MARINOS, 885

F. wee. OS CDN. 3. 2000) nck ea 17

Hellenic Steel Co. & Others v. Svolamar Shipping

Co. Ltd. & Others, 1 Lloyd’s Rep. 370 (Ct. App.

NOOR cesses ee cS 5 21

Ilva U.S.A., Inc. v. M/V BOTIC, 1998 A.M.C. 240

(E.D. Pa. 1992), aff’d, 1998 A.M.C. 2445 (8rd

2 Ae} PEREGO ananesr eM aie mameler 3:18) 18, 20

I.N.A. v. The ATLANTIC CORONA, 704 F. Supp.

eT M.A | Seakraovanne can unl mer ame 17

I.N.A, v. The SEALAND DEVELOPER, 1990

A.M.C. 2967 (S.D.N.Y. 1089) ...:.-..cc.cccccsscsnasese 17

Itel Container Corp. v. M/V TITAN SCAN, 1997

A.M.C. 1568 (S.D. Ga. 1996), aff'd in part, rev’d

in part, 189 F.2d 1450 (11th Cir. 1998) ............. 2

Lauritzen Reefers v. Ocean Reef Transport Ltd.

S.A., 2 Lloyd’s Rep. 744 (Q.B. 1997) ............ 22, 23

Pyropower Corp. v. M/V ALPS MARU, 1998

Am 1668 -(2.D. Pa. 1008? ok es 18

Rockwell Int’l Corp. v. S/S KOELN EXPRESS,

1987 A.M.C. 2587 (D. Md. 1987) ......................... 18

Sunds Defibrator, Inc. v. M/V ATLANTIC STAR,

1986 A.M.C. 368 (S.D.N.Y. 1986) ................. 14, 16

Unimac Co., Inc. v. C.F. Ocean Serv., Inc., 43 F.3d

Un Re CTY SOIT acces chicken as 13

——

TABLE OF AUTHORITIES—Continued

Page

Valmet Materials Handling Equip. Inc. v. Nedlloyd

Lijnen B.V. Rotterdam, 1998 A.M.C. 1248 (M.D.

SD RED eres en Cae EE ed 15

Statutes

United States Carriage of Goods by Sea Act,

46 U.S.C. § 1300, et seq. NEE. OR Ee i

CB UEG. § BGR CO ii. sk 14

Se es Te UN ibicencieitcicicaieiie a be 2,14

fe Ra bo: ay area eer TER eS 13

British Carriage of Goods by Sea Act................. 19, 20, 21

Japanese International Carriage of Goods by Sea

SOUT iaisish ditinecMaiicindisidiicininsies ian cctthaasnih tea ese 19

Rules and Regulations

at sv BOI sccndanlitiniictcdsncdpshticenasitenle date 3

Miscellaneous

2A Benedict on Admiralty § 41 at 5-2 (7th ed.

MPR ieibotitihschisnisciiapindatbsichisinsatoh nie idesliciuacemuon ie 13

2A Benedict on Admiralty § 46 at 5-18 (7th ed

RITE D idiiinbepiinasinstiiedhasindpiabaliuisiiniidatedibccia ciate Ae eee? 13

2A Benedict on Admiralty § 46 at 5-14 (7th ed.

MAINE svciticihisninicisasnesiaiaeaipnbing tek dinaiden mene. titas 15

T. R. Jefferies, COGSA or Hague-Visby: Cargo

Damages in International Shipments, 18 Hous.

é. Intl i. 367, TOS (1906) 2S 16

A. Nakazawa and A. Moghaddam, Choice of For-

eign Law Clauses in Bills of Lading, 17 Tul. Mar.

Reb tar RR Ue an ae rae 14

W. Tetley, Acceptance of Higher Visby Liability

Limits by U.S. Courts, 23 J. Mar. L. & Com. 55

CBD simnciicthiniscehinciccttchsibiinbtitaleshsceiiebd ashstitaasscaiiecs 16

. eee Ler a eee y ee

In THE

— Suytrene Court of the United States

OcTOBER TERM, 1998

No.

MAMMOET SHIPPING B.V., MoDUL CARRIERS

A.G. & Co. “TITAN SCAN” ScHIFFARTS

K.G., and M/V TITAN SCAN,

. Petitioners,

SKY SHIPPING LTD.,

esi Respondent,,

ITEL CONTAINER CORPORATION, et al.,

Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

PETITION FOR A WRIT OF CERTIORARI

Petitioners Mammoet Shipping B.V. (“Mammoet”),

Modul Carriers A.G. & Co. “Titan Scan” Schiffarts K.G.

(“Modul”) and the M/V TITAN SCAN respectfully

pray that a writ of certiorari issue to review the order

and judgment of the United States Court of Appeals for

the Eleventh Circuit entered in this proceeding.

OPINIONS AND JUDGMENTS BELOW

The United States Court of Appeals for the Eleventh

Circuit entered its order and judgment on May 1, 1990,

(App. A & B, infra). The opinion of the court of ap-

peals (App. A, infra, la-13a) is reported at 139 F.3d

1450 (11th Cir. 1998). The order and judgment of the

United States District Court for the Sovthern District of

Georgia (App. C & D, infra) are reported at 1997 A.M.C.

1568 (S.D. Ga. 1996).

JURISDICTION

The court of appeals entered its judgment on May 1,

1998. (App. B, infra, 14a-15a). The jurisdiction of

this Court is invoked under 28 U.S.C. § 1254(1).

STATUTORY PROVISION INVOLVED

The U.S. COGSA package limitation provides in rele-

vant part as follows:

(5) Neither the carrier nor the ship shall in any

event be or become liable for any loss or damage

to or in connection with the transportation of goods

in an amount exceeding $500 per package lawful

money of the United States . . . unless the nature and

value of such goods have been declared by the

shipper before shipment and inserted in the bill of

lading...

By agreement between the Carrier, master, or agent

of the carrier, and the shipper another maximum

amount than that mentioned in this paragraph may

be fixed ....

46 U.S.C. § 1304(5) (emphasis added).

STATEMENT OF THE CASE

A. Statement Of Proceedings And Disposition In The Courts

Below.

On or about January 23, 1992, Itel Container Corpor-

ation (“Itel”) filed its complaint in the United States

Wistrict Court for the Southern District of New York

against the M/V TITAN SCAN, in rem, and against

Modul Carriers A.G. & Co. “Titan Scan” Schiffarts K.G.

“(Modul”) and Sky Shipping Ltd. p/k/a Candyline Ltd.

(“Candyline”), in personam, seeking to recover damages

associated with the loss of 20 new refrigerated (“reefer”

containers and physical damage sustained by 6 other new

refrigerated containers. On or about July 8, 1993, Itel

filed an amended complaint in the United States District

Court for the Southern District of New York, naming as

additional defendants Mammoet and Autoridad Portuaria

Nacional (“Autoridad”).1 The district court had sub-

ject matter jurisdiction pursuant to 28 U.S.C. § 1333. By

order dated February 4, 1994, the lawsuit was trans-

ferred from the United States District Court for the South-

ern District of New York to the United States District

Court for the Southern District of Georgia.

1. The first round of summary judgment motions.

On March 13, 1995, Mammoet? filed a motion for par-

tial summary judgment asserting that Itel’s cause of action

was time-barred as against it or, alternatively, that the

package limitation of U.S. COGSA, 46 U.S.C. § 1304(5),

limited the liability of Mammoet to a maximum of $500.00

for each damaged or lost container. On May 5, 1995,

Candyline filed a motion for partial summary judgment,

adopting that portion of Mammoet’s motion for summary

of judgment which supported the application of the U.S.

COGSA package limitation.

On May 5, 1995, Itel filed a memorandum of law in

Opposition to Mammoet’s motion for partial summary

judgment. Itel asserted that its cause of action against

Mammoet was not time barred and, moreover, the applica-

ble package limitation was the higher limitation of lia-

bility of England’s Hague-Visby Rules, not the lower lim-

1 Autoridad is a stevedoring company which was never served

with process in this lawsuit. As a result, Autoridad was dismissed

from the lawsuit pursuant to Fed. R. Civ. P. 4(m). (App. A,

infra, 3a n.2).

2 Except as noted specifically otherwise, Mammoet, Modul and the

M/V TITAN SCAN may be referred to collectively as Mammoet.

itation of U.S. COGSA. On May 25, 1995, Itel filed its

memorandum of law in opposition to Candyline’s motion

for partial summary judgment. Itel asserted that the

package limitation found in England’s Hague-Visby Rules

governed the contract of carriage between Itel and Candy-

line, not U.S. COGSA.

By order dated June 30, 1995, the district court denied

the defendants’ motions for partial summary judgment,

concluding that unresolved evidentiary issues existed as

to: (1) whether the parties to the respective contracts

of carriage clearly agreed to increase the carriers’ liability

limits beyond that of U.S. COGSA; and (2) the scope of

the extension of suit time granted by Candyline to Itel

(i.e., whether it included an extension of suit time from

Mammoet to Itel).

2. The second round of summary judgment motions.

On December 6, 1995, Mammoet filed its second mo-

tion for partial summary judgment, asserting that Itel’s

cause of action was time-barred as against it or alter-

natively, that its liability was limited by the package lim-

itation of either the Hague Rules, as enacted in Japan

(“Japanese COGSA”), or U.S. COGSA. Itel filed a

motion for summary judgment asserting that neither Jap-

anese COGSA nor U.S. COGSA applied to Itel’s contract

of carriage with Candyline; rather, the contract of car-

riage was governed by either England’s Hague-Visby Rules

or, alternatively, the 1924 Hague Convention. Candyline

filed a motion for partial summary judgment against

Mammoet, asserting that it was entitled to full indemni-

fication, together with all costs and attorneys’ fees, for

any judgment entered in favor of Itel against it.

By order dated February 15, 1996, the district court

ruled on the motions for summary judgment. The district

court held as follows: (1) Candyline was entitled to in-

demnity from Mammoet for any sums adjudged against

Leen PPh Pn yl

DNR iLO AMOR LAL DEA SA LER ES BALIN Z SIT

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it, plus reasonable attorneys’ fees, but only up to the

maximum liability of Mammoet pursuant to the liability

limitation governing the contract of carriage between

Candyline and Mammoet; (2) the contract of carriage

between Itel and Candyline was governed by England's

Hague-Visby Rules; (3) unresolved factual issues pre-

cluded the district court' from determining which statu-

tory regime governed the contract of carriage between

Candyline and Mammoet; and (4) questions of fact re-

mained as to whether Itel’s claim against Mammoet was

time barred. The district court ruled that the case would

“proceed to trial on the remaining issues of liability and

the law applicable to the Candyline-Mammoet shipping

agreement.”

3. The district court’s order and judgment.

On September 3, 1996, a one-day bench trial was con-

ducted, during which time the district court heard the

deposition and live testimony of various witnesses, re-

viewed numerous exhibits introduced into evidence by

the parties, and heard arguments of counsel. By order

dated October 24, 1996, the district court entered its

findings of fact and conclusions of law. The district court

ruled as follows: (1) Itel’s claims against Mammoet are

time barred: (2) Candyline breached its contract of car-

riage with Itel, but Candyline’s liability is limited by the

package limitation of England’s Hague-Visby Rules; (3)

Mammoet must indemnify Candyline for any damages

Candyline pays Itel, but Mammoet'’s liability is limited

by the package limitation of U.S. COGSA, which governs

the contract of carriage between Candyline and Mam-

moet: and (4) Itel did not prove a deviation from the

contract of carriage sufficient to oust the applicable limi-

tations of liability. (App. C, imfra, 43a).

On February 20, 1997, the district court entered final

judgment: (1) against Candyline and in favor of Itel

in the amount of $385,136.96, representing $291,509.83,

calculated according to the liability limitation of Eng-

land’s Hague-Visby Rules, plus prejudgment interest in

the amount of $93,627.13; and (2) against Mammoet

and in favor of Candyline in the amount of $73,145.47,

representing $13,000.00, calculated according to the U.S.

COGSA package limitation, prejudgment interest in the

amount of $4,175.34, and reasonable attorney’s fees and

costs in the amount of $55,970.13. (App. D, infra, 45a-

46a).

4. The appeal to the Eleventh Circuit Court of Appeals.

Candyline filed its notice of appeal to the court of

appeals on March 21, 1997. Appellate jurisdiction was

grounded upon 28 U.S.C. § 1291. Neither Itel nor Mam-

moet appealed from thhe proceedings below. On May 1,

1998, the court of appeals entered its order and judgment

affirming in part and reversing in part the district court’s

order and judgment. The court of appeals affirmed the

district court’s determination that the Hague-Visby liabil-

ity limit applies to the Candyline/Itel contract of carriage.

The court of appeals reversed the district court’s finding

that the U.S. COGSA liability limit governs the Mam-

moet/Candyline contract of carriage. The court held

that England’s Hague-Visby liability limit also applies to

the Mammoet/Candyline contract of carriage. (App. A,

infra, 13a).

B. Statement Of The Facts.

l. The Parties.

Itel is, or was during the relevant time period, a con-

tainer leasing company with a principal place of doing

business in San Francisco, California. Candyline is, or

was during the relevant time period, a non-vessel operat-

ing common carrier (““NVOCC”) with its principal place

of business in London, England. Modul is, or was during

the relevant time period, a legal entity with an office c/o

Mammoet-Hansa Linie A.G. in Bremen, Germany. Modul

was the owner of the M/V TITAN SCAN during the

ce?) a +4, A — 7 eS

OS FO te eet

relevant time period. Mammoet is, or was during the

relevant time period, a legal entity with its principal

place of business in Amsterdam, The Netherlands. Mam-

moet was the operator of the M/V TITAN SCAN during

the relevant time period. The M/V *ITAN SCAN is the

ocean-going vessel which transported Itel’s refrigerated

containers from Yokohama, Japan, to Savannah, Georgia.

2. Negotiation of the contracts of carriage.

In 1990, Itel purchased 198 new refrigerated contain-

ers in Japan for use in international commerce. In August

and September of 1990, following the purchase of the

containers, Itel made arrangements to have the containers

transported from Japan to the United States for distribu-

tion to its customers.

a. The Candyline/Itel Booking Note and Bill of Lading.

To negotiate the ocean transportation of the containers

Itel retained the services of Roger Cook, a London-based

shipbroker engaged in the business of chartering whole

vessels or space on vessels to charterers who have the need

to hire vessels or space on vessels. Ite] had employd Mr.

Cook on previous occasions to assist in “repositioning”

containers purchased by Itel. Cook was a director at

Mercury (London) Limited (“Mercury”), a ship broker-

age service located in the Baltic Exchange Chambers in

London, England. Mercury was owned by Brown Jenkin-

son (Chartering) Ltd. (“Brown Jenkinson”), a ship brok-

erage service also located in London, England. George

Connides was an employee of Brown Jenkinson. At all

material times, Mercury, Brown Jenkinson, Roger Cook

and George Connides acted as Itel’s agents.

In August of 1990, Kenneth Hurst, who was stationed

in Itel’s San Francisco office, held the position of Direc-

tor of Marketing and Administration for Itel. Ronald

Howson was Itel’s Vice President for Europe, operating

out of Itel’s office in the United Kingdom. Lisa Leach

was Itel’s Vice President and General Counsel. In nego-

tiating the terms of the ocean carriage of the containers,

Mr. Cook dealt “in the main” with Mr. Hurst.

After being retained by Itel, Mr. Cook contacted Jona-

than Marks, who shared office space with Mercury Ship-

ping at the Baltic Exchange Chambers, in London, Eng-

land. Mr. Marks was a director and ship broker at

Prochart Services Ltd. (“Prochart”), a ship brokering

company. Mr. Marks was also a director at Candyline.

At all material times, Prochart acted as the agent for

Candyline.

Negotiations between Itel and Candyline for the car-

riage of the containers were carried out by Mr. Cook,

of Brown Jenkinson as agent for Itel, and Mr. Marks, of

Prochart as agent for Candyline. After negotiations com-

menced, Mr. Cook presented Mr. Marks with a “proforma

booking note” previously employed by Itel for the car-

riage of Itel’s containers aboard the M/V THALASSINI

DOXA. The proforma booking note contained a number

of clauses with a line running through them, indicating

that all or a portion of clauses 5, 6, 7, and 10 of the

proforma booking note had been deleted. This proforma

booking note, with deletions, was presented to Mr. Marks

for review by Candyline. On or about August 29, 1990,

Mr. Cook forwarded a facsimile to Mr. Hurst, of Itel, in

which Mr. Cook confirmed that Candyline had reviewed

the proforma booking note and had submitted proposed

“logical amendments” and “required alterations,” includ-

ing an additional clause 10 requiring that “English law

to apply.”

After obtaining Mr. Hurst’s approval of the amend-

ments and alterations proffered by Candyline, Mr. Cook

had his secretary prepare the final draft of the booking

note between Candyline and Itel. Candyline and Itel sub-

sequently executed the final draft of the Conline Booking

Note dated August 30, 1990 (“Itel/Candyline Booking

Note”), for the transportation of Itel’s containers from

tO ac BD ODL AE OTE OS MS at et Ny

PASCAL Di RAGA CER © EERIE Set ESI SELLE CI

Yokohama, Japan, to Savannah, Georgia. Itel’s final ap-

proval of the terms set forth in the Itel/Candyline Book-

ing Note was provided to Mr. Cook by Mr. Hurst from his

San Francisco office. Mr. Marks signed the Candyline

Booking Note on behalf of Candyline while Mr. Howson

signed on behalf of Itel.

The Itel/Candyline Booking Note contains two pages

labeled “additional clauses.” Clause 10, as set forth in

these additional clauses, provides as follows: “English Law

to apply.” This clause was inserted in the Candyline

Booking Note at the request of Candyline. The Candyline

Booking Note also contains an addendum, dated August

31, 1990, which altered the discharge port from Jackson-

ville, Florida, to Savannah, Georgia.

In September of 1990, Aall Barwil Agencies K.K.

(“Barwil Japan”), Candyline’s agent in Japan, prepared

a Liner Bill of Lading (“Itel/Candyline Bill of Lading”)

which was signed by Yasushi Iwaishi, an employee of

Barwil Japan, on behalf of Candyline. The Itel/Candy-

line Bill of Lading obligated the “carrier” to transport the

containers from Yokohama, Japan, to Savannah, Georgia.

Itel (Tokyo) is named in the Itel/Candyline Bill of Lad-

ing as the “shipper” and Itel (Charleston) is named as

the “consignee.” The Itel/Candyline Bill of Lading pro-

vides as follows: “Terms and Conditions as per Conline

Booking Note Dated 30th August 1990.” The Itel/

Candyline Bill of Lading incorporates the calculation of

freight set forth in the Candyline Booking Note. Clause

13 at Page 2 of the Itel/Candyline Booking Note provides

as follows: “Freight payable to: Hambros Bank Ltd., 41

Tower Hill, London EC3N 4HA, ... .” An “excess

value” for the containers was neither declared nor inserted

in the Itel/Candyline Bill of Lading, and additional freight

was not paid for the shipment of Itel’s containers aboard

the M/V TITAN SCAN. On or about September 14,

1990, Itel paid the $207,900.00 freight due Cai.dyline to

Candyline’s bank account at Hambros Bank Ltd., in Lon-

don, England.

The original Itel/Candyline Bill of Lading was deliv-

ered by Barwil Japan to Itel’s office in Tokyo, Japan, and

was thereafter received by Itel’s Charleston office. The

original Itel/Candyline Bill of Lading was subsequently

surrendered by Itel’s Charleston office to Candyline’s

agent in the United States, Barwil Agencies (Louisiana)

Inc. (“Barwil Louisiana”), in consideration for the deliv-

ery of the containers to Itel at Savannah.

b. The Candyline/Mammoet Booking Note and Bill of

Lading.

During the course of Candyline’s negotiations with Itel,

Candyline entered into negotiations with Mammoet for

the carriage of the containers aboard the M/V TITAN

SCAN. Itel and Mammoet had no direct dealings with

each other during the time period during which the respec-

tive contracts of carriage were negotiated.

The negotiations between Candyline and Mammoet

were initiated during a conversation on the floor of the

Baltic Exchange between Mr. Marks and Lindsay Adams,

the manager of Mammoet’s London office. Mammoet’s

London office was also located in the Baltic Exchange

Chambers. Mammoet’s London office served as a branch

office for Mammoet’s principal office in Amsterdam, The

Netherlands. Mammoet’s London office did not actually

draft or negotiate the contracts of carriage, but forwarded

all proposed contracts of carriage for review by Mam-

moet’s Amsterdam office.

After Mr. Marks advised Ms. Adams that Prochart

had possible cargo business for Mammoet, Ms. Adams

telephoned Mammoet’s Amsterdam office to determine

whether Mammoet had any interest in the cargo. Mam-

moet’s Amsterdam office responded in the affirmative, and

negotiations commenced in earnest for the fixture. By

telex dated August 28, 1990, Mammoet advised Prochart

of its “firm offer” for the carriage of Candyline’s contain-

ers. In this telex, Mammoet requested that Prochart pro-

vide it with background information on Candyline. Mam-

moet sought this information because it had never before

contracted with Candyline.

Mr. Marks, by return telex dated August 28, 1990, set

forth Candyline’s counter-offer to Mammoet’s firm offer.

Mr. Marks suggested that the freight rate be reduced to

$900 per container from the original $1,100 per container

rate offered by Mammoet. Mr. Marks also provided back-

ground information on Candyline, including Candyline’s

registered office, bank, and trade references. Prochart and

Mammoet continued to exchange telexes refining the major

terms of the proposed contract of carriage between Candy-

line and Mammoet.

On or about August 29, 1990, Mr. Marks provided

Mammoet’s London office with a copy of a proforma

booking note for review. The booking note, as well as

one page of additional clauses thereto, consisted of a

copy of the proforma booking note from the M/V THA-

LASSINI DOXA which Mr. Cook, on behalf of Itel, had

previously provided to Mr. Marks during the negotiation

of the Candyline Booking Note. The proforma booking

note also consisted of a final page, entitled “Candyline/

Titan Scan,” setting forth additional alterations in the

M/V THALASSINI DOXA proforma booking note. The

last sentence of this last page contained the proposed ad-

ditional clause 10, which provided that “English law to

apply.” By facsimile dated August 29, 1990, Mammoet’s

London office forwarded this proforma booking note, and

proposed alterations thereto, to Mr. Jaap Slager, the sales

manager in the commercial department of Mammoet’s

Amsterdam office.

In August or September of 1990, Candyline and Mam-

moet executed a Conline Booking Note dated August 30,

1990 (“Candyline/Mammoet Booking Note”), for the

transportation of the 198 containers from Yokohama,

Japan, to Savannah, Georgia. The Candyline/Mammoet

Booking Note was prepared by Prochart, on behalf of

Candyline. In September of 1990, Nedlloyd Lines Agen-

cies K.K. (“Nedlloyd”), as agents for Mammoet in Japan,

signed and delivered the original Liner Bill of Lading

Number MSBV900200 (“Candyline/Mammoet Bill of

Lading”) to Barwil Japan, Candyline’s agent in Japan.

The Candyline/Mammoet Bill of Lading was prepared by

Candyline’s agent, Barwil Japan, at the request of Mam-

moet. The Candyline/Mammoet Bill of Lading obligated

the “carrier” to transport the containers from Yokohama,

Japan, to Savannah, Georgia. Candyline is named in the

Candyline/Mammoet Bill of Lading as the “shipper” and

Candyline’s American agent, Barwil Louisiana, is named

as the “consignee.” The Candyline/Mammoet Bill of

Lading provides as follows: “Terms and Conditions as

per Conline Booking Note Dated 30th August 1990.”

The Candyline/Mammoet Bill of Lading incorporates the

calculation of freight set forth in the Candyline/Mammoet

Booking Note. Clause 13 at Page 2 of the Candyline/

Mammoet Booking Note provides as follows: “Freight

payable to: Mammoet Shipping B.V., Bank Account

54.03.75.020 Algemene Bank Nederland, N.V. Am-

sterdam.”

An “excess value” for the containers was neither de-

clared nor inserted in the Candyline/Mammoet Bill of

Lading, and additional freight was not paid for the ship-

ment of the containers aboard the M/V TITAN SCAN.

On or about September 14, 1990, Candyline paid the

$181,046.25 freight due Mammoet to Mammoet’s bank

account in Amsterdam, The Netherlands.

3. The voyage.

Itel’s containers were loaded aboard the M/V TITAN

SCAN at Yokohama, Japan, in September of 1990, des-

tined for discharge in Savannah, Georgia. While en route

to Savannah, however, the vessel encountered confused

seas, with the result that 20 containers were lost over-

board and 6 other containers sustained physical damage.

REASONS FOR GRANTING THE PETITION

At the district court level, the question presented by

this petition has generated conflicting decisions which

continue to proliferate and the need for guidance from

this Court is acute. This case presents a timely oppor-

tunity to provide that guidance. Moreover, the decision

below is erroneous and the issue that it addresses is

important.

I. THE COURT OF APPEALS’ INTERPRETATION

AND APPLICATION OF U.S. COGSA § 1304(5) PRE-

SENTS AN IMPORTANT QUESTION OF FEDERAL

LAW UPON WHICH DISTRICT COURTS HAVE

REACHED CONFLICTING RESULTS, THUS RE-

QUIRING GUIDANCE FROM THIS COURT.

A. Application of U.S. COGSA.

U.S. COGSA “is a comprehensive statute intended

to limit the liability of carriers engaged in international

shipping.” Unimac Co., Inc. v. C.F. Ocean Serv., Inc.,

43 F.3d 1434, 1436 (11th Cir. 1995). U.S. COGSA

applies ex proprio vigore “to all contracts for carriage

of goods by sea to or from ports of the United States in

foreign trade.” 46 U.S.C. § 1312. “Foreign trade” is

defined as “the transportation of goods between the ports

of the United States and ports of foreign countries.” I/d.

This is so despite conflicting contract terms or foreign

legal systems. “Under U.S. law, [U.S.] COGSA is com-

pulsorily applicable, regardless of any provision to the

contrary in the bill of lading or any rule to the contrary

under foreign law. The parties do not have the freedom

to displace [U.S.] COGSA with another regime... .”

2A Benedict on Admiralty § 46 at 5-13 (7th ed. 1996);

see also 2A Benedict on Admiralty § 41 at 5-2 (noting

that while for most shipments to the United States more

than one legal regime will be compulsorily applicable,

United States courts are bound to apply U.S. COGSA).

B. Increasing the liability limit “by agreement.”

Section 1303(8) of U.S. COGSA prohibits clauses in

bills of lading which relieve a carrier from liability for

its negligence or fault, or that lessen its liability “other-

wise than as provided” in U.S. COGSA. 46 U.S.C.

§ 1303(8). The U.S. COGSA package limitation, section

1304(5), provides in relevant part as follows:

(5) Neither the carrier nor the ship shall in any

event be or become liable for any loss or damage

to or in connection with the transportation of goods

in an amount exceeding $500 per package lawful

money of the United States . . . unless the nature

and value of such goods have been declared by the

shipper before shipment and inserted in the bill of

lading...

By agreement between the carrier, master, or agent

of the carrier, and the shipper another maximum

amount than that mentioned in this paragraph may

be fixed....

46 U.S.C. § 1304(5) (emphasis added).

U.S. COGSA § 1304(5) limits the liability of the

carrier to $500 per package or customary freight unit

unless (1) the shipper declares the value of the goods

and inserts that information in the bill of lading, or (2)

the carrier and shipper establish a higher liability limit

“(bly agreement.” Sunds Defibrator, Inc. v. M/V AT-

LANTIC STAR, 1986 A.M.C. 368 (S.D.N.Y. 1986).

Neither U.S. COGSA nor its legislative history defines

the term “agreement.” See A. Nakazawa and A. Moghad-

dam, COGSA and Choice of Foreign Law Clauses in

Bills of Lading, 17 Tul. Mar. L.J. 1, at 4 n.16 (1992).

“Black’s Law Dictionary defines ‘agreement,’ . . . as ‘the

coming together in accord of two minds on a given prop-

osition.” The test, therefore, is whether the parties in

fact contemplated and intended a higher limitation of

liability to govern their relationship.” /d.

The analysis of whether such an “agreement” exists

must begin with the presumption that where, as here,®

U.S. COGSA applies ex proprio vigore to the bill of

lading, then U.S. COGSA governs. If the shipper argues

for a higher liability limit than that contained in U.S.

COGSA, it must show that the parties agreed to it in the

contract of carriage. The effectiveness of a shipper’s

argument to impose the higher Hague-Visby liability limit

generally depends on the clarity with which the clause

paramount calls for the application of the Hague-Visby

Rules. 2A Benedict on Admiralty § 46 at 5-14. If the

clause paramount is irretrievably ambiguous the U.S.

COGSA liability limit is applied because there is no clear

intent to allow a liability limit different than that set by

law. Valmet Materials Handling Equip. Inc. v. Nedlloyd

Lijnen B.V. Rotterdam, 1993 A.M.C. 1243 (M.D. Fla.

1993); Francosteel Corp. v. M/V KAPETAN AN-

DREAS G, 1993 A.M.C. 1924 (S.D.N.Y. 1993).

C. Conflicting decisions of district courts.

The recurring issue presented in the present lawsuit is

as follows: in a lawsuit against a carrier for cargo dam-

age, which liability limit applies—the lower U.S. COGSA

limit or the more generous Hague-Visby limit? Many dis-

trict court decisions have addressed this issue, albeit with

inconsistent results:

A line of cases, predominantly from the Southern

District of New York, holds that a Clause Para-

mount in an international bill of lading that ex-

pressly mentions both COGSA and the Hague-Visby

Rules incorporates Hague-Visby’s higher carrier lia-

bility limits. The Clauses Paramount discussed in

these cases generally maintain that the contract of

carriage is controlled by either COGSA or the

3 Because this lawsuit involves the shipment of goods from Japan

to the United States, U.S. COGSA governs the contracts of carriage

ex proprio vigore.

Hague-Visby Rules. However, the two regimes in-

corporate different levels of package liubility limi-

tation, with Hague-Visby allowing the shipper a

greater recovery against the carrier. Courts gene-

ally hold that COGSA applies ex proprio vigore but

sometimes still allow the conflict between COGSA

and the Hague-Visby liability limits to be resolved

in favor of the shipper by allowing for the higher

Hague-Visby recovery. Courts arrive at this conclu-

sion by one of two analytical paths. First, some

courts have held that the bill of lading is ambiguous

because the Clause Paramount makes reference to

Hague-Visby and so it must be construed against the

carrier (who is usually the drafter). Other courts

have held that because Hague-Visby allows a higher

recovery, any reference to Hague-Visby in the bill of

lading constitutes the carrier’s “agreement” to accept

the higher package liability scheme. Neither analysis

withstands careful scrutiny.

T. R. Jefferies, COGSA or Hague-Visby: Cargo Damages

in International Shipments, 18 Hous. J. Int’l L. 767, 769

(1996); see also W. Tetley, Acceptance of Higher Visby

Liability Limits by U.S. Courts, 23 J. Mar. L. & Com.

55 (1992).

District courts, reviewing the express language of sim-

ilar clauses paramount in the bills of lading before them,

have reached conflicting results. See Tetley, 23 J. Mar.

L. & Com. at 55, 58 (noting that of six opinions from the

Southern District of New York addressing this issue, the

courts have reached conflicting results, with four decisions

applying the higher of liability limit of Hague-Visby and

two refusing to do so); Sunds Defibrator, Inc. v. The

Atlantic Star, 1986 A.M.C. 368 (S.D.N.Y. 1983) (in

shipment from Sweden (a Hague-Visby nation) to the

United States, the district court, in construing clause

paramount providing that the “Hague Rules . . . dated

25th August 1924, and any legislation making those rules

compulsorily applicable to this Bill of Lading including

[COGSA] . . .,” denied the higher Hague-Visby limit on

the basis there was no clear reference to the Hague

Visby Rules); Daval Steel Products v. ACADIA FOR-

EST, 1988 A.M.C. 1669 (S.D.N.Y. 1988) (in shipment

from Belgium to United States, court concluded clause

paramount incorporated higher Hague-Visby limitation) ;

I.N.A. v. The ATLANTIC CORONA, 704 F. Supp. 528

(S.D.N.Y. 1989) (in construing bill of lading similar to

that of ATLANTIC STAR, the court held that the higher

limitation of Hague-Visby applied); /.N.A. v. The SEA-

LAND DEVELOPER, 1990 A.M.C. 2967 (S.D.N.Y.

1989) (court denied higher WHague-Visby limitation

where bill of lading for shipment from the United King-

dom to the United States referred to “a compulsorily

applicable Carriage of Goods by Sea Act, ordinance or

statute similar to [the Hague Rules]”); Francosteel Corp.

v. The DEPPE EUROPE, 1990 A.M.C. 2962 (S.D.N.Y.

1990) (court allowed higher Hague-Visby limitation in

shipment from Belgium to Puerto Rico where bill of

lading referred to a compulsory carriage of goods by sea

act along with the “rules thereto annexed”); Associated

Metals & Minerals Corp. v. The ARKTIS SKY, 1991

A.M.C. 1499 (S.D.N.Y. 1991) (in shipment from Spain

to United States, court allowed higher Hague-Visby lim-

itation where bill of lading provided that the Hague

Rules, as enacted in the country of shipment, would

apply and that in trades where the Hague-Visby Rules

applied compulsorily, “the provision of the respective

legislation would be considered incorporated in the bill

of lading); Francosteel Corp. v. M/V KAPETAN AN-

GREAS G, 1993 A.M.C. 1924 (S.D.N.Y. 1993) (court

found material issues of fact remaining with respect to

the parties’ intent to apply a higher limitation of liability

than that of U.S. COGSA); Francosteel v. MV/ PAL

MARINOS, 885 F. Supp. 86 (S.D.N.Y. 1995) (in ship-

ment from Belgium to the United States, court found

clause paramount ambiguous and therefore, construing

ambiguity against the carrier as drafter of the bill of

lading, held that higher Hague-Visby limitation applied).

District courts in other jurisdictions have also reached

conflicting results on whether a clause paramount re-

quires application of the higher liability limit provided by

the Hague-Visby Rules. See Rockwell Int'l Corp. v. S/S

KOELN EXPRESS, 1987 A.M.C. 2537 (D. Md. 1987)

(in shipment from Germany to the United States, where

bill of lading provided for the application of the Hague

Rules or the Hague-Visby Rules, whichever was “com-

pulsorily applicable to the contract,” the court refused

to apply higher Hague-Visby limitation because U.S.

COGSA applied ex proprio vigore); Associated Metals

& Minerals Corp. v. M/V LUMBE, 1993 A.M.C. 700

(D.N.J. 1991) (without citation to supporting authority,

court held that in shipment from Argentina to the United

States, plain language of bill of lading’s clause paramount

amounted to an agreement to a higher liability limit than

that provided by U.S. COGSA); Ilva U.S.A. v. M/V

BOTIC, 1993 A.M.C. 240 (E.D. Pa. 1992), aff'd, 1993

A.M.C. 2445 (3d Cir. 1993 (in shipment from Italy to

the United States, court held that Hague-Visby liability

limitation applied because clause paramount called for

application of laws enacted in country of shipment and

here, Italy had enacted Hague-Visby); Pyropower Corp.

v. M/V ALPS MARU, 1993 A.M.C. 1562 (E.D. Pa.

1993) (in shipment from Korea to United States, court

applied U.S. COGSA, albeit by virtue of analysis under

Hague-Visby Rules as enacted in The Netherlands): As-

sociated Metals v. M/V STAR SKARVEN, 1995 A.M.C.

505 (S.D. Fla. 1994 )(relying upon the reasoning of the

district courts in M/V BOTIC and ARKTIS SKY, the

court held that because the country of shipment, Finland,

had adopted the Hague-Visby Rules, Hague-Visby

limitation would apply pursuant to the express language

of the clause paramount).

Guidance is required from this Court to permit con-

sistent resolution of the issue of which limitation governs

a carrier’s liability when U.S. COGSA applies to a bill of

lading ex proprio vigore. The parties to a bill of lading

should be assured of their potential liabilities at the time

and place of issuance of the bill of lading. M/V DEPPE

EUROPE, 1990 A.M.C. at 2964.

Il. THE DECISION OF THE COURT OF APPEALS IS

ERRONEOUS AND DEPARTS FROM THE AC-

CEPTED AND USUAL MANNER OF RESOLVING

THE ISSUE PRESENTED BY THIS CASE.

The district court cases cited above share one common

feature: reliance upon the express language of the bill of

lading’s clause paramount to determine which liability

limit governs the bill of lading. The court of appeals in

the present matter erred by first recognizing, then disre-

garding the clear and unambiguous language of the clause

paramount in the Candyline/Itel and Mammoet/Candy-

line contracts of carriage. The court of appeals eschewed

the clear language of the clause paramount because clause

10 of the booking notes and bills of lading provides that

“English law to apply.” The court of appeals reasoned

that the application of English law necessarily required

the application of England’s Hague-Visby Rules and there-

fore a higher liability limit. The court’s analysis is

flawed because under English law, a court would be re-

quired to rely upon the clear language of the clause para-

mount which, as conceded by the court of appeals, calls

for the application of Japanese COGSA.

