The M/V Akili, its owner, Akela Navigation Co., and manager, Almi Marine Management, appeal from Judge Cote’s decision, after a bench trial, holding the MTV Akili liable in rem for damage to cargo shipped aboard the vessel. Appellants claim that the district court erred in holding the vessel liable in rem. Man Ferrostaal (“Ferrostaal”) cross-appeals from the holding that Almi Marine Management (“Almi”) and Akela Navigation Co. (“Ake-la”) are not liable in personam under a bailment theory. We write at length to clarify both the issues and our analysis, which differs somewhat from that of the district court. However, we affirm.
BACKGROUND
Ferrostaal’s business is accepting orders of steel from customers in the United States, procuring steel from international suppliers, and then arranging for the steel’s transportation to the customer. The cargo at issue here was 9,960 “thin-walled” steel pipes, manufactured in China and sold to Ferrostaal pursuant to a purchase order dated March 23, 2006 (“Pur
A series of charters and sub-charters of the Akili were executed before the cargo was loaded aboard. On June 19, 2006, Akela time-chartered the Akili to Seyang Shipping, Ltd., which in turn was permitted to sublet the vessel for all or any part of the time covered by the charter (the “Time Charter Party”). The Time Charter Party specified that all bills of lading issued under the charter would incorporate “the General Clause Paramount or U.S. or Canadian Clause Paramount whichever applicable as attached.” 1 Thereafter, Sey-ang sub-chartered the vessel to S.M. China for the voyage from Shanghai to Houston and then to New Orleans. Prior to chartering the Akili from Seyang, S.M. China had executed a part-cargo charter (the ‘Voyage Charter Party”) with Ferrostaal for the carriage of the thin-walled pipes from Shanghai to New Orleans. The Voyage Charter Party did not identify the vessel on which the cargo was to be shipped, stating instead that the ship was “TBN” — “to be named” in landlubbers’ lingo — by S.M. China.
The Voyage Charter Party placed responsibility for loss “caused by improper or negligent stowage, or discharge, or care of the goods” on the “Owners” of the vessel. It further specified that “[s]towage is to be under the Master’s supervision and responsibility as Owners’ agent.” The “Owner” was defined as S.M. China. It also contained a “free-in-and-out” provision that stated that the handling of cargo was to be “free of risk ... to the vessel.”
The Voyage Charter Party also contained a “Clause Paramount” that stated in part, “[njotwithstanding any other provisions in this contract, any claims for loss or damage to cargo shall be governed by the Hague-Visby rules as if compulsorily applicable by law.” The Hague-Visby rules are an international convention that are in all pertinent respects literally identical to rules established by the Carriage of Goods by Sea Act, 46 U.S.C. § 30701 (“COGSA” or “the Act”). This is no coincidence because the convention requires signatory nations to pass legislation embodying these rules.
A bill of lading was issued by China Ports International Shipping Agency Ltd., as the agent of S.M. China, to Zhongqing, the shipper, and then was transferred to Ferrostaal through banking channels pursuant to the “cash against documents” term of the Purchase Order. The bill of lading contained a Clause Paramount that incorporated the Hague rules. 2
The pipe was carried from China to New Orleans aboard the Akili. Upon arrival in New Orleans, it was discovered that the steel pipes had been placed at the bottom
On July 9, 2007, Ferrostaal filed the present action in rem against the Akili and in personam against Akela, Almi, and S.M. China. Akela and Almi filed a cross-claim against S.M. China. 3 After a bench trial, Judge Cote held the Akili liable in rem 4 and dismissed the claims for in personam liability against Akela and Almi. This appeal and cross-appeal followed.
DISCUSSION
We review the district court’s findings of fact for clear error and its conclusions of law
de novo. Mobil Shipping & Transp. Co. v. Wonsild Liquid Carriers Ltd.,
A. The Appeal
Boiled down, the parties dispute whether: (i) an in rem proceeding rendering the Akili liable for damage to, or loss of, cargo is unavailable in this matter because a vessel is not' a “carrier” within the meaning of COGSA and (ii) the free-in- and-out provision in the Voyage Charter Party purportedly absolving the Akili of in rem liability is enforceable. We hold that the first issue is essentially irrelevant because a vessel’s in rem liability for damage to cargo exists under maritime common law, not COGSA, for a violation of a carrier’s contractual or statutory — COGSA’s— obligations. We resolve the second issue against enforcement of the free-in-and-out provision so far as it might be construed to prevent in rem liability of the vessel. In doing so, we do not decide whether COG-SA applied as a matter of law to this voyage because, even if it did not, the Voyage Charter Party’s Clause Paramount contractually incorporates the Hague-Visby rules prohibiting a carrier from contracting for a waiver of its obligations regarding damage to cargo. See 46 U.S.C. § 30701 Note § 3(8).
1. The Vessel as a COGSA “Carrier”
COGSA sets out the obligations of “carriers” involved in the shipment of goods
Appellant argues that because a “vessel” is not a carrier under COGSA, the Akili cannot be liable in rem for damage to, or loss of, cargo. We disagree. COG-SA assumes the existence of the in rem proceeding rather than creates it. Section 3, the crux of the Act, sets out duties applicable only to carriers but is entitled “Responsibilities and Liabilities of Carrier and Ship.” (emphasis added). The very title of Section 3 thus assumes that maritime law supplies in rem liability coextensive with carrier liability. 5
Well before enactment of COGSA and its predecessor, the Harter Act, maritime law held ships liable
in rem
for cargo damage due to improper stowage.
The Water Witch,
In rem
liability is derived from a pre-COGSA maritime law doctrine to the effect that, once cargo is aboard a vessel, the vessel is deemed to have impliedly ratified the underlying contract of affreightment and is answerable for nonperformance.
6
Demsey,
As between S.M. China and Ferrostaal, the contract of affreightment was the Voyage Charter Party rather than the bill of lading.
8
A carrier may not alter its contractual obligations to a shipper under a Voyage Charter Party by issuing a bill of lading with different terms,
Asoma Corp. v. SK Shipping Co.,
To sum up, even if a vessel is not a “carrier” within the meaning of COGSA, maritime law renders vessels liable in rem for a carrier’s violations of its obligations. Therefore, while COGSA, if applicable, may affect or alter a carrier’s obligations and thereby determine the outcome of an in rem proceeding against a carrier’s vessel, the in rem remedy is a creature of maritime law, not COGSA.
2. Enforceability of a Waiver of the Vessel’s In Rem Liability
The applicability of COGSA in this appeal arises in a second and different context. Appellants argue that the free-in-and-out provision of the Voyage Charter Party relieves the vessel of liability for improper stowage. The free-in-and-out provision reads:
The cargo to be loaded, stowed, lashed, secured, and dunnaged free of risk and expenses to the vessel in accordance with local regulations for steel cargoes, under deck only.
Appellee disagrees with this interpretation of the provision, but we need not
As the classic admiralty treatise states, “The general law of maritime carriage made the public carrier of goods by sea absolutely responsible for their safe arrival,” with a few exceptions. Gilmore & Black, supra § 3-22 at 139. “When the bill of lading came into general use as a receipt for goods and document of title, [however], shipowners [and other carriers] ