704 F.3d 77
2d Cir.2012Background
- Ferrostaal ordered steel pipes from the U.S. and arranged shipment from China to New Orleans via the M/V Akili under multiple charters.
- Akela Navigation Co. owned the Akili; Almi Marine Management managed the vessel; S.M. China chartered the Akili through Seyang and a voyage charter to Ferrostaal.
- The Voyage Charter Party included a Clause Paramount incorporating Hague-Visby rules; the bill of lading also incorporated Hague rules.
- The pipes were damaged when heavier pipes were placed atop lighter ones in New Orleans cargo holds; Ferrostaal paid to repair and sought recovery in rem and in personam.
- Judge Cote held the Akili liable in rem; Akela and Almi were not liable in personam; Ferrostaal cross-appealed on the personal liability issue.
- The court here clarifies that in rem liability exists under maritime law for cargo damage, even if not applying COGSA, and discusses enforcement of waivers under Hague-Visby.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Akili can be liable in rem as a non-COGSA carrier | Ferrostaal argues in rem liability exists under maritime law regardless of COGSA status. | Akili argues vessel is not a COGSA carrier, so no in rem liability. | In rem liability exists under maritime law independent of COGSA. |
| Whether the free-in-and-out waiver shields the vessel from in rem liability | Waiver provisions cannot nullify in rem liability under COGSA/Hague-Visby. | Free-in-and-out may exculpate the carrier from liability for improper stowage. | Waiver is unenforceable to the extent it waives in rem liability. |
| Whether COGSA applies or Hague-Visby applies via Clause Paramount | COGSA applicability depends on public/private carriage; Clause Paramount may incorporate Hague-Visby regardless. | Applicability depends on carriage type and governing instrument; dispute on applicability as law. | Clause Paramount incorporates Hague-Visby rules; waivers barred; COGSA applicability not required for outcome. |
| Whether Ferrostaal can pursue in personam bailment against Akela/Almi | Possible bailment liability exists if exclusive possession by bailee is shown. | Akela/Almi did not have exclusive possession or authorizing authority; not liable in personam. | No bailment in personam liability; Akela/Almi not liable. |
Key Cases Cited
- Demsey & Assoc., Inc. v. S.S. Sea Star, 461 F.2d 1009 (2d Cir. 1972) (in rem lien for cargo damage predates COGSA)
- The Water Witch, 66 U.S. 494 (1859 (1862)) (ship liable for cargo damage under maritime law)
- Freeman v. Freeman, 59 U.S. 190 (1856) (implied ratification of contract when ship carries third-party cargo)
- Nichimen Co. v. M.V. Farland, 462 F.2d 319 (2d Cir. 1972) (COGSA applicability and governing-instrument approach)
- Asoma Corp. v. M/V Seadaniel, 971 F. Supp. 140 (S.D.N.Y. 1997) (Clause Paramount and Hague-Visby incorporation)
- Thyssen, Inc. v. Nobility MV, 421 F.3d 295 (5th Cir. 2005) (carriage/document approach to COGSA applicability)
- Pioneer Import Corp. v. Lafcomo, 138 F.2d 907 (2d Cir. 1943) (in rem liability persists under non-cooperation or chartering)