A. “English law to apply” does not result in the appli-

cation of England’s Hague-Visby Rules.

Clause 2, the general paramount clause of the Mam-

moet/Candyline Booking Note and Bill of Lading, pro-

vides as follows:

2. General Paramount Clause.

The Hague Rules contained in the International

Convention for the Unification of certain rules relat-

ing to Bills of Lading, dated Brussels the 25th of

August 1924 as enacted in the country of shipment

shall apply to this contract. When no such enact-

ment is in force in the country of shipment, the

corresponding legislation of the country of destina-

tion shall apply, but in respect of shipments to which

no such enactments are compulsorily applicable, the

terms of the said Convention shall apply.

Trades where Hague-Visby Rules apply:

In trades where the International Brussels Conven-

tion 1924 as amended by the Protocol signed at

Brussels on February 23rd 1968—The Hague-Visby

Rules—apply compulsorily, the provisions of the re-

spective legislation shall be considered incorporated

in this Bill of Lading. The Carrier takes all reserva-

tions possible under such applicable legislation, re-

lating to the period before loading and after dis-

charging and while the goods are in the charge of

another Carrier, and to deck cargo and live animals.

(App. A, infra, 8a (emphasis added)). The court of ap-

peals concluded correctly that “[a]ccording to the first

paragraph of the General Paramount Clause, the Hague

Rules as enacted by Japan would be incorporated into the

Bill of Lading.” (App. A, infra, 9a). The court of ap-

peals’ interpretation of the general paramount clause is

supported by other district courts and other circuit courts

of appeals addressing the identical clause paramount. See

M/V BOTIC, 1993 A.M.C. 240 (E.D. Pa. 1992), affd,

1993 A.M.C. 2445 (3rd Cir. 1993); M/V ARKTIS SKY,

1991 A.M.C. 1499 (S.D.N.Y. 1991), rev’d on other

grounds, 978 F.2d 47 (2d Cir. 1992).

Despite the clear language of the clause paramount,

which would result in the application of Japanese

COGSA, the court of appeals, citing clauses 3 and 10

of the bill of lading as pointing toward the application

of English law, held that the phrase “English law to

apply” would result in the application of England’s Hague-

Visby Rules. In so ruling, the court of appeals failed to

engage in the analysis of whether, under English law,

England’s Hague-Visby Rules would apply to the

Mammoet/Candyline Booking Note and Bill of Lading.

At trial, Mammoet introduced without objection the

affidavit of Martin Wisdom, an English solicitor retained

by Candyline to address whether the “English law to

apply” provision of the respective booking notes and bills

of lading results in the compulsory application of Eng-

land’s Hague-Visby Rules. Mr. Wisdom offered his opin-

ion on the following issue: “Whether the English Car-

riage of Goods by Sea Act 1971 and therefore the Hague-

Visby rules are incorporated into the contract by carriage

by necessary inference from the fact that the terms of the

contract of carriage provide for English law to be appli-

cable.” (App. E, infra, 48a). Mr. Wisdom, relying upon

the English Court of Appeal’s decision in Hellenic Steel

Co. & Others v. Svolamar Shipping Co. Ltd. & Others,

1 Lloyd’s Rep. 370 (Ct. App. 1991) (hereinafter referred

to as “the KOMINOS S”), and upon an authoritative text

discussing the KOMINOS S, concludes that the “English

law to apply” provision of the Mammoet/Candyline

Booking Note and Bill of Lading would not be sufficient

to result in compulsory application of the England’s

Hague-Visby Rules. (App. E, infra, 56a).

Mr. Wisdom notes that an English court, in determin-

ing which version of the Hague Convention would apply,

would examine the general paramount clause of the bill of

lading which, in the present case, is found at Clause 2 of

the Mammoet/Candyline Booking Note and Bill of Lad-

ing. Mr. Wisdom’s opinion comports with that of the

court of appeals in concluding that the clause paramount

in the Mammoet/Candyline Booking Note and Bill of

Lading would call for the application of Japanese

COGSA.- (App. A, infra, 9a). Mr. Wisdom concludes

that “[c]lonsequently, . . . an English Court applying

English law would be bound to hold that the United

Kingdom Carriage of Goods by Sea Act 1971 and the

Hague-Visby Rules are not incorporated into the contract

of carriage. (App. E, infra, 56a).

Mr. Wisdom’s affidavit is reinforced by a decision of

the Queen’s Bench Division (Commercial Court) which

was handed down on June 5, 1997, after the trial in this

case, and which was submitted to the court of appeals by

Candyline. The decision, Lauritzen Reefers v. Ocean

Reef Transport Ltd. S.A., 2 Lloyd’s Rep. 744 (Q.B.

1997) (hereinafter “the BUKHTA RUSSKAYA"), in-

volved the construction of a clause paramount in a charter

party which, like that in the present matter, contained

the following essential terms: “(1) if the Hague Rules

are enacted in the country of shipment, then they apply

as enacted; (2) if the Hague Rules are not enacted in the

country of shipment, the corresponding legislation of the

country of destination applies or, if there is no such

legislation, the terms of the Convention containing the

Hague Rules apply: (3) if the Hague-Visby Rules are

compulsorily applicable into the trade in question, then

the legislation enacting those rules applies.” BUKHTA

RUSSKAYA, 2 Llioyd’s Rep. at 746; (see App. F, infra,

113a). Moreover, as with the contract of carriage in the

present case, the charter party provided that it was gov-

erned by English law. BUKHTA RUSSKAYA, 2 Lloyd’s

Rep. at 745; (App. F, infra, 114a).

The charterers argued that England’s Hague-Visby

Rules applied to the charter party because the charter

party provided that it was governed by English law.

BUKHTA RUSSKAYA, 2 Lloyd’s Rep. at 746; (App. F,

infra, 112a). The charterers reasoned that because Eng-

lish law was the “overriding regime” applicable to the

charter party, the Hague-Visby Rules applied as the “rele-

vant overriding regime.” /d. Justice Thomas rejected the

charterers’ argument and ruled that, pursuant to the ex-

press language of the clause paramount, the Hague Rules,

as enacted in the country of shipment (Mauritania) or,

alternatively, the country of destination (Japan), gov-

erned. BUKHT'A RUSSKAYA, 2 Lloyd’s Rep. at 747;

(App. F, infra, 114a). Justice Thomas ruled that the

clear language of the clause paramount determined which

law was applicable, not the charter party’s provision that

English law governed. Id.

CONCLUSION

For the reasons set forth above, the petition for a writ

of certiorari should be granted.

Respectfully submitted,

RoBERT S. GLENN, JR.*

GEORGE M. EARLE

HUNTER, MACLEAN, EXLEY

& DUNN, P.C.

Post Office Box 9848

Savannah, Georgia 31412

(912) 236-0261

Attorneys for Petitioners

* Counsel of Record

APPENDIX A

UNITED STATES COURT OF APPEALS

ELEVENTH CIRCUIT

No. 97-8278

ITEL CONTAINER CORPORATION,

Plaintiff-Appellee,

Vv.

M/V “TITRAN SCAN”, her engines, boilers, etc.;

Mopbut Carriers A.G. & Co., TITAN SCAN”

SCHIFFAHRTS K. G.; MAMMOET SHIPPING, B. V.,

Defendants-Cross-

claimants-A ppellees,

Sky SHIPPING LTD. f.k.a. CANDYLINE LTD.,

Dejfendant-Cross-

claimant-A ppellant.

Appeal from the United States District Court

for the Southern District of Georgia

May 1, 1998

Before COX, DUBINA and BLACK, Circuit Judges.

COX, Circuit Judge:

Sky Shipping Ltd., formerly known as Candyline Ltd.

(“Candyline”) appeals following the district court’s judg-

ment finding the liability limits of the English Hague-

Visby Rules applicable to Candyline’s contract of car-

riage with Itel Container Corporation (“Itel”) and the

liability limits of the United States Carriage of Goods

by Seas Act (U.S.COGSA) applicable to Candyline’s

contract of carriage with Mammoet Shipping B.V. (“Mam-

moet”). We affirm in part, reverse in part, and remand.

I. BACKGROUND

Itel is a container leasing company. In 1990, Itel

purchased 198 refrigerated containers in Japan for use

in international commerce. Subsequently, Itel negotiated

with a representative from Candyline for the shipment

of the containers from Japan to Savannah, GA. Candy-

line operates as a non-vessel operating common carrier—

an entity that contracts with a shipper as carrier, but then

enters into a separate agreement with a vessel owner or

charterer for actual carriage of the shipper’s cargo. After

negotiating the contract, Itel received a signed copy of a

Conline Booking Note evidencing the terms and condi-

tions of the shipment. Along with the boilerplate terms,

the Booking Note contained an addendum with additional

typewritten terms, including Clause 10, which states

“English law to apply.” Candyline’s agent in Japan then

prepared and delivered to Itel’s Japanese agent a Liner

Bill of Lading. The Bill of Lading incorporated by

reference the Booking Note, stating “Terms and Condi-

tions as per Conline Booking Note Dated 30th August,

1990.” (R.2-46-5, 6 at § 24). The Bill of Lading con-

tained a General Paramount Clause providing for the

application of the Hague Rules in some situations and

for the incorporation of Hague-Visby Rules in others,

where applicable. Clause 3 of the Bill of Lading was a

1The Hague Rules arose from the International Convention of

1924 and were ratified in the United States in 1937. The United

States Carriage of Goods by Sea Act (U.S.COGSA) represents the

domestic enabling of the Hague Rules. The “Protocol to Amend

the Hague Rules of 1924,” or the Visby Amendments, were drafted

in 1968 and were not adopted by the United States. These Amend-

forum selection clause providing for any disputes arising

under the Bill of Lading to be decided in the country

where the carrier has its principal place of business,

under that country’s laws. Candyline’s principal place of

business was in England.

As a non-vessel operating common carrier, Candyline

contracted with Mammoet for the actual carriage of the

containers. Mammoet managed the M/V TITAN SCAN,

which was owned by Modul Carriers A.G. & Co. (“Mo-

dul”). Candyline and Mammoet executed a Conline

Booking Note and Bill of Lading containing terms iden-

tical to those found in the Itel/Candyline agreement with

the sole exception of the cost of the freight. The Bill of

Lading was issued in Japan, and like the Itel/Candyline

Bill of Lading, provided for “Terms and Conditions as

per Conline Booking Note Dated 30th August 1990.”

The containers were transported from Japan to Pan-

ama without incident. In Panama, the ship made an

unscheduled stop and the containers were restowed. Dur-

ing the trip from Panama to Savannah, the containers

came loose during heavy weather. Twenty were lost over-

board and six others severely damaged.

Itel sued the M/V TITAN SCAN, in rem, and Candy-

line, Modul, Mammoet, and Autoridad Portuaria Na-

cional, in personam, seeking to recover damages for the

lost and physically damaged containers.* Candyline then

filed a cross-claim for indemnity against Mammoet. The

district court held that Itel was entitled to recover dam-

ments raised the per package limitation on liability. See Associated

Metals & Minerals Corp. v. M/V ARKTIS SKY, 1991 A.M.C. 1499

(S.D.N.Y.1991). During the relevant time period, England had

adopted the Visby Amendments, or Hague-Visby Rules, and Japan

had not. (R.4-85-17).

2 Autoridad is a stevedoring company that was never served

with process and was therefore dismissed from the lawsuit pur-

suant to Fed. R.Civ.P. 4(m). Itel’s claims against Modul, Mam-

moet, and the TITAN SCAN are not at issue in this appeal.

i I a a

ages from Candyline and that Candyline’s liability was

determined by the Hague-Visby Rules, a statutory regime

adopted in England that provides higher liability limits

than United States law provides. The district court also

held that Candyline was entitled to indemnity from Mam-

moet, but that Mammoet’s liability was limited by the

U.S. COGSA. Because the U.S. COGSA contains a lower

cap on liabiilty than the Hague-Visby Rules, Candyline

was not indemnified the full amount Candyline paid Itel.

Il. CONTENTIONS OF THE PARTIES

The parties do not dispute that Candyline breached its

contract with Itel and therefore stands liable to Itel, or

that Mammoet must indemnify Candyline as limited by

the relevant statutory scheme. Rather, Candyline contends

that the distirct court erred in concluding that Candy-

line’s liability to Itel was subject to the liability limits of

the Hague-Visby Rules as enacted in England, whereas

Mammoet’s indemnity to Candyline was restricted by the

liability limits contained in the U.S. COGSA. Candyline

argues that there is no legal basis for distinguishing be-

tween the Itel/Candyline and Candyline/Mammoet agree-

ments and that they were intentionally created as “back to

back” contracts to be governed in all aspects by the same

statutory regime. Candyline also asserts that the district

court erred in finding the liability limits contained in the

Hague-Visby Rules applicable to the Itel/Candyline con-

tract. Candyline maintains that while the district court

correctly found that the parties intended that English law

be used to determine the controlling liability scheme for

the Itel/Candyline contract, the district court incorrectly

concluded that English law calls for the application of the

liability limits of the Hague-Visby Rules. Instead, Candy-

line asserts that under English law, the liability limits of

the Japanese COGSA, which did not adopt the Hague-

Visby Rules, would apply.

Itel maintains that Candyline’s liability under the Itel/

Candyline agreement should be governed by the English

Hague-Visby Rules, arguing that Clause 10 of the Book-

ing Note (“English law to apply”) and Clause 3 of the

Bill of Lading (forum selection clause) mandate the

application of English law. Itel also contends that its

contract with Candyline falls within the purview of Arti-

cle X(c) of the Hague-Visby Rules, calling for the appli-

cation of those rules when the contract contained in or

evidenced by the bill of lading so provides.*

Because Mammoet was not a party to the Itel/Candy-

line agreement, it does not address the district court’s

conclusion that the liability limits of the Hague-Visby

Rules apply to that agreement. Instead, Mammoet urges

this court to affirm the district court’s determination that

the Itel/Candyline and Candyline/Mammoet contracts

must be construed separately and that the liability limits

contained in the U.S. COGSA applies to the Candyline/

Mammoet contract. Mammoet notes that Candyline failed

to include in the agreement with Mammoet any language

suggesting the existence of a “pass through” liability

scheme or “back to back” agreement. Further, Mammoet

maintains that the Candyline/Mammoet agreement does

not evidence a clear intent to abrogate the liability limits

of the U.S. COGSA in favor of a higher liability limit.

Iff. DISCUSSION

U.S. COGSA aplies compulsorily “to all contracts foi’

carriage of goods by sea to or from ports of the Unite

3 Article X of the British Carriage of Goods by Sea Act of 1971

states:

The provisions of these Rules (Hague-Visby] shall apply to

every bill of lading relating to the carriage of goods between

ports in two different States if:

(a) the bill of lading is issued in a contracting State, or

(b) the carriage is from a port in a contracting State, or

lading provides that these Ruules or legislation of any

State giving effect to them are to govern the contract.

States in foreign trade.” 46 U.S.C.App. § 1312. USS.

COGSA provides that neither the carrier nor the ship are

liable “for any loss or damage to or in connection with

the transportation of goods in an amount exceeding $500

per package . . . unless the nature and value of such

goods have been declared by the shipper before shipment

and inserted in the bill of lading.” 46 U.S.C.App.

§ 1304(5). U.S. COGSA permits the parties to agree by

contract to a higher liability limit. However, the parties’

intent to apply the higher limit must be clear; if the

question of whether the parties agreed to a higher liability

limit is “irretrievably ambiguous,” then U.S. COGSA

applies by default. See Valmet Materials Handling Equip.,

Inc. v. Nedlloyd Lijnen B.V. Rotterdam, 1993 A.M.C. |

1243, 1246 (M.D.Fla.1993).

_ The district court concluded that, with respect to the

Itel/Candyline contract, the Hague-Visby statutory scheme

as enacted in England provided the appropriate cap on

Candyline’s liability to Itel. In making this determination,

the district court considered that (1) the Bill of Lading

was issued in Japan; (2) Candyline, the “carrier” for

purposes of the transaction, had its principal place of

business in England; (3) previous courts had construed

the same General Paramount Clause as evidencing an

intent to agree to a higher liability limit; and (4) Clause

10 (“English law to apply”) incorporated a foreign legal

regime with a higher liability limit than that under U.S.

COGSA.

With respect to the Candyline/Mammoet contract, the

district court rejected Candyline’s argument that the two

contracts stood “back to back,” thereby creating a “pass

through” liability scheme. The court then concluded that

unlike the Candyline/Itel agreement, the Candyline/

Mammoet agreement did not evidence an intent to abro-

gate the package limitations contained in the U.S.

COGSA in favor of a foreign regime with higher liability

limits. The court noted that the “carrier” for purposes of

the Candyline/Mammoet agreement was Mammoet, whose

principal place of business is Amsterdam. Thus, while the

presence of Clause 3 (forum selection clause) in the Itel/

Candyline Bill of Lading suggested the application of

British law, it did not with respect to the Candyline/

Mammoet agreement. The court also noted that the lan-

guage of Clause 10 of the Booking Note (“English law

to apply”) is ambiguous and is not, in itself, dispositive of

the parties’ intent to displace the liability limits of the

U.S. COGSA. Accordingly, because Clause 10 called for

the application of English law, Clause 2 (General Para-

mount Clause) pointed in the direction of Japanese

COGSA, and Clause 3 (forum selection clause) called

for the application of Dutch law, the court held that

Candyline failed to meet its burden of proving Mam-

moet’s unqualified assent to a limit above the $500 ceil-

ing. Thus, Mammoet’s reimbursement to Candyline for

the damages Candyline paid Itel was restricted by the

liability limits of the U.S. COGSA.

The district court’s findings of fact shall not be set

aside unless clearly erroneous. See Reich v. Dep't of

Conservation & Natural Resources, 28 F.3d 1076, 1082

(11th Cir. 1994). We review the district court’s applica-

tion of law to the facts of the case de novo. See id. at

1083 (citing Massaro v. Mainland Section 1 & 2 Civic

Ass'n, Inc., 3 F.3d 1472, 1475 (11th Cir.1993) ).

A. Are the Itel/Candyline and Candyline/Mammoet

Agreements Separate Transactions?

We agree with the district court’s conclusion that the

Itel/Candyline and Candyline/Mammoet contracts must

be evaluated as two separate transactions. The evidence

is undisputed that Itel and Mammoet had no communica-

tion during the negotiation of the respective contracts of

carriage. Further, while Candyline insists that its intent

in structuring the contracts identically was to create a

“pass through” system of liability, Candyline failed to in-

clude language to that effect in the Candyline/Mammoet

agreement. Looking at the language of the contract, we

find no evidence to support Candyline’s assertion that the !

two contracts must be evaluated as a single transaction. |

Our analysis does not end, however, with the determi-

nation that the contracts must be evaluated separately.

The real question we must answer is whether the district

court correctly concluded that the differences in the Itel/

Candyline contract and the Candyline/Mammoet con-

tract justify the application of different liability limita-

tions.

B. Do the Liability Limits of the English Hague-Visby

Rules Apply to the Itel/Candyline Agreement?

We first consider whether the district court correctly

concluded that Hague-Visby Rules, as enacted in England,

govern the amount of Candyline’s liability to Itel pursuant

to the Itel/Candyline contract. Relevant to our determi-

nation is Clause 2 of that contract, the General Para-

mount Clause, which provides:

The Hague Rules contained in the International Con-

vention for the Unification of certain rules relating to

Bills of Lading . . . as enacted in the country of

shipment shall apply to this contract. When no such

enactment is in force in the country of shipment, the

corresponding legislation of the country of destination

shall apply, but in respect to shipments to which no

such enactments are compulsorily applicable the

terms of the said Convention shall apply.

Trades where Hague-Visby Rules apply.

In trades where . . . the Hague-Visby Rules [ ] apply

compulsorily, the provisions of the respective legis-

lation shall be considered incorporated in this Bill of

Lading. The Carrier takes all reservations possible

under such applicable legislation, relating to the pe-

riod before loading and after discharging and while

the goods are in charge of another Carrier, and to

deck cargo and live animals.

a mere mane Ene T OO TS Cree erero rope emer anwneceOeewuRewmN te

Also relevant to our determination is Clause 3 of the

Bill of Lading, which provides:

Any dispute arising under the Bill of Lading shall

be decided in the country where the carrier has his

principal place of business, and the laws of such

country shall apply except as provided elsewhere

herein.

The district court noted that in the past, General Para-

mount Clauses identical to this one have been interpreted

as an agreement between the parties to have a liability

limit higher than that provided under U.S. COGSA. See

Associated Metals & Minerals Corp. v. M/V ARKTIS

SKY, 1991 A.M.C, 1499 (S.D.N.Y.1991); Pyropower

Corp. v. M/V ALPS MARU, 1993 A.M.C. 1562 (E.D.

Pa.1993). However, while it is true that in those cases,

the General Paramount Clause was interpreted to allow

for a higher limit of liability, those cases stand for the

proposition that where the Hague-Visby Rules were en-

acted in the country of shipment, the second paragraph

of the General Paramount Clause is implicated and the

Hague-Visby Rules are therefore incorporated into the

Bill of Lading. In this case, the country of shipment was

Japan, which had not enacted the Hague-Visby Rules at

the time of the contract. Thus, the second paragraph of

the General Paramount Clause is not implicated. Accord-

ing to the first paragraph of the General Paramount

Clause, the Hague Rules as enacted by Japan would be

incorporated into the Bill of Lading.

While the General Paramount Clause suggests the ap-

plication of Japanese COGSA, we nonetheless agree with

the district court’s conclusion that the liability limits of

the Hague-Visby Rules, as enacted in England, apply to

the Itel/Candyline agreement. First, Clause 3 in the

Bill of Lading (forum selection clause) states that any

dispute arising under the Bill of Lading shall be decided

in the country of the carrier’s place of business. The

“carrier” for purposes of the Itel/Candyline agreement is

10a

Candyline, whose principal place of business is London.

Thus, Clause 3 points toward the application of English

law. Second, Clause 10 (“English law to apply”), which

is contained in the typewritten addendum to the Booking

Note, calls for the application of English law.

Until recently, forum selection clauses such as these

were unenforceable as a violation of U.S. COGSA. Re-

cently, however, the Supreme Court overruled the line of

cases invalidating forum selection clauses in COGSA

cases, holding that U.S. COGSA does not nullify foreign

arbitration clauses contained in maritime bills of lading.

See Vimar Seguros y Reaseguros, S.A. v. M/V Sky

Reefer, 515 U.S. 528, 535-36, 115 S.Ct. 2322, 2327-28,

132 L.Ed.2d 462 (1995). In Sky Reefer, the Court up-

held a foreign arbitration clause against a challenge that

the clause violated section 3(8)* of U.S. COGSA by

making recovery under U.S. COGSA more difficult. See

id. at 531-32, 115 S.Ct. at 2324-26. At least one court

has upheld a foreign forum selection clause based on the

Court’s analysis in Sky Reefer, noting that such clauses

are enforceable unless the substantive law the foreign

forum would apply is less than what COGSA guarantees.

See Blaise G.A. Pasztory v. Croatia Line, 918 F.Supp. 961,

965 (E.D.Va.1996). Here, the foreign forum selection

clauses call for the application of English law which,

under the Hague-Visby Rules, contains a higher liability

limit than that under U.S. COGSA. Thus, under a Sky

Reefer-type analysis, the forum selection clause should be

enforced.

4 Section 3(8) of U.S. COGSA provides:

Any clause, covenant, or agreement in a contract of carriage

relieving the carrier or the ship from liability for loss or

damage to or in connecction with the goods, arising from negli-

gence, fault, or failure in the duties or obligations provided in

this section, or lessening such liability otherwise than as pro-

vided in this chapter, shall be null and void and of no effect.

46 U.S.C.App. § 1803(8).

| CEE ere re ney ae

lla

Furthermore, under generally accepted principles of

contract construction, specific clauses take precedence

cver general ones, and clauses that have been added by

the parties preempt form provisions. See, e.g., Insurance

Co. of N. Am. v. S/S SEALAND DEVELOPER, 1990

A.M.C, 2967, 2970 & n. 4 (S.D.N.Y.1989). Clause 10

of the addendum to the Booking Note is a specific clause

that was added by the parties and therefore should pre-

empt the boilerplate clause paramount. Additionally,

while Clause 3 of the Bill of Lading was not added by

the parties, it is more specific than the General Para-

mount Clause, and it, too calls for the application of

English law.

As to Candyline’s argument that under English law,

the liability scheme contained in the Japanese COGSA,

rather than that of the English Hague-Visby Rules, would

apply, we agree with the district court that the language

of Clause 10 (“English law to apply”) together with that

of Clause 3 (forum selection clause) satisfies Article

X(c) of the Hague-Visby Rules, which provides that the

Hague-Visby Rules apply if “the contract contained in or

evidenced by the bill of lading provides that these Rules

or legislation of any State giving effect to them are to

govern the contract.”

C. Do the Liability Limits of the U.S. COGSA Apply

to the Candyline/Mammoet Agreement?

We turn now to the question of whether the Candyline/

Mammoet agreement evidences a clear intent to abrogate

the liability limits of the U.S. COGSA in favor of higher

liability limits contained in a foreign statutory regime. As

the district court noted, the Candyline/Mammoet con-

tract and the Itel/Candyline contract are nearly identical.

However, the district court concluded that unlike the

Itel/Candyline agreement, the Candyline/Mammoet

agreement did not evidence an intent to overcome the

congressional mandate that the liability limits of the U.S.

COGSA apply in the absence of a clear agreement to

12a

apply a higher liability limit. We disagree. While the

Candyline/Mammoet situation is marginally different from

the Itel/Candyline situation, we do not think the differ-

ences between the two situations constitute adequate

grounds upon which to distinguish the statutory schemes

applicable to the liability limits of the respective contracts.

The factors that counseled in favor of our applying the

higher liability limits of the English Hague-Visby Rules to

the Itel/Candyline contract are present in the Candyline/

Mammoet contract, as well.

As with the Itel/Candyline contract, the Bill of Lading

was issued in Japan, and the country of shipment was

Japan; both of these facts suggest, as they did in the

Itel/Candyline contract, the application of the Japanese

COGSA liability scheme, which does not include the

Hague-Visby Rules. However, the Candyline/Mammoet

agreement, like the Itel/Candyline agreement, also con-

tains Clause 10, the typewritten term added by the parties

stating “English law to apply.” Therefore, the only ground

for distinguishing between the Itel/Candyline situation and

the Candyline/Mammoet situation is Clause 3 (forum

Selection clause), which provides for the application of

the law of the carrier’s principal place of business. The

“carrier” for the purposes of the Candyline/Mammoet

agreement was Mammoet, whose principal place of busi-

ness is Amsterdam rather than London. Thus, Clause 3

calls for the application of Dutch law. Clause 3, however,

is an inadequate ground upon which to distinguish the

Itel/Candyline contract from the Candyline/Mammoet

contract, for two reasons. First, Clause 3 specifies that

“{a]ny dispute . . . shall be decided in the country where

the carrier has his principal place of business, and the

laws of such country shall apply except as provided else-

where herein.” (emphasis added). Clause 10, a type-

written phrase added by the parties, specifically provided

for the application of English law. Second, even if Clause

10 were eliminated, the Netherlands, like England, has

adopted the Hague-Visby Rules. Thus, even if the lia-

13a

bility limits of the contract were governed by Dutch law,

the higher liability limits contained in the Hague-Visby

Rules would nevertheless apply. See 6 Benedict on Ad-

miralty 1-30 (Frank L. Wiswall ed., 1998). We there-

for conclude that Clause 3 is not an appropriate ground

upon which to distinguish the Itel/Candyline agreement

from the Candyline/Mammoet agreement. If anything,

Clause 3 evidences an intent to abrogate the liability limits

of the U.S. COGSA in favor of a foreign statutory scheme

with higher liability limits.

IV. CONCLUSION

For these reasons, we affirm the district court’s deter-

mination that the amount of liability under the Itel/

Candyline contract is governed by the English Hague-

Visby Rules and reverse the district court’s conclusion

that amount of indemnity under the Candyline/Mammoet

agreement is subject to the U.S. COGSA. We remand for

the district court to determine the amount of indemnifica-

tion to which Candyline is entitled pursuant to the

English Hague-Visby Rules.

AFFIRMED in part, REVERSED in part and RE-

MANDED.

l4a

APPENDIX B

[Filed May 1, 1998]

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 97-8278

District Court No. 4:94-CV-55

ITEL CONTAINER CORPORATION,

Plaintiff-A ppellee,

versus

M/V “TITAN SCAN”, her engines, boilers, etc.;

Moput Carriers A. G. & Co. “TITAN SCAN”

SCHIFFAHRTS K. G.; MAMMOET SHIPPING, B.V.,

Defendants-Cross-

claimants-A ppellees,

SKY SHIPPING LTD. f.k.a. CANDYLINES LTD.,

Defendant-Cross-

claimant-A ppellant.

Appeal from the United States District Court

for the Southern District of Georgia

Before COX, DUBINA and BLACK, Circuit Judges.

JUDGMENT

This cause came to be heard on the transcript of the

record from the United States District Court for the South-

ern District of Georgia, and was argued by counsel;

15a

UPON CONSIDERATION WHEREOF, it is now

hereby ordered and adjudged by this Court that the judg-

ment of the said District Court in this cause be and the

same is hereby AFFIRMED in part and REVERSED in

part; and that this cause be and the same is hereby RE-

MANDED to said District Court with instructions in ac-

cordance with the opinion of this Court;

It is further ordered that defendants-cross-claimants-

appellees, Mammoet Shipping pay to plaintiff-appellee, the

costs on appeal to be taxed by the Clerk of this Court.

Entered: May 1, 1998

For the Court:

THOMAS K. KAHN

Deputy Clerk

By: /s/ Matt Davidson

Deputy Clerk

Issued as Mandate: Jun. 2, 1998

16a

APPENDIX C

[Filed Oct. 24, 1996]

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF GEORGIA

SAVANNAH DIVISION

Civ. No. 494-55

ITEL CONTAINER CORPORATION,

a Plaintiff,

M/V TITAN SCAN, her engines, boilers, etc.,

Moput CarRIERS A.G. & Co. “TITAN SCAN”

SCHIFFAHRTS K.G., CANDYLINE LTp., MAMMOET

SHIPPING B.V. and AUTORIDAD PORTUARIA NACIONAL,!

Defendants.

ORDER

Following the 9/3/96 trial of this admiralty case, the

Court now makes its findings of fact and conclusions of

law. The complexity of the matter, however, warrants a

brief summary of the Court’s determinations.

In 1990, Plaintiff Itel Container Corporation (“TItel’”)

purchased 198 refrigerated containers (“reefers”) and ar-

ranged to have them transported from Japan to Savannah,

Georgia. To this end, Itel contracted with Defendant

Candyline Ltd. (“Candyline”), which in turn contracted

with Defendant Mammoet Shipping B.V. (“Mammocet”)

for actual carriage of the containers. Each agreement was

evidenced by a bill of lading. Once it struck its deal with

1 Evidently never having been served by Itel, Autoridad Nacional

' Portuaria is now dropped from the action. F. R. Civ. P. 4(m).

All future filings shall reflect a properly revised caption.

17a

Itel, Candyline quickly executed a nearly identical agree-

ment with Mommoet, using its contract with Itel as a

model.

Mammoet managed the vessel) TITAN SCAN, which

was owned by Defendant Modul Carriers A.G. & Co.

(“Modul”). The TITAN SCAN carried the reefers with-

out incident to Balboa, Panama, at which time it made an

unscheduled stop and restowed the cargo. As the vessel

journeyed from Balboa to Savannah, twenty containers

were lost overboard and six others severely damaged. As

a result, Itel brought suit against Candyline, alleging inter

alia, that Candyline was liable for Mammoet’s reckless

conduct in restowing cargo without authorization.

Itel also asserted claims directly against Mammoet,

Modul, and the TITAN SCAN. These claims, however,

are untimely and thus barred. Not only did Itel fail to

bring its action within the one-year limitations period, but

it made an insufficient showing that these Defendants con-

sented to extend the time for suit.

Nevertheless, because Candyline breached its contract

of carriage, Itel can recover damages and prejudgment

interest from Candyline. Those damages, however, are lim-

ited by the Hague-Visby rules, which govern the Itel-Candy-

line accord. Although Itel argued that the Hague-Visby

limits are inapplicable in light of Mammoet’s alleged reck-

lessness, the Court finds Mammoet at most acted negli-

gently.

Candyline, in turn, is entitled to partial indemnity from

Mammoet for damages it pays to Itel. While Candyline

argued that all liability should fully “pass through” to

Mammoet, Candyline’s recovery is cabined by the lower

liability limitations of the United States Carriage of Goods

by Sea Act (“U.S. COGSA”). That statutory scheme ap-

plies compulsorily “to all contracts for carriage of goods

by sea to or from ports of the United States in foreign

18a

trade.” Influenced by a variety of factors, the Court finds

Mammoet did not assent to the application of a scheme

(such as Hague-Visby) providing higher liability limits’

than those prescribed by U.S. COGSA. Finally, Mam-

moet must reimburse Candyline for attorney’s fees and

expenses incurred in defense of Itel’s action.

I. Background

Plaintiff Itel is a container leasing company. Stipulated

Facts (“Facts”) € 1. In 1990, it bought 198 new refrig-

erated containers in Japan for use in international com-

merce at a cost of $23,883 apiece. Transcript (“Tr.”)

at 8; Facts 41. Following the purchase, Itel arranged to

have the containers shipped from Japan to the United

States for distribution to its customers. Facts #41, 51.

Seeking ocean transport, Itel’s employees in San Fran-

cisco and London negotiated with Brown Jenkinson,

Ltd., a London-based charterer representing Defendant

Candyline in this transaction. Facts 442, 4, 5, 7-13.

Candyline acted as a non-vessel operating common car-

rier (“NVOCC”)—an entity that contracts with a shipper

as carrier, but then enters into a separate agreement with

a vessel owner or charterer for actual carriage of the ship-

per’s cargo. Tr. at 28, 35, 43.

Itel personnel negotiated the terms of the carriage con-

tract with Candyline by telephone, telex and facsimile.

The parties first evidenced their agreement with a Conline

Booking Note containing boilerplate terms. Facts § 19,

20; 6/30/95 Order at 3, 15-16. Itel proposed various

alterations to which Candyline agreed. Facts € 22. The

parties thus struck preprinted Clauses 5 (in part), 6, 7,

and 10 and replaced them with new provisions detailed

in an addendum. Tr. at 54-66. Fearful that an American

court or arbitrator would imply unintended terms to the

2 Each empty container had a size of 40’ x 9’6” x 8’. Together,

all 198 reefers weighed 855,360 kilograms.

19a

Itel-Candyline contract of carriage, at Candyline’s behest

Clause 10 came to read, “English law to apply.” Tr. at

49-50; Facts ¢ 20.

Significantly, the parties left untouched Clauses 2

(“General Paramount Clause”), 3 ( “Jurisdiction”), 9

(“Live Animals and Deck Cargo”), 19 (“Optional Stow-

age”) and Additional Clause B. (“U.S. Trade, Period of

Responsibility” )—provisions pertaining in some way to

statutory schemes limiting a carrier’s liability to a shipper.

Tr. at 66, 68-70; Facts 431. On 8/30/90, Itel and

Candyline executed the final version of the booking note

in London, with director Jonathan Marks signing on the

latter’s behalf. Facts € 20; Tr. at 28.

On 9/8/90, Candyline’s agent in Japan, A.A. Barwil

Agencies K.K. (“Barwil’”). signed a bill of lading and

delivered it thereafter to Itel’s agent in Japan. Facts 424.

The bill of lading superseded and incorporated by refer-

ence the Conline booking note: “Terms and Conditions

as per Conline Booking Note Dated 30th August, 1990.”

Facts 4 26. The document obligated Candyline to trans-

port the containers from Yokohama, Japan to Savannah,

Georgia. Pursuant to the freight provision, Itel paid

$207,900 ($1,050 per unit) to Candyline about one

week later. Facts 4435, 36. Itel neither declared an

“excess value” for the containers nor paid additional

freight for the shipment of such items. Facts € 34.

As an NVOCC, Candyline negotiated with Defendant

Mammoet to ship the containers. At the same time,

Candyline also conducted discussions with Itel. Tr. at

52-53. Mammoet, an entity with its principal place of

business in the Netherlands, managed the M/V TITAN

SCAN, a vessel owned by Defendant Modul. Facts "¢ 16,

17. Mr. Marks, trying to “turn contracts in the market,”

Tr. at 43, did not inform Mammocet of Itel’s identity, Tr.

at 72, but he testified that Mammoet knew full well that

Candyline did not own the containers to be transported.

Tr. at 22, 41.

20a

Mr. Marks’ “fundamental intent” regarding any agree-

ment with Mammoet was its “back-to-back” or “pass

through” nature. Tr. at 35-36, 205-06. As a fledging

company. Candyline could ill-afford to strike any deal

where Mammoet as carrier did not absorb all potential

liability Candyline might incur on its contract with Itel;

thus, Candyline aimed to guarantee that any liability

would “pass through” Candyline to Mammoet. Tr. at 35,

39. To this end, Mr. Marks sought a Candyline-

Mammoet contract to mirror the Candyline-Itel contract

to the letter, so that the two would stand “back to back.”

Tr. at 35, 52-53. In hammering out the agreement’s

terms, Mr. Marks dealt extensively with Brian Carroll and

Lindsay Adams, two agents in Mammoet’s London office.

Tr. at 40,

Mr. Marks insists Mr. Carroll understood and acceded

to the “pass through” feature as the cornerstone of any

agreement. Tr. at 45-46; cf. 151, 162. On 8/28/90,

Mammoet made Candyline a “firm offer” of carriage. Tr.

at 47, 151. Two days later, the parties executed in Lon-

don a boilerplate Conline booking note prepared, in es-

sence, by Candyline. Tr. at 64; Facts 44 37, 38.

In order to ensure a “pass through,” Mr. Marks used

the Itel-Candyline booking note as a model: he canceled

the same preprinted terms Itel had previously stricken and

appended “additional clauses” identical to those found in

the Itel-Candyline addendum. Tr. at 64-66, 181-82.

Clauses 2, 3, 9, 19 and Additional Clause B remained

undisturbed, while Clause 10 again provided “English law

to apply.” To Lindsay Adams, Mammoet’s agent in Lon-

don, “[Clause 10] was a typical insertion” in “the UK

markets.” Tr. at 64-66, 68, 174, 184-85; Facts 4 46.

Only the rate of freight varied from the Candyline-Itel

contract,® Tr. at 49, and Candvline neither declared an

3 Mammoet collected $950 per unit, so that Candyline made a $100

profit on each container shipped once it paid freight to Mammoet

approximately two weeks later. Tr. at 49, 73; Facts §{ 33, 47.

2la

“excess value” for the containers nor paid additional

freight for their shipment. Facts qq 47, 48.

More importantly, Candyline failed to include any

declaration of its “pass through” intent in writing to

Mammoet. Tr. 71, 189, 207, 209. At trial, Candyline

suggested that the 1993 detonation of an IRA bomb at

Candyline’s offices destroyed any documentation it had

detailing the pertinent Candyline-Mammoet negotiations.

Tr. 30, 207-08. Mr. Marks readily admitted, however,

that Candyline never had discussions with Mammoet con-

cerning a liability scheme; he believed any such action

would be superfluous in light of the “back-to-back” nature

of the contracts. Tr. 55, 73-74, 188-89, 198, 206.4 More-

over, Mammoet could produce no records reflecting Mr.

Marks’ intent. Tr. 71, 207, 209.

On 9/8/90, Nedlloyd Lines Agencies K.K. (“Ned-

lloyd”), as agents of Mammoet in Japan, signed the Can-

dyline-Mammoet bill of lading and delivered the original

to Barwil, Candyline’s agent. Facts 439. Candyline

drafted the document at Mammoet’s request, and just like

its Candyline-Itel counterpart, it provides “Terms and

Conditions as per Conline Booking Note Dated 30th

August, 1990.” Tr. at 66-67: Facts qq 39, 40.

At the beginnig of September 1990, the TITAN SCAN

loaded general cargo at Hatachi, Japan that was destined

for discharge at Puerto Moin, Costa Rica. Tr. at 112-13,

140. A few days later, Itel’s containers, then in good con-

dition, were loaded in Yokohama onto the ship’s eight on-

deck bays and into holds below. Tr. at 115, 121; Facts

451. Itel asserted at trial that port regulations in Yoko-

hama limited the stacking of reefers to four in height,5

* Nevertheless, Mr. Marks still secured insurance to cover the

voyage of Itel’s containers across the Pacific and beyond. Tr. 71.

5 However, as aptly noted by counsel for Mammoet and Modul,

Tr. at 219, Itel made no proffer of evidence to elucidate the sub-

stance of these port restrictions beyond merely referencing them,

22a

Tr. at 114, 129, 139, 195-96, and further submitted the

vessel’s Container Stowage Plan as proof that cargo this

size could not be stacked any higher than four.® In ac-

cordance with these specifications, the containers stood in

tiers of three, two, four, four, four, four, three, and three

in each of the eight bays when the TITAN SCAN de-

parted Yokohama on 9/9/90. Tr. at 117.

The voyage en route to Puerto Moin and Savannah

was uneventful until the TITAN SCAN unexpectedly

stopped in Balboa, Panama; the vessel’s chief officer,

Reinhard Juttner, called on that port in compliance with

orders received from Mammoet. Tr. at 121, 142; Facts

454. Under the guidance and supervision of the ship’s

personnel, stevedores there restowed the Itel cargo located

in bays one and two in order to create sufficient space to

allow for the discharge in Puerto Moin of other cargo

stowed below deck. Tr. at 86-87, 121, 141. After the

reconfiguration, the first two bays held no containers,

whereas the fourth, fifth and eighth bays now stacked

Itel’s cargo in tiers of five. Tr. at 79, 86-89, 124-25;

Facts 4 54.

Although Mr. Juttner testified that no restrictions pre-

vented the restowing of containers five high, Tr. at 126,

Pl’s Exh. 4; Tr. at 142, 195-96, and any judicial notice by this

Court of Japanese law would be inappropriate. International Trad-

ing Co. v. M/V ZENIT SUN, 684 F. Supp. 861, 864 (E.D.Pa. 1988)

(“No proof having been presented at trial as to Chilean law, the

court cannot take judicial notice of the law of Chile”). In any

event, Itel failed to prove how Yokohama port regulations govern

a carrier’s conduct once the vessel is in the Caribbean.

6 Itel’s own witness, a marine surveyor with the Maritime Bureau

named John Peck, conceded on cross-examination that the Con-

tainer Stowage Plan is merely a guideline for the transport of

loaded containers. Here, by contrast, Itel’s containers were empty.

Tr. at 92-93; 114, 137-38. As a consequence, Itel’s contention that

violation of the Plan constituted reckless conduct on the part of

Mammoet and the crew of the TITAN SCAN is accorded little

weight. See infra at 9-10, 26-28.

23a

129, Mr. Marks swore under oath that (1) Mammoet

failed to inform Candyline either before or during the

transport that restowing would be necessary or that the

TITAN SCAN would anchor in Balboa, Tr. at 22, 76;

(ii) he expected Itel’s cargo would “not be touched” once

loaded in Japan, Tr. at 22; (iii) industry practice forbids

the restowing of cargo without permission, Tr. at 23; and

(iv) had Mammoet sought permission, Candyline would

likely have asked Itel “out of prudence,” and recom-

mended “no objection” on the condition that a Candyline-

appointed surveyor supervise the stevedores. Tr. at 23-24.

The vessel proceeded and discharged its cargo without

incident in Puerto Moin, but while in transit to Savannah,

twenty containers from bay five were lost overboard and

six others damaged in the early morning hours of 10/

11/90. Tr. at 11-12, 88, 230; Facts €55. Itel charged

that the containers were inadequately secured as a result

of restowing in Balboa: rather than unitizing the first and

second tiers of containers with twistlocks, as the Container

Stowage Plan provides, the stevedores and TITAN SCAN

personnel utilized double stacking cones, a device which

cannot bind one container to another as tightly as the

twistlocks. Tr. at 79-80, 89-90, Furthermore, Itel argued

that (i) the TITAN SCAN’s structural design hindered

proper fastening of the containers, since the bays them-

selves afforded inadequate room for the use of criss-

cross lashing, instead of the less effective vertical lashing

that was used, Tr. at 82-85, 103-04, 134; and (ii) stack-

ing reefers five high, above the ship’s center of gravity and

in contravention of Yokohama’s port regulations, created

a situation that significantly increased the possibility of

container loss or damage. Taken together, Itel contended

that numerous deviations from proper containerization

constituted recklessness and not simply negligence on the

part of Candyline and Mammoet. Tr. 211-215.

Mammoet did not dispute the harm that befell Itel’s

cargo on the way from Puerto Moin to Savannah, Facts

24a

¢ 55, but responded by noting that the unitization and

lashing in the other bays remained intact and the rest of

the cargo—nearly ninety percent—arrived in good condi-

tion in Savannah on October 13, 1990. Tr. at 131. John

Peck, presented by Itel as an expert in maritime contain-

erization, concurred with Mammoet’s assessment that the

twenty containers went overboard when the adjustable

bridge fittings, ordinarily used to secure columns of con-

tainers to one another, Tr. at 90, 120, opened for reasons

unknown. Tr. at 104. This destabilized the stow so dras-

tically that something as minor as the vessel’s normal vi-

brations could then have caused the cargo to jolt, hasten-

ing the loss of the reefers. Tr. at 94-95.

At trial, Itel claimed damages of $477,660 for the

twenty lost containers, $54,253.75 for the six damaged

reefers, and $97,797.04 for costs incurred in locating and

removing containers from the waters of the Caribbean,’

for a total of $623,710.79. Although Itel sued Candyline

claiming breach of the contract of carriage, Candyline, in

turn, attempted to deflect liability onto Mammoet, alleg-

ing that because Mammoet assented to “back-to-back” con-

tracts, Candyline was entitled to full indemnification for

any payments made to Itel. In addition, Itel sued the

TITAN SCAN in rem and Mammoet and Modul in tort,

alleging a bailment theory.

Il. Governing Standards

A. Breach and Indemnity

Because courts have not hesitated to hold NVOCCs

liable for cargo loss or damage, Candyline stands liable to

Itel if the contract of carriage is found to be breached.

See, e.g., Antilles Ins. Co. v. Transconex, Inc., 862 F.2d

391-92 (1st Cir. 1988) (holding NVOCC liable for cargo

7 An Itel employee, Lisa Leach, testified about only $60,997.04 of

these expenses, but Defendants did not dispute the paperwork Itel

offered into evidence detailing $91,797.04 worth of damages.

25a

damage); Polyplastics, Inc. v. Transconex, Inc., 827 F.2d

859, 860 (1st Cir. 1987) (“Vis-a-vis the owner, the

[NVOCC] retains primary responsibility for carriage of the

goods from origin to destination.”); 6/30/95 Order at 11.

Nonetheless, this Court has already held that Candyline

is entitled to indemnity from Mammocet for claims recover-

able against Candyline by Itel. 2/15/96 Order at 4; In-

surance Co. of N. America v. M/V OCEAN LYNX, 901

F.2d 934, 941 (11th Cir. 1990), cert. denied, 498 U.S.

1025 (1991).

B. Time Bar Issues

Itel’s independent claims against Mammoet, Modul, and

the TITAN SCAN encounter insurmountable obstacles.

Ordinarily, Itel could sue Mammoet in contract for dam-

age and loss to cargo, because “where an agent [Candy-

line] contracts with a third party [Mammoet] on behalf of

a partially disclosed principal [Itel], the third party is liable

to such principal as if the parties had contracted directly.”

Orion Ins. Co. v. M/V HUMACAO, 1994 A.M.C. 1922,

1924 n.5, 851 F. Supp. 575 (S.D.N.Y. 1994): 6/30/95

Order at 11-12. Moreover, by its very terms the Candy-

line-Mammoet bill of lading binds the carrier and the

“Merchant,” which is defined broadly in the bill to include

“the Owner of the cargo.” 6/30/95 Order at 11. See also

All Pacific Trading, Inc. v. M/V HANJIN YOSU, 7 F.3d

1427, 1432 (9th Cir. 1993), cert. denied sub nom. Hanjin

Container Lines, Inc. v. Tokio Fire & Marine Ins. Co.,

Ltd., 114 S.Ct. 1301 (1994) (finding privity of contract

between shipper and actual carrier based on broad defi-

nition of “Merchant” in bill of lading, despite presence of

NVOCC).

At earlier stages in these proceedings, however, Mam-

moet and Modul asserted a statute of limitations defense

against Itel. At that time, all parties agreed that, under

any of the possible statutory regimes limiting a carrier’s

liability—U.S. COGSA, Japan’s International Carriage of

26a

Goods by Sea Act (“Japanese COGSA”), or the British

Carriage of Goods by Sea Act (“Hague-Visby”)—the ap-

plicable limitations period is one year. U.S. COGSA—

which, as will be seen, governs Mammoet’s obligations—

discharges the carrier and the ship “from all liability in

respect of loss or damage unless suit is brought within one

year after delivery of the goods or date when the goods

should have been delivered[.]” 46 U.S.C. § 1303(6).

When this strictly enforced statute of limitations accrues,

Unilever Ltd. v. M/T STOLT BOEL, 77 F.R.D. 384, 386

(S.D.N.Y. 1977), the time-bar effectively extinguishes not

just the remedy, but the cause of action itself. American

Hoesch, Inc. v. Steamship Aubade, 316 F. Supp. 1193,

1194 (D.S.C. 1970); 129 ALR Fed 273, 289 (1996).

While U.S. COGSA typically limits liability arising from

contract, § 1303(6)’s plain language does not preclude its

application to claims sounding in tort. Commercial Sheet-

metal Co., Inc. v. Matson Navigation Co., 711 P.2d 738,

740 (Haw. Ct. App. 1986) (“COGSA § 1303(6)’s suit

deadline applies to ‘all liability.” That phrase encompasses

both contract and tort liability.”); Barretto Peat, Inc. v.

Luis Ayala Sucrs., Inc., 896 F.2d 656, 661 (ist Cir.

1990) COGSA’s one-year statute of limitations applies to

torts); Reisman v. Medafrica lines, U.S.A., 592 F. Supp.

50, 52 (S.D.N.Y. 1984) (COGSA’s statute of limitations

bars shipper’s claims for breach of contract and negli-

gence) .®

It is undisputed that Itel filed its Complaint on

12/26/91, one year and two months after the TITAN

8 See also St. Paul Fire and Marine Ins. Co. v. Marine Transpor-

tation Svcs. Sea-Barge Grp., 727 F. Supp. 1488, 1442 (S.D.Fla.

1989) (“COGSA provides an exclusive remedy, barring all other

theories of liability, including theories of bailment and negli-

gence”); Miller Export Corp. v. Hellenic Lines, Ltd., 534 F. Supp.

707, 710-11 (S.D.N.Y. 1982) (“exclusive application of COGSA can-

not be avoided by couching claims in terms of negligence or other

common law causes of actions .. .”’).

27a

SCAN discharged Itel’s reefers in Savannah. 6/30/95

Order at 6; Facts 4.57. At first blush, Itel failed to meet

U.S. COGSA’s limitations period; in fact, Candyline

granted a six-month extension of time in which to sue.

6/30/95 Order at 7. The right to invoke the U.S. COGSA

limitation period may be waived— indeed, such extensions

are common in the industry—but the terms of a ‘waiver

are strictly construed. Bunge Edible Oil Corp. v. M/V

TORM RASK, 756 F. Supp. 261 (E.D.La. 1991), aff'd,

949 F.2d 786 (Sth Cir.), cert. denied, 505 U.S. 1207

(1992); United Fruit Co. v. J.A. Folger & Co., 270 F.2d

666, 668-669 (Sth Cir. 1959), cert. denied, 362 U.S. 911

(1960) ; 6/30/95 Order at 5-6, 8.

Prior to trial, Mammoet and Modul argued that Candy-

line’s consent did not extend to Itel. 6/30/95 Order at 8.

As a consequence, they contended that the Statute of limi-

tations precluded Itel from asserting its direct claims

against them. This Court, despite noting that “[t]he most

plausible reading of the correspondence shows that Candy-

line consulted the vessel owners and management, secured

their consent to an extension, and then relayed this in-

formation to Itel on behalf of all concerned,” nevertheless

found the statute of limitations question to be a genuine

issue of material fact, since later communications gave “the

distinct impression that Candyline and [Mammoet and

Modul] viewed the extension as a grant to Candyline

alone.” 6/30/95 Order at 8-9. Thus, after two rounds

of motions for summary judgment, the issue of whether

Itel’s claims against Mammoet and Modul were time-

barred was preserved for trial.

At trial Candyline, evidently secure in the fact that

Mammoet would indemnify it for any liability incurred

with respect to Itel, made no effort to prove that the six-

month extension applied to the vessel owner and manager.

More puzzling, however, is why Itel neglected any dis-

cussion of the subject. In closing argument, Mammoet and

28a

Modul presented no evidence but formally moved to bar,

on statute of limitations grounds, any claim Itel had

against Mammoet and Modul through the Candyline-

Mammoct bill of lading. Tr. at 215-16. Hence, by the

close of trial, the parties scarcely resolved an issue ex-

plicitly left open for resolution in oral argument.

Now confronting the issue squarely, the Court finds Itel

has not carried its burden of proving that the vessel’s own-

ers and manager granted an extension allowing for direct

suit. Not only has Itel already admitted that Modul and

Mammoet did not directly grant it an extension of time,

6/30/95 Order at 7, but, as previously discussed, waivers

of the statute of limitations are strictly construed, no mat-

ter what their prevalence in the maritime community. See

A.B. Volvo v. M/V ATLANTIC SAGA, 534 F. Supp.

647, 648-49 (S.D.N.Y. 1982) (extensions granted by ves-

sel’s agent do not bind vessel when latter refused to give

extension on its own behalf). Furthermore, Clause 17—

an item in full force in both the Itel-Candyline and Candy-

line-Mammoet bills of lading—limits Itel’s recovery to

contract-based remedies alone and entitles a bailee to take

advantage of liability liimts provided by law (here, U.S.

COGSA). Thus, Itel’s direct claims against the vessel,®

its OWner, and its manager—including those in tort—are

time-barred, and Itel’s only basis for recovery stems from

its agreement with Candyline.

C. Statutory Regimes Limiting Liability

In ascertaining the extent to which Candyline and (by

extension) Mammoet are liabel to Itel, this Court has

already ruled that the Itel-Candyline agreement is governed

by the Hague-Visby Rules, a statutory regime adopted in

® Nothing precludes the time bar from operating on in rem ac-

tions against the vessel. See Bunge Edible Oil, 949 F.2d at 787

(affirming dismissal of in rem claims against vessels as untimely) ;

Mitsubishi Corp. v. M.V. Oinoussian Strength, 1994 WL 74087 at *4

(S.D.N.Y. 3/8/94) (same).

29%

England that limits a carrier’s liability. 6/30/95 Order

at 15-16; 2/15/96 Order at 5-6. Those Rules state:

Unless the nature and value of such goods have been

declared by the shipper before shipment and inserted

in the bill of lading, neither the carrier nor the ship

shall in any event be or become liable for any loss or

damage to or in connection with the goods in an

amount exceeding the equivalent of 10,000 francs per

package or unit or 30 francs per kilo of gross weight

of the goods lost or damaged, whichever is higher.

Article IV, British Carriage of Goods by Sea Act of 1971.

See also J.C.B. Sales, Ltd. v. M/V SEIJIN, 1996 A.M.C.

1507, 1510, 921 F. Supp. 1168 (S.D.N.Y. 1996); Pyro-

power Corp. v. M/V ALPS MARU et al., 1993 A.M.C.

1562, 1567-1568, 1993 WL 45978 (E.D.Pa. 1993). This

Court, however, reserved judgment as to which liability

scheme—Hague-Visby, Japanese COGSA, or U.S. COGSA

—applies to the Candyline-Mammoet bill of lading.1° Had

§ 1303(6) not barred Itel’s independent claims against

Mammoet, Modul and the TITAN SCAN, this determina-

tion would have been crucial, for it would have controlled

Mammoet and Modul’s direct liability to Itel. As it stands,

the choice of liability scheme still dictates the extent of

Mammoet’s indemnity to Candyline, since, as discussed

infra at 17, Candyline stands liable to Itel for breach of

the contract of carriage.

U.S. COGSA applies compulsorily “to all contracts for

carriage of goods by set to or from ports of the United

States in foreign trade.” 46 U.S.C. § 1312. “[R Jegardless

of any provision to contrary in the bill of lading or any

rule to the contrary under foreign law .. . the parties do

not have the freedom to displace COGSA with another

10 At the time Mammoet shipped Itel’s containers, neither Japan

nor the United States had adopted the Hague-Visby Rules. Facts

at 11.

30a

regime.” 2A Benedict on Admiralty § 46 at 5-13. US.

COGSA reads similar to the Hague-Visby Rules and pro-

vides:

Neither the carrier nor the ship shall in any event be

or become liable for any loss or damage to or in con-

nection with the transportation of goods in an amount

exceeding $500 per package . . . unless the nature and

value of such goods have been declared by the shipper

before shipment and inserted in the bill of lading.

46 U.S.C. § 1304(5).

Notwithstanding this limitation, U.S. COGSA permits

shippers and carriers to agree by contract to raise their

liability to an amount exceeding $500 per package. 7/d.

If the parties agree to a higher liability limit, then—but

only then—may a foreign legal regime trump USS.

COGSA. See, e.g., Ilva U.S.A., Inc. v. M/V BOTIC, et.

al., 1993 A.M.C. 240, 243-44, 1992 WL 296562 (E.D.

Pa. 1992) (finding mutual intent to raise $500 limitation

of U.S. COGSA where goods carried from Italy to Phila-

delphia). If, however, the question of whether the parties

agreed to a higher limit is “irretrievably ambiguous,” then

U.S. COGSA limit applies by default, for there is no clear

intent otherwise. 6/30/95 Order at 14; see Valmet Ma-

terials Handling Equipment, Inc. v. Nedlloyd Linjen B.V.

Rotterdam, 1993 A.M.C. 1243, 1246, 1993 WL 204149

(M.D.Fla. 1993).

Ill. Analysis

Candyline unquestionably breached its contract of car-

riage with Itel when twenty reefers were tossed overboard

and six others suffered extensive damage during the voy-

age from Japan to Savannah. Tr. 40. After all, in strik-

ing an agreement with Candyline, Itel sought to ensure

safe passage of its cargo from Japan to Savannah. How-

ever, Itel’s recovery is constrained because, as mentioned

3la

earlier, its direct claims against Mammoet and Modul are

time-barred and, as explained below, the Hague-Visby

statutory regime limits the extent of Candyline’s liability.

B. Liability Limitations and The Extent of Indemnity

This Court previously concluded as a matter of law

that the Hague-Visby statutory scheme governs the Itel-

Candyline accord. 6/30/95 Order at 1416; 2/15/96

Order at 5-6. In making this determination, it evaluated

numerous factors, see Z.K. Marine, Inc. v. M/V ARCHI-

GETIS, 1993 A.M.C. 1444, 808 F. Supp. 1561 (S.D.

Fla. 1992), and found that: (i) the bill of lading was

issued in Japan, 2/15/96 Order at 6; (ii) Candyline, the

“carrier” for purposes of the transaction, had its principal

place of business in England, and Clause 3 of the bill of

lading provides that the law of the country in which the

carrier has its principal place of business applies to any

dispute; (iii) previous courts had construed the same Gen-

eral Clause Paramount (the bill of lading’s Clause 2) as

evidencing an intent to agree to a higher liability limita-

tion than that provided by U.S. COGSA; and (iv) Clause

10 (“English law to apply”), a provision to which the

parties mutually agreed, incorporated a foreign legal

regime (i.e., Hague-Visby) with a liability limit exceeding

$500 per package. 6/30/95 Order at 14-16; Pyropower

Corp., 1993 A.M.C. at 1570-71; Ilva, 1993 A.M.C. at

242-43 44

11In directing its attention towards factors (i) and (iv), the

Court’s analysis was guided by Article X of the British Carriage

of Goods by Sea Act of 1971, which states that

[t]he provisions of these Rules [Hague-Visby] shall apply to

every bill of lading relating to the carriage of goods between

ports in two different States if:

(a) the bill of lading is issued in a contracting State, or

(b) the carriage is from a port in a contracting State, or

32a

In contrast, the Court could not ascertain on summary

judgment whether Candyline and Mammoet agreed to a

higher limitation than U.S. COGSA’s to operate on their

own bill of lading. 6/30/95 Order at 17-19. Conse-

quently, the Court received evidence concerning this issue

at trial. While the provisions of the Candyline-Mammoet

contract are often identical to its Itel-Candyline counter-

part—and although Candyline repeatedly has trumpeted

the “pass through” aspect to its dealings—the contracts

must be evaluated as distinct agreements, since the “proper

method of defining relationships between shippers,

NVOCCs, and vessel owners is to treat the various bills

of lading as just that—discrete shipping agreements know-

ingly entered by the parties involved.” 6/30/95 Order at

20 (citing Gross Machinery Group v.M/V ALLIGATOR

INDEPENDENCE, 1994 A.M.C. 732, 737-739, 1992

WL 47557 (S.D.N.Y. 1992)).

Trying to absolve itself of liability entirely, Candyline

argued that mirror agreements must be controlled by the

same statutory regime. Because Hague-Visby’s liability

limits are higher than those established by U.S. or Japa-

nese COGSA, Candyline sought to prove that Hague-Visby

governs the Candyline-Mammoet agreement, lest Candy-

line not receive full indemnity from Mammoet for any

sums paid to Itel as damages.* To this end, Mr. Marks

—

lading provides that these Rules or legislation of any

State giving effect to them are to govern the contract.

That the Itel-Candyline bill of lading was issued in Japan (factor

(i)) did not lead the Court to conclude that Article X(a) was

satisfied, since Japan was not a “contracting state” in 1990. Supra

note 10. The presence of typewritten Clause 10 (factor (iv)), how-

ever, combined with factors (ii) and (iii), evidenced that the

Hague-Visby Rules governed the contract, thus satisfying Article

X(c).

12 At bottom, Candyline’s primary concern is “parallelism.” Tr.

at 224-226. Because it aims to effectuate a complete “pass through”

of liability, it insists that the same statutory regime should control

both contracts. While Candyline argued at trial that the Hague-

’

;

33a

testified that in knowingly accepting a contract that stood

“back-to-back” to the Itel-Candyline accord, Mammoet

explicitly acceded to the application Hague-Visby. Mr.

Marks steadfastly adhered to this assertion despite con-

ceding that the parties never actually spoke about liability

schemes per se.

In light of the evidence adduced at trial, as well as

Candyline’s post-trial concessions, see supra note 12, the

Court finds that U.S. COGSA governs the Candyline-

Mammocet contract. As with the Candyline-Itel agreement,

Candyline and Mammoet reached the terms of the book-

ing note in London, but signed the bill of lading, which

incorporated the terms of the booking note in toto, in

Japan. Again Clause 3 was left intact, but this time the

carrier’s principal place of business is Mamunoet’s office

in Amsterdam, not London. Thus, unlike its analysis of

the Itel-Candyline accord, which led to the inexorable

conclusicn that Hague-Visby controlled, these factors do

not point the Court in a definite direction.

Muddying the waters further are Clauses 2 and 10.

The parties did not strike Clause 2, which provides that

the bill of lading incorporates the Hague Rules as enacted

in the country of shipment (here, Japan) and has been

read by other courts as an agreement to a liability limita-

tion greater than that provided by U.S. COGSA. See,

e.g., Ilva, 1993 A.M.C. at 242-43; Associated Metals &

Mineral Corp. v. M/V ARKTIS SKY, 1991 AMC.

1499, 1505-06, 1991 WL 51087 (S.D.N.Y. 1991), va-

cated and remanded on other grounds, 978 F.2d 47

(2d Cir. 1992). Mr. Marks, however, also introduced

Clause 10 (“English law to apply”) into both agreements

to which Candyline was party, and a “typical insertion”

ought not be read in a manner rendering it superfluous.

Still, he admitted he did not intend to address liability

Visby rules apply to the Candyline-Mammoet contract, it has since

reversed course. In its post-trial submissions, it contends that its

contract with Mammoet is governed by Japanese COGSA.

34a

schemes in inserting the provision, and he could not

produce a shred of documentation evincing Mammoet’s

express agreement to a higher liability limit. Leaving

aside the uncontroverted destruction of Candyline’s files,

Mammoet has no tangible record of Candyline’s “back-to-

back” intent, and assuredly, an understanding of such

material import would have been reduced to writing.

Even if, during negotiations, Mr. Marks communicated

his hopes far a “pass through” agreement to Mr. Carroll,

the final versions of the booking note and bill of lading

are devoid of any language to this effect. As a result, the

parol evidence rule bars introduction of this evidence.

See Warren v. Ajax Navigation Corp. of Monrovia, 1995

A.M.C. 2609, 1995 WL 688421 at *1 (S.D.Fla. 2/3/95)

(“When a contractual agreement has been reduced to an

integrated writing, the parol evidence rule dictates that

evidence, whether parol or otherwise, of antecedent under-

standing and negotiation will not be admitted for the

purpose of varying or contradicting the writing.”); see

also Anyangwe v. Nedlloyd Lines, 1996 A.M.C. 1083,

909 F. Supp. 315, 322 (D.Md. 1995) (assuming that

prior oral understanding existed, but nonetheless barring

evidence on parol evidence grounds). Whatever Candy-

line’s expectations—articulated or implied—Mammoet is

not held to a metaphysical standard of comprehension.

This conclusion is strengthened by the fact that Mam-

moet had no hand in bringing Clause 10 into the Candy-

line-Mammoet bill of lading. See Associated Metals, 1991

A.M.C, at 1507 (ambiguities in bill of lading are con-

strued against the drafter); Tano Automation, Inc. v.

U.S., — F. Supp. —, —, 1996 WL 537744 at *3 (E.D.

La. 9/20/96) (same).

In its closing argument, Candyline urged the Court not

to exalt boilerplate terms over a specially-added provision

like Clause 10. Tr. at 226. While mindful that custom-

ized provisions preempt preprinted ones, see Insurance

Co. of N. Amer. v. S/S SEALAND DEVELOPER, 1990

eee ee? a

35a

A.M.C. 2967, 2970 & n.4, 1989 WL 85789 (S.D.N.Y.

1989), Clause 10 alone is not dispositive as to whether

Mammoet agreed to a higher liability limit than that

provided by U.S. COGSA. The Court is reluctant to give

a cryptic snippet (“Engish law to apply” to what?) such

effect that it constitutes the sole measure of Mammoet’s

express agreement to displace U.S. COGSA; indeed, an

English solicitor retained by Candyline itself has sworn,

“[ T]he fact that the terms of the contract of carriage pro-

vided for English law to apply will not result in the incor-

oration of the Hague-Visby rules.” Wisdom Aff. 44 17,

20. In striking its deal with Mammoet, Candyline was

under no obligation to utilize the same standard forms it

used with Itel. Instead, Candyline could have achieved its

“pass through” objective by doing what others do on a

regular basis, i.e., spell out its intent in a customized

contract.

Faced with tht ambiguity of preprinted Clause 2, which

points in the direction of Japanese COGSA; boilerplate

Clause 3, which calls for the application of Dutch law;

and typewritten Clause 10, which applies English law but,

according to accepted rules of contractual construction,

must be construed against Candyline, the Court returns

to its initial point of departure: U.S. COGSA applies

ex proprio vigore “to all contracts of carriage of goods

by sea to or from ports of the United States.” 46 U.S.C.

§ 1312; R.B.K. Argentina S.A. v. M/V DR. JUAN B.

ALBERDI, 935 F. Supp. 358, 366 (S.D.N.Y. 1996).

Although parties to a contract can agree to deviate

upwards from U.S. COGSA’s package limitation, 46

U.S.C. § 1304(5), Candyline failed at trial to meet its

burden of proving Mammoet’s unqualified assent to a

limit above the $500 ceiling. Previously, the Court noted

that “the evidence of conscious agreement by Mammoet

13 Indeed, “Additional Clause B” of the Candyline-Mammoet bill

of lading explicitly contemplates the possibility that U.S. COGSA

will govern.

36a

and Modul is fairly thin,” and also remarked that “[t]here

is no direct evidence that the defendants consciously

agreed to increase their liability for any cargo damage{.]”

6/30/95 Order at 18-19. Having received and reviewed

the weight of the evidence, nothing has altered the Court’s

earlier inclinations.* Thus, Candyline—the “shipper” for

purposes of its transaction with Mammoet-—is saddled with

the $500 per package limitation, having never declared

the value of the goods Mammoet transported. See 46

U.S.C. § 1304(5); Rockwell Int'l Corp. v. S/S KOELN

EXPRESS, 1987 A.M.C. 2537, 2539, 1987 WL 33397

(D.Md. 1987). Having drafted the bill of lading, Candy-

line unquestionably had a “fair opportunity” to make

such a declaration. Hoechst Celanese Corp. v. M/V

TRIDENT AMBER, 1992 A.M.C. 2769, 2774-75, 1992

WL 179219 (S.D.Ga. 1992); Unimac Co., Inc. v. C.F.

Ocean Service, 43 F.3d 1434, 1438 (11th Cir. 1995.

In sum, Candyline breached its contract of carriage with

Itel, but its liability to Itel is capped by the application of

the Hague-Visby Rules. Mammoet, in turn, must indem-

nify Candyline for damages Candyline pays to Itel, but

that reimbursement is restricted by the application of U.S.

COGSA. See SPM Corp. v. M/V MING MOON, 22 F.3d

523, 525 & n. 3, 4 (3d Cir. 1994) (where an NVOCC

has signed separate bills of lading with the shipper and

carrier, each contract may specify different liability limits).

C. Breaking the Limits

In an effort to avert statutory liability limitations, at

trial Itel sought to prove that re-stacking the containers

14In short, the Court finds that given the circumstances sur-

rounding the formation of the Candyline-Mammoet agreement,

Article X(c) of the British COGSA of 1971 is not satisfied in this

instance. See supra note 11.

15 Each reefer constitutes a “package” for U.S. COGSA purposes.

See Hayes-Leger Assocs., Inc. v. M/V ORIENTAL KNIGHT, 765

F.2d 1076, 1082 (11th Cir. 1985) (adopting Second Circuit’s defini-

tion of “package”); Pyropower Corp., 1993 A.M.C. at 1572-73.

37a

five high in Balboa was a reckless act by Candyline and

Mammoet, in contravention of both the Yokohama port

regulations and the Container Stowage Plan. As further

evidence, Itel submitted that the use of vertical lashings

and double stacking cones in securing the reefers departed

so substantially from the accepted practice of criss-cross

lashings and twistlocks as to constitute reckless behavior

by the defendants. Finally, Itel maintained that the

TITAN SCAN’s call and restowing at Balboa amounted

to an impermissible deviation sufficient to oust the statu-

tory regime limiting liability.

Itel’s agreement with “carrier” Candyline is governed by

the Hague-Visby regime, which prohibits the package lim-

itation from applying in cases of recklessness:

Neither the carrier nor the ship shall be entitled to

the benefit of the limitation of liability . . . if it is

proved that the damage resulted from an act or omis-

sion of the carrier done with intent to cause damage,

or recklessly and with knowledge that the damage

would result.

Article IV(5)(e); In Re Tecomar, S.A., 199] A.M.C.

2432, 765 F. Supp. 1150, 1182 (S.D.N.Y. 1991). De-

spite having known since the middle of 1995 that the

Hague-Visby rules apply to its contract with Candyline,

Itel has provided the Court with the text of exactly one

case addressing the issue of reckless conduct. In The

Pembroke, 2 Lloyd’s Rpts. 291 (1993), the judge noted

that the issue of recklessness “is a matter of fact for

each case.” Id. at 296. That said, the Court finds Mam-

moet’s conduct—for which Candyline is liable to Itel—

negligent at worst.2¢

Having already rejected Itel’s arguments regarding the

Yokohama port regulations and the Container Stowage

16 At trial, Mammoet all but conceded it actéd negligently. Tr.

at 223-24 (“90 percent of the containers got there safely. That

can’t be reckless; [it] may be negligence.’’).

38a

Pian, see supra notes 5 and 6, the Court now concludes

that in using vertical lashings and double stacking cones,

Defendants did not take “a calculated risk with the full

appreciation of the dangers and probable consequences.”

The Pembroke, 2 Lloyd’s Rpts. at 297.17 Indeed, an ex-

pert in marine containerization surmised that an inex-

plicable failure in the bridge fittings proximately caused

the loss of stow. Tr. at 94-95, 104; Streeton Dep. at 54-

58. For this reason, it cannot be said that Mammoet or

the crew of the TITAN SCAN “knew of the probable

result”—that is, that the cargo would be thrown over-

board—when the reefers were restowed five high by

stevedores in Balboa. The Pembroke, 2 Lioyd’s Rpts. at

296. As it stands, nearly ninety percent of the cargo ar-

rived in Savannah in good condition. Thus, Itel cannot

break the Hague-Visby limitations on the grounds that

Defendants acted recklessly.

Nor can Itel evade Hague-Visby for reasons relating

to unreasonable geographic deviation or restowage

(“quasi-deviation”). With Itel failing to introduce ade-

quate English law on this score, the Court resorts to the

application of U.S. admiralty law principles. Cavic v.

Grand Bahama Development Co. Ltd., 701 F.2d 879,

882 (lith Cir. 1983) (citing Restatement (Second) of

Conflicts § 136, coment h, at 378-79 (1971)); Cantieri

Navali Riuniti v. M/V SKYPTRON, 8062 F.2d 160, 163

n. 5 (Sth Cir. 1986) (“In the absence of sufficient proof

17 Cf. Konica Business Machines v. Vessel SEA-LAND CON-

SUMER, 1996 A.M.C. 1761, 1762-63, 1996 WL 468770 (C.D.Cal.

1996) (finding negligence, “but not more,” where cargo was jet-

tisoned after crew failed to secure twistlocks; such action did “not

rise to the level of an unreasonable deviation” sufficient to deprive

vessel of U.S. COGSA’s liability limitations) ; Tecomar, 765 F. Supp.

at 1184-1185 & n. 938, 94 (expressing reluctance to oust statutory

liability limitations, for whether conduct is characterized as “will-

ful,” “wanton” or “reckless,” courts ought not evaluate “in almost

every case the degree of the carrier’s culpability”) (citations

omitted).

39a

to establish with reasonable certainty the substance of the

foreign principles of law, the modern view is that the law

of the forum should be applied.”) (cites and quotes

omitted).

The doctrine of deviation provides “that when a car-

rier deviates markedly from the contract of Carriage,

[U.S.] COGSA does not apply because the bill of lading,

which acts as the contract of carriage, is nullified.” Uni-

mac, 43 F.3d at 1437. See also Yang Machine Tool Co.

v. Sea-Land Service, Inc., 58 F.3d 1350, 1358 (9th Cir.

1995) (defining deviation as “a serious departure from

the contract of carriage, exposing the cargo to unantici-

pated and additional risks.”) (cites and quotes omitted).

Courts have applied the doctrine “sparingly,” reserving

it for instances of unreasonable geographic departures

and unauthorized on-deck stowing. Unimac, 43 F.2d at

1437. While conceding that mere re-stacking at a sched-

uled port does not warrant the ouster of US. COGSA,

see Anyangwe, 909 F. Supp. at 321 (indeed, even “Tijn-

tentional restowage at an [unscheduled] intermediate port

is neither a deviation nor a quasi-deviation”), Itel never-

theless insists that application of the deviation doctrine

is appropriate here.

The Court disagrees. For starters, Clause 5 of the

Itel-Candyline and Candyline-Mammoet bills of lading

States that the vessel, “engaged in liner service,” “is not

limited to the direct route” of travel. Where the bill of

lading provides such notice to the shipper, it precludes a

finding of deviation. See Yang Machine, 58 F.3d at 1352

(no deviation where bill of lading gave carrier the right

to substitute vessels without informing shipper); Great

Amer. Ins. Cos. v. M/V ROMERAL, 934 F. Supp. 744,

747 (E.D.La. 1996) ( “stops at a vessel’s customary ports

of call, whether or not the bills of lading list those ports,

18 While the parties struck the remainder of Clause 5, there is

no indication that this portion was unintentionally left intact. Tr.

at 65, 182, 218-19; Cook Dep. at 17-18.

40a

cannot costitute deviations so long as the carrier has

made those stops known to the shipper . . .”). In stop-

ping at Balboa, the TITAN SCAN hewed close to the

“direct” rout of travel. Cf. SPM, 22 F.3d at 528 (no.

geographic deviation where vessel restowed cargo at port

in New Jersey in transit from Yokohama to Norfolk,

Virginia).

In any event, although Mr. Marks testified that the

call a Balboa was unplanned, nothing in the record indi-

cates that the port is not on ordinary trade routes from

Yokohama to Savannah.’ See General Elec. Co. Int'l

v. SS. NANCY LYKES, 706 F.2d 80, 84 (2d Cir.),

cert. denied, 464 U.S. 849 (1983) (defining reasonable-

ness of geographic deviation in terms of degree of de-

parture from customary routes). Nor has Itel shown that

docking at Balboa was unreasonable under the circum-

stances: the record is devoid of evidence demonstrating,

for example, that Balboa was unable to handle the shift-

ing of reefer cargo or that the port suffered from “labor

problems” at the time the TITAN SCAN stopped there.

See SNC S.L.B. v. M/V NEWARK BAY, 1996 A.M.C.

1764, 1773, 1996 WL 82384 (S.D.N.Y. 1996).*° Be-

cause, as noted supra at 25-26, the Court is not con-

vinced that calling at Balboa “substantially increase[d]

the exposure of [Itel’s] cargo to foreseeable dangers that

would have been avoided had no deviation occurred,”

19 Simply because the Captain of the TITAN SCAN had never

before restowed or discharged cargo in Balboa, Baermann Dep. II

at 40, does not prove that the port was not part of routine trade

routes. The Captain, after all, estimated that he had traversed the

Panama Canal and the Caribbean but four to five times in a sea-

faring career spanning forty years. Baermann Dep. I at 14-15, 39.

20Itel has cited SNC, Tr. at 214-15, for the proposition that a

deviation occurs when a carrier’s actions are improperly motivated

by a desire for self-gain (such as taking on additional cargo).

SNC, 1996 A.M.C. at 1775. Without addressing the merits of this

assertion, the Court notes that the SNC court explicitly avoided

this rationale as the grounds for its decision. Jd.

4la

id. (cites and quotes omitted), Itel cannot take cover

under “unreasonable geographic deviation” as the basis for

ousting the governing liability scheme.

As for Itel’s arguments regarding “quasi-deviation,”

the Court is equally unpersuaded. In SPM Corp. v.

M/V MING MOON, 965 F.2d 1297 (3d Cir. 1992), the

vessel’s owner ordered restowage to make room for addi-

tional cargo while still attempting to leave adequate space

for discharge of the shipper’s load. During this process,

the shipper’s cargo was damaged. Id. at 1299. When the

plaintiff charged that the defendants impermissibly shifted

its cargo, the Third Circuit responded by noting that “the

doctrine of quasi-deviation should not be viewed expan-

sively in the post-COGSA era.” Id. at 1304; see also

M/V ROMERAL, 934 F. Supp. at 748 (“the notion of

non-geographic deviation may be of doubtful justice under

modern conditions, of questionable status under COGSA,

and of highly penal effect”) (cites omitted). The SPM

panel went on to remark that “a deviation requires more

than negligence.” SPM, 965 F.2d at 1304 n. 6. Since the

Court has already found that Mammoet did not act reck-

lessly, Itel cannot prevail on claims related to the restow-

ing of cargo in Balboa. Accordingly Itel cannot thwart

the application of the Hague-Visby liability limitations.24

D. Prejudgment Interest and Attorneys’ Fees

Having breached the contract of carriage, Candyline

must pay, in accordance with the liability limits prescribed

by the Hague-Visby statutory regime, damages to Itel for

the loss of 26 reefers. Consequently, Itel—as it expected,

Tr. at 8—cannot recover costs incurred in removing the

21The Court pauses to note that to the extent Candyline as

“shipper” likewise attempts to free itself from the shackles of U.S.

COGSA—e.g., Candyline suggested that Mammoet could not avail

itself of Clause 5 in the bill of lading because Mammoet was not

“engaged in liner service”, Tr. at 177—such efforts must be denied

for the same reasons set forth above.

42a

refrigerated containers from the waters of the Caribbean.

Cf. Armco Chile Prodein, S.A. v. M/V NORLANDA,

1993 A.M.C. 2403, 880 F. Supp. 781, 796 (M.D. Fila.

1991) (where U.S. COGSA liability limitation, inappli-

cable, plaintiff entitled to damages for necessary expenses

incidental to the loss).

Despite the applicability of the Hague-Visby limitation,

Itel is nevertheless entitled to prejudgment interest. See

Noritake Co., Inc. v. M/V HELLENC CHAMPION, 627

F.2d 724, 729 (Sth Cir. 1980) (awarding prejudgment

interest in a U.S. COGSA action). As a general rule, pre-

judgment interest is awarded in admiralty cases as “com-

pensation to the plaintiff for the use of funds that were

rightfully his.” M/V OCEAN LYNX, 901 F.2d at 942.

The Court finds no “peculiar circumstances” making it

linequitable for Candyline (and, in turn, Mammoet) to

avoid paying prejudgment interest. Self v. Great Lakes

Dredge & Dock Co., 832 F.2d 1540, 1550-51 (11th Cir.

1987), cert. denied, 486 U.S. 1033 (1988). Therefore,

prejudgment interest shall accrue from the date of Itel’s

loss at the same rate as postjudgment interest, which is

calculated pursuant to 28 U.S.C. § 1961. Ocean Sves.

Towing and Salvage v. Brown, 1993 A.M.C. 2701, 810

F. Supp. 1258, 1265 (S.D.Fla. 1993); see alse City of

Milwaukee v. Cement Division, Nat’! Gypsum Co., 1995

A.M.C. 1882, 1885, 115 S.Ct. 2091 (1995) (observing

that while there is no federal statute governing the award

of prejudgment interest, the “question is governed by tra-

ditional judge-made principles”).

Not only must Mammoet, within the confines of U.S.

COGSA, reimburse Candyline for the latter’s liability to

Itel, but Mammoet must also indemnify Candyline for

reasonable attorney’s fees and costs associated with de-

fending against Itel’s action. See 2/15/96 Order at 4-5.

Candyline and Mammoet have agreed that Candyline will

submit a separate motion and brief on these issues after

this Order is entered. Tr. at 204

OI NE REI EPL, NOVI CEO

43a

To this end, the parties arre advised to bear in mind

the lessons of SPM Corp. v. M/V MING MOON, 22

F.3d 523 (3d Cir. 1994), a case where the court held

that the NVOCC, having signed separate bills of lading

which specified different liability limitations, could not

recover fees and expenses incurred solely from defending

against the higher liability limit. Jd. at 528. In addition,

Candyline may not recover attorney’s fees expended in its

earlier efforts to obtain indemnification from Mammoet.

See M/V OCEAN LYNX, 901 F.2d at 941 n. 15.

IV. Conclusion

While Defendant Candyline breached its contract of

carriage with Plaintiff Itel, it need not reimburse Itel for

the full cost of the 26 lost and damaged refrigerated con-

tainers; rather Candyline’s liability is limited by the appli-

cation of the Hague-Visby scheme, as Itel was unable to

prove deviation sufficient to oust the contract of carriage.

Candyline must also pay Itel prejudgment interest running

from the date of the breach, i.e., the date the containers

were thrown overboard.

For its part, Defendant Mammoet Shipping B.V. must

reimburse Candyline for damages paid to Itel; that in-

demnity, however, is capped by the application of U.S.

COGSA. Mammoet must also indemnify Candyline for

reasonable attorney’s fees and costs incurred in defense

of this action. Additionally, Itel’s direct claims—both con-

tract- and _ tort-based—against Defendants Mammoet,

Modul Carriers A&G Co., and the M/V TITAN SCAN

are deemed untimely and thus barred. Pusuant to F. R.

Civ. P. 21, Defendants Modul and M/V TITAN SCAN

are dropped from the action. The caption on future filings

shall reflect this result, as well as the fact that Autoridad

Portuaria Nacional has been dropped, too.

Candyline is directed to submit a brief detailing its

reasonable attorney’s fees and exenses within 20 days of

entry of this Order. Mammoet will then have 10 days to

44a

respond, if it so chooses. Once the Court passes on these

sums, all parties shall confer and submit, within a time to

be later specified, a judgment reflecting computations con-

sistent with the Court’s rulings.

SO ORDERED this 24th day of October, 1996.

/s/ B. Avant Edenfield

B. AVANT EDENFIELD

Chief Judge

United States District Court

Southern District of Georgia

45a

APPENDIX D

[Filed Feb, 20, 1997]

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF GEORGIA

SAVANNAH DIVISION

CV 494-55

ITEL CONTAINER CORPORATION,

Plaintiff,

M/V TITAN SCAN, her engines, boilers, etc.,

Moput Carriers A.G. & Co. “TITAN SCAN”

SCHIFFAHRTS K.G., Sky SHIPPING LTD., and

MAMMOET SHIPPING B.V.,

Defendants.

FINAL JUDGMENT

Judgment is hereby granted in favor of Plaintiff Itel

Container Corporation (“Itel”) and against Defendant

Sky Shipping Ltd. (“Candyline”) in the amount of

$385,136.96. See 10/24/96 Order. This sum includes

$291,509.83, calculated in accordance with the liability

limitation provisions of the Hague-Visby Rules, as well

as prejudgment interest totaling $93,627.13, calculated at

a rate of 5.353% from 10/11/90. 2/18/97 Proposed

judgment at 1-3.

In addition, Defendants Mammoet Shipping B.V.,

Modul Carriers A.G. & Company (“Modul”) and M/V

TITAN SCAN must indemnify Candyline in the amount

of $73,145.47. See 2/15/96 and 10/24/96 Orders.

1 After holding that Itel’s direct claims against Modul and mM/V

TITAN SCAN were untimely and thus barred, the Court dropped

46a

This sum includes $13,000.00, calculated in accordance

with the package limitations of the United States Car-

riage of Goods by Sea Act; prejudgment interest totaling

$4,175.34 (again, calculated at the 5.353% rate); and

$55,970.13 for reasonable attorney’s fees and costs (see

1/17/97 Order). 2/18/97 Proposed Judgment at 2-3.

This case is hereby closed.

SO ORDERED, this 20th day of February, 1997.

/s/ B. Avant Edenfield

B. AVANT EDENFIELD

Chief Judge

United States District Court

Southern District of Georgia

those Defendants as parties to this action. 10/24/96 Order at 34.

However, the Court had previously ruled—as all parties well recog-

nize in their Proposed Judgment—that Modul and M/V TITAN

SCAN stand liable for indemnification to Candyline. 2/15/96 Order

at 4-5. To this end, these parties are reinstated; the caption has

been amended accordingly. See F. R. Civ. P. 61.

47a

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF GEORGIA

SAVANNAH DIVISION

Civil Action Number: CV494-55

ITEL CONTAINER CORPORATION,

a Plaintiff,

M/V TITAN SCAN, Her ENGINES, BOILERS, ETC,

Moput Carriers A G & Co.

TITAN SCAN ScuirrFanrts K., CANDYLINE LTD

MAMMOET SHIPPING B.V. and

AUTORIDAD PoRTUARIA NACIONAL,

Defendants.

FIRST AFFIDAVIT OF

MARTIN JOHN WISDOM

I, MARTIN JOHN WISDOM, of 14-15 Philpot Lane,

London, EC3M 8AJ, England, hereby MAKE OATH

and Say as follows:

1. I am a practicing solicitor of the Supreme Court

of England and Wales and a partner of Waterson

Hicks of the above address. I qualified as_ solicitor

H in 1982 since when I have been employed exclusively

in dealing with all aspects of maritime law including

cargo claims, first as an assistant with the maritime

law firm of Horrocks & Co then later as a partner in

that firm. I was a founding partner of the maritime

law firm Waterson Hicks in 1990,

2. The facts, matters and opinions stated herein are true

and to the best of my knowledge, information and

belief.

48a

3. I have been asked by Mr. T. Langston Bass of

Brennan, Harris & Rominger, acting for Candyline

Limited, to give my opinion of English law on 3

matters set out below arising as a matter of construc-

tion out of the following 3 documents, copies of

which are now produced and shown to me marked

“MJW 1”:

(1)

(2)

(3)

a Liner Booking Note dated 30th August 1990

on the Conlinebooking form (pages 1 to 5);

a Liner Bill of Lading No. MSBV900200 issued

on 8th September 1990, naming Candyline

Limited as the Shippers (pages 6 to 8) (“the

Candyline Bill of Lading”);

a Liner Bill of Lading issued on 8th September

1990 naming as Shipper ITEL Container Corp

International, Tokyo, Japan, on behalf of ITEL

Container International Corp, San Francisco

USA (pages 9 to 11) (“the Itel Bill of

Lading”).

The 3 points on which I have been asked for my

opinion are:

(1)

(2)

(3)

Whether the English Carriage of Goods by Sea

Act 1971 and therefore the Hague-Visby rules

are incorportaed into the contract of carriage

by necessary inference from the fact that the

terms of the contract of carriage provides for

English law to be applicable.

Whether the reference to “Bill of Lading” in

article X(a) of the Hague-Visby rules would be

read as a reference to the “Booking Note” with

the consequence that, the Booking Note having

been issued in England, the requirements of

article X(a) would be met.

Whether the effect of Clause 2, the General

Paramount Clause, of the Itel Bill of Lading

49a

would be effective to incorporate the Japanese

Carriage of Goods by Sea Act enacting the

Hague Rules or the Hague Rules Convention

itself.

5. I understand that the circumstances of the documents

are as follows:

(1)

(2)

(3)

(4)

(5)

On 30th August 1990 Candyline Limited as

Merchant entered into a Liner Booking Note

contract with Mammoet Shipping BV as Car-

rier on the “CONLINEBOOKING” form for

the carriage of a quantity of reefer containers

on the mv “TITAN SCAN”.

Also on 30th August 1990, Candyline Limited

as Carrier entered into a Liner Booking Note

contract with Itel Containers International Cor-

poration of San Francisco, as Merchants for the

carriage of the same quantity of reefer contain-

ers on the mv “TITAN SCAN”.

On 8th September 1990, Nedlloyd Lines Agen-

cies KK, as agents for Mammoet Shipping BV,

issued the Candyline Bill of Lading naming

Candyline Limited as shippers of the containers

and referring to their 30th August 1990 book-

ing note.

Also on 8th September 1990, AALL Barwil

Agencies KK, as agents for Candyline Limited,

issued the Itel Bill of Lading naming Itel Con-

tainer Corp International of Tokyo on behalf

of Itel Container International Corp of San

Francisco as shippers of the containers and

referring to their 30th August 1990 booking

note.

Subsequently, to obtain possession of the goods:

(a) Barwil Agencies (Louisiana) Inc (agents

for Candyline Limited) presented the

50a

Candyline Bill of Lading to the ship and

obtained the goods;

(b) Itel Container International Corp of

Charleston, South Carolina, presented the

Itel Bill of Lading to Candyline’s agents,

Barwil Agencies (Louisiana) Inc, and

thereby obtained the goods.

Whether the English Carriage of Goods by Sea Act 1971

and therefore the Hague-Visby rules are incorporated into

the contract of carriage by necessary inference from the

fact that the terms of the contract of carriage provided for

English law to be applicable.

6. This point can be dealt with shortly as it has been

definitively determined by the English Court of Ap-

peal. Previous decisions of the English Court of

Appeal are binding on all Courts and Tribunals in

England and Wales, including the Court of Appeal,

with the only exception of the House of Lords. The

House of Lords deals with very few cases each year;

in 1994 only 64 appeals were determined across the

entire range of English, Welsh, Northern Irish civil

and criminal law and Scottish civil law. Permission

to appeal to the House of Lords is correspondingly

rarely given. Consequently, a decision of the English

Court of Appeal would ordinarily be considered

definitive.

7. The relevant English authority is the case of Hellenic

Steel Co. & Others - V - Svolamar Shipping Co. Ltd.

& Others, the Court of Appeal decision being re-

ported at [1991] 1 Lloyds Reports 370. The case

would ordinarily be referred to by the name of the

ship involved in the dispute, The Komninos S, by

which name I shall refer to it hereinafter. The

Lloyds Law Reports are the specialist English law

shipping and commercial reports which are generally

used in shipping cases and are very highly regarded.

Sla

- There is now produced and shown to me marked

“MJW 2” a true copy of the report of the decision

both in the Court of Appeal at [1991] 4 Lloyds Re-

ports 370 and, for completeness, at First Instance

which is reported at [1990] 1 Lloyds Reports 541.

. The conclusion of the Court of Appeals on the point

on which I am asked to give my opinion is stated in

the headnote on page 371 in the right hand column

at item (3):

“the Hague-Visby Rules were not incorporated

and the shipowners were entitled to rely on the

exemption clauses in the bill of lading;”.

- Lord Justice Bingham gave the main judgement be-

ginning at page 372. Lord Justice Nourse agreed

with Lord Justice Bingham beginning at page 377

towards the end of the right hand column. He _Jso

specifically stated that the Hague-Visby rules were

not incorporated. Lord Justice Lloyd also agreed

with Lord Justice Bingham, at page 378. It is there-

fore the judgment of Lord Justice Bingham which

needs to be considered.

. The judgment of Lord Justice Bingham begins at

page 372. he first explains the relevant facts of the

case. For our purposes, these are that:

(1) A cargo of steel coils belonging to the Plaintiffs

was shipped on the Defendants’ vessel (the

Komninos S) at Thessaloniki and carried to

Ravenna under contracts of carriage contained

in or evidence by bills of lading.

(2) After discharge at Ravenna the cargo was found

to have been serious damaged by water.

(3) The cargo owners issued at Writ against the

ship owners claiming damages for breach of

contract and duty, bailment and negligence.

12.

13.

52a

(4) In due course, the ship owners served a defence,

relying, inter alia, on two exemption clauses in

the bills of lading.

(5) The cargo owners served a reply stating that:

(a) the bills of lading were subject to Greek

law, under which the exemption clauses

were void; alternatively,

(b) the proper law of the bills of lading was

English law and so included Hague-Visby

Rules, article III, rule 8 of which rendered

void the exemption clauses on which the

shipowners relied.

(6) The shipowners rejoined, inter alia, that:

(a) the proper law of the bills of lading was

not Greek, but English;

(b) the Hague-Visby Rules were not incorpo-

rated;

tect the shipowners.

Lord Justice Bingham then went on to set out the

legal issues at page 372 in the right hand column by

reference to the findings on each of them of the First

Instance Judge. The relevant ruling of the First

Instance Judge for our purposes was ruling (4):

“If contrary to his ruling (1) [that the proper

law of the contract was Greek law], English law

was the proper law of the contracts, the Hague-

Visby Rules were not incorporated, and the

shipowners were entitled to rely on the exemp-

tion clauses [in the bills of lading].”

Lord Justice Bingham deal with this central issue be-

ginning on page 376 in the left hand column. He

first stated his conclusion before going on to give his

reasons. His conclusion was expressed as follows:

14,

15.

16,

17.

53a

“If, contrary to his submission, English law was

the proper law of these [bill of lading] contracts,

Mr. Collins [for the cargo owners] argued that

English law included the Hague-Visby Rules

and accordingly invalidated the exemption

clauses on which the shipowners relied. The

[First Instance] Judge rejected this submission

(which on his primary conclusion did not of

course arise) and I agree with him.”

Lord Justice Bingham then gave his reasons from

page 376 left hand column beginning at the last full

paragraph. He first rejected any suggestion that the

Carriage of Goods by Sea Act 1971 and correspond-

ingly the Hague-Visby Rules applied automatically

by operation of article X(a) or (b) of the Hague-

Visby Rules.

He then turned to the question of incorporation be-

ginning at page 376 in the right hand column just

below half way down and ending at the end of the

first paragraph in the left hand column on page 377.

The learned Judge posed the question as:

“Whether, assuming the choice of an English

forum showed an intention that English law

should govern the contracts [which he had held

it did], the bills of lading “provided” that the

legislation of the United Kingdom giving effect

to the [Hague-Visby] Rules should govern the

contracts.”

The learned Judge concluded that the bills of lading

did not so provide.

If a contract of carriage was found to be subject to

English law, the English Courts would not attach

significance to whether that arose by express choice

or English law or, as in the Komninos S, because

the parties intention that English law should govern

the contract was to be inferred from other express

18.

19,

20.

54a

terms, though it was not itself express. Consequently,

The Komninos S is clear and binding Court of Ap-

peals authority that the fact that the terms of the

contract of carriage provided for English law to

apply will not result in the incorporation of the

Hague-Visby rules.

Leave to appeal to the House of Lords was refused

by the Court of Appeal (at page 378). An applica-

tion to the House of Lords for leave to appeal was

also refused. This shows that the House of Lords did

not feel that the point merited any further considera-

tion in the English Courts and is usually taken as

an indication that the House of Lords considered that

the point has been correctly decided by the Court of

Appeal.

I should point out the although the appeal from the

First Instance Judge was allowed, this was on the

different point as to whether English law or Greek

law was the proper law of the contract. This can

be seen most clearly from the headnote in the Court

of Appeal report which reproduced the essential

findings both of the First Instance Judge and the

Court of Appeals. I refer in particular to findings

(3) and (4) of the First Instance Judge set out at

page 371 in the left hand column where he held that

Greek law governed the bills of lading and there-

fore the exemption clauses sought to be relied on by

the shipowners were void and finding (1) of the

Court of Appeal, also in the left hand column of

page 371, where the Court of Appeal held that

English law governed the bills of lading.

On the point on which I am asked to advise, namely

whether the incorporation of the English Carriage of

Goods by Sea Act 1971 and thereby the Hague-

Visby rules is to be inferred from the fact that

English law applied to the contract of carriage, both

the First Instance Judge and the Court of Appeal

21.

22.

23.

55a

decided the point the same way: there was no in-

corporation. The First Instance Judge so held in the

First Instance report [1990] 1 Lloyds Reports 541

at page 545 beginning at the bottom of the left hand

column and ending half way down the right hand

column. I have already set out the finding of the

Court of Appeal on the point.

The Judge at First Instance in that case (Mr Justice

Leggatt) is now a Court of Appeal Judge. As re-

gards the Court of Appeal Judges:

(1) Lord Jusiice Bingham who gave the main

speech was for a number of years a Judge of

the Commercial Court in England and Wales

and is now the Master of the Rolls, the most

senior Judge of the Court of Appeal in Charge

of the entire Civil (as opposed to Criminal) law

system in England and Wales. His appointment

is based merit, not length of service.

(2) Lord Justice Lloyd is now one of the twelve

Law Lords sitting in the House of Lords.

(3) Lord Justice Nourse is still a Court of Appeal

Judge.

Consequently, the Judges who decided this point

would be regarded as very strong Courts.

The case is treated as good authority on this point

by a recent authoritative text book in this area:

Cooke, Young, Taylor, Kimball, Martowski and

Lambert on Voyage Charters 1993 Ed published by

Lloyds of London Press Limited in the Lloyds Ship-

ping Law Library Series, which states at page 707:

“The fact that English law included the Car-

riage of Goods by Sea Act 1971, and gives the

Hague-Visby Rules the force of law, does not of

itself mean that a bill of lading contract is gov-

erned by those Rules simply because it is ex-

56a

pressly or impliedly governed by English law,

where it is issued neither in a contracting state,

nor in respect of cargo loaded in a contracting

state: the Komninos §. There must, in such

cases, be some specific reference to the Carriage

of Goods by Sea Act 1971, or particular Hague-

Visby legislation, in the bill of lading if it is in-

tended to cause a bill of lading contract to be

governed by the Hague-Visby Rules.”

24. A copy of the frontispiece and of the relevant ex-

ad.

26.

tract is now produced and shown to me marked

“MJW 3”.

Even were that no such binding authority to decide

the point, in the context of this case where the terms

of the contract of carriage expressly do contain a

General Paramount Clause, which is the normal way

in English law bills of lading for determining the

applicable Convention (Hague-Visby) or other rele-

vant enactment giving effect to either of them, there

would be no scope for incorporating the United King-

dom Carriage of Goods by Sea Act 1971 or the

Hague-Visby Rules (if they are not compulsorily ap-

plicable under Article X(a) or (B)), since this

would be directly contrary to the express choice pro-

visions of the General Paramount Clause.

An English Court would take the view that the con-

tracts of carriage have provided in accordance with

the General Paramount Clause as to the applicable

Convention or enactment thereof; that this did not

provide for the United Kingdom Carriage of Goods

by Sea Act 1971-or-the-Hague-Visby.Rules_and_that_.___.

they should therefore not govern the contract.

Consequently, on either approach, an English Court

applying English law would be bound to hold that

the United Kingdom Carriage of Goods by Sea Act

1971 and the Hague-Visby Rules are not incorporated

into the contract of carriage.

57a

Whether the reference to “Bill of Lading” in article X(a)

of the Hague-Visby rules would be read as a reference to

the “Booking Note” with the consequence that, the Book-

ing Note having been issued in England, the requirements

of article X(a) would be met.

27.

28.

—29-—

It has never been held, indeed I am not aware of it

having been suggested, that the words “bill of lading”

in the Carriage of Goods by Sea Act 1971 or the

Hague-Visby Rules as set out in the Schedule to the

Act can mean any more than “Bill of Lading” and

possible also any similar documents of title by virtue

of Article 1(b) whereby the meaning of contract of

carriage is limited to contracts of carriage covered

by the bill of lading or any similar documents of title.

The only circumstances where “bill of lading” has

been read as something other than bill of lading or

(possibly) similar document of title is where the

parties have expressly agreed that the terms of their

Charterparty are to be governed by the Hague-Visby

Rules, for example by a term that the contract shall

have effect subject to the Carriage of Goods by Sea

Act of the United Sttes 1936: The Adamastos [1959]

AC 133, a copy of which is now produced and

shown to me marked “MJW 4”. The Court has then

held (in that case, for example) that the Hague-Visby

Rules are then to be taken to apply notwithstanding

that they are expressed to be limited to bills of lading

and other similar documents of title and indeed sec-

tion 5 of US COGSA expressly states that it is not to

apply to Charterparties.

What is clear from this that the meaning of the word

“bill of lading” in the Hague-Visby Rules will not be

construed as meaning anything other than a bill of

lading and (possibly) similar documents of title un-

less the parties have expressly made clear their inten-

tion that the Hague-Visby Rules shall apply notwith-

standing their being limited to contracts of Carriage

30.

31.

32.

33.

58a

under bills of lading or similar documents of title.

It certainly would not extend to include a booking

note or charterparty. Consequently, there is no basis

for construing “bill of lading” in Article X to include

the Booking Note. Indeed to do so would be to stand

English law in this area on its head.

I should perhaps clarify what appears to be some

confusion on page 4 of a document I have been

shown entitled “Plaintiffs’ Memorandum of Law in

Support of Its Motion for Parttial Summary Judge-

ment”. This document indicates that the booking

note:

(1) contains a negotiated bill of lading; and

(2) was the contract of carriage.

The booking notes does not contain a negotiated bill

of lading. It sets out the terms of the bill of lading

which is to be used. The negotiated bill of lading,

which is the relevant document for the purposes of

Article X(a), is the Itel bill of lading which is given

to Itel as evidence of the shipment of the containers

at the load port and tendered by the consignee to

obtain delivery of the containers at the discharge

port. This document was issued in Japan and does

not come within Article X(a).

The booking note, unlike the bill of lading, is not a

document of title, nor is it a receipt for the goods,

nor is it negotiated.

Furthermore, once the bill of lading is issued, the

booking note ceases to be the contract of carriage:

it states in terms above the signatures and just be-

neath the boxes on page 2:

“It is hereby agreed that this Contract shall be

performed subject to the terms contained on

Page 1 and 2 hereof which shall prevail over

any previous arrangements and which shall in

A NER a iis PRN ABP ea eats bends Lich nel Galea oc niin AN tenants 7 eee

59a

turn be superseded (except as to deadfreight and

demurrage) by the terms of the Bill of Lading,

the terms of which (in full or in extract) are

found on the reverse side hereof [emphasis

added].”

Since on issue of the Itel Bill of Lading it ceases to be

governing contract of carriage, it cannot be the document

referred to in Article X(a).

34.

Consequently, the booking note can in no sense be

described as a bill of lading or similar document of

title and nor would it be treated as being such for the

purposes of Article X(a), the more so when there is

a bill of lading (the Itel Bill of Lading) and one

which the Booking Note expressly provides shall

superced the Booking Note.

Whether the effect of Clause 2, the General Paramount

Clause, of the Itel Bill of Lading would be effective to

incoporate the Japanese Carriage of Goods by Sea Act

enacting the Hague Rules or the Hague Rules Convention

itself.

36.

The General Paramount Clause provides in the first

place for the Hague Rules as enacted in the country

of shipment to apply to the contract. The Japanese

Carriage of Goods by Sea Act satisfies this require-

ment, as it enacts the Hague Rules in the country

of shipment. This is the end of the inquiry.

The second sentence of the General Paramount

Clause goes on to deal with the situation where no

such enactment is in force in the country of ship-

ment. That is not the case here and an English Court

would therefore not be concerned with the second

sentence.

37. If an English Court were required to construe the

second sentence, it would read it in its ordinary

sense:

60a

(1) It is premised on there being no enactment of

the Hague Rules in force in the country of ship-

ment.

(2) It then goes on to stipulate that in such circum-

stances the legislation of the country of destina-

tion shall apply, but if no such enactments are

compulsorily applicable, then the terms of the

Convention apply.

38. Thus the reference to enactments being compulsorily

applicable in the second sentence are to enactments in

the country of destination. The second sentence is

enly concerned with the situation where there is no

enacting legislation in the country of shipment.

/s/ M. J. Wisdom

Sworn by the above named deponent

at (illegible )—

in the City of London

This 20th day of December 1995

Before me

/s/ D. J. Mossby

D. J. MossBy

Solicitor

6la

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF GEORGIA

SAVANNAH DIVISION

Civil Action Number: CV490-55

ITEL CONTAINER CORPORATION,

Plaintiff,

VS.

M/V TITAN SCAN, Her ENGINES, BOILERS, ETC,

Mopbut Carriers AG & CO.

TITAN SCAN ScuiFFAuRTS K., CANDYLINE LTD.

MAMMOET SHIPPING B.V.

and AUTORIDAD PORTUARIA NACIONAL,

Defendants

EXHIBIT

This is the Exhibit marked “MJW 2” referred to in the

Affidavit of MARTIN JOHN WISDOM.

Sworn this 20th day of December 1995.

Before me

/s/ D. J. Mossby

D. J. MossBy

Solicitor

62a

MIW 2

COURT OF APPEAL

Dec. 10 and 11, 1990

HELLENIC STEEL Co. AND OTHERS

SVOLAMAR SHIPPING Co. LTD. AND OTHERS

(THE “KOMNINOS 8S”)

Before Lord Justice LLoyp,

Lord Justice NouRSE and

Lord Justice BINGHAM

Carriage by sea—Limitation of liability—Damage to

cargo—Proper law of contract—Cargo found to be dam-

aged on discharge—Whether vessel unseaworthy—Whether

proper law of contract English or Greek—Whether car-

riers entitled to limit liability.

The plaintiffs’ cargo of steel coils was shipped in ap-

parent good order and condition on board the defendants’

vessel Komninos S at Thessaloniki, Greece for carriage to

Ravenna and Ancona.

On the previous voyage Komninos S had carried 2500

tonnes of marine salt from Spain to Thessaloniki. She

arrived there on Mar. 3, 1987 and discharge of the salt

was completed on Mar. 10, 1987. The holds were then

cleaned first with sea water and then with fresh water.

Loading of the steel cargo commenced on Mar. 11,

1987. The weather was very cold, the temperature falling

to —7 deg. C. The coils were brought alongside the ves-

sel on open trucks. Loading was completed on Mar. 13,

1987 and the hatches were closed.

ge ee > ere ae ee ee thecal Sol iin ale

63a

On the way to Ravenna the vessel encountered fairly

heavy weather on Mar. 14, 15 and 16, 1987. The master

did not ventilate the cargo and on discharge at Ravenna

the Ravenna carge was found to have been damaged by

corrosion but no claims were made on the owners in re-

spect of the Ancona consignment of steel coils.

The possible causes of the damage to the steel coils were

(a) water introduced with the cargo; (b) condensation;

pump the bilges.

The plaintiffs claimed damages alleging that the vessel

was unseaworthy and that the defendants acted negligently.

The principle issues of law were whether the proper law

of the contract was English or Greek: if English whether

the Hague-Visby Rules applied; and if not whether the de-

fendants could rely on the exclusion clauses in the bills of

lading to exclude or limit their liability.

Held, by Q.B. (Com. Ct.) (Leccatrt, J.), that

(1) there was very little water carried on board the ship

in the coils: when the hatches were closed the mass of

the coils caused the temperature of the warmer entrapped

air to fall below its dewpoint with the result that moisture

condensed on to the exposed surfaces of the coils causing

rust; the moisture ran off the coils onto the tank tops and

due to the trim of the vessel by the stern, the resulting

water concentrated in the after end of each hold; that

water could collect in this way must have been due to a

failure to pump out the bilges; and the rate of corrosion

of the steel coils was considerably increased by the pres-

ence of salt left there by insufficient cleaning of the holds;

(2) the effective causes of the damage were the failure

to clean the holds sufficently and the failure to pump the

bilges; in both omissions the master and crew were negli-

gent and both rendered the vessel unseaworthy by render-

ing her unfit to carry the cargo of steel coils; the extent

of the damage was increased by the fact that the receivers

did not immediately open up and deal with the cargo;

64a

(3) the bills of lading contained no express choice of

law but the facts, that the contract was made in Greece

between Greek shippers and Greek managers to carry

Greek steel from Greece to Italy for freight payable in

Greek currency, indicated that Greek law was the proper

law of the contract;

(4) under Greek law the exemption clauses did not

apply; to escape liability the defendants had to bring them-

selves within exception of perils of the sea or act of ship-

per; although some of the damage was caused by the re-

ceivers’ failure to deal immediately with the goods there

was no evidence of the amount of damage so caused and

5 per cent would be deducted from the total damages re-

coverable under this head:

(5) the applicatiton of foreign limitation law was gov-

erned bv the Foreign Limitation Periods Act. 1984 ss. 1

and 2: under Greek law the plaintiffs’ claims were time

barred but it would constitute undue hardship if the plain-

tiffs were prevented from pursuing their claim by an inci-

dent of foreign law by which the parties did not realize

that their contract was soverned: that hardship outweighed

anv suffered by the defendants bv reason of the plaintiffs

being able to take advantage of Greek law which excluded

reliance on exemption clauses: by virtue of the Act Greek

rules of limitation conflicted with public policy and did not

apply; the plaintiffs’ claims succeeded.

The defendants appealed.

Held, by C.A. (LiLoyp, Nourse and BINGHAM,

L.JJ.), that (1) the parties intended their contracts to be

governed by the law of the forum where disputes were to

be tried; there were no indica

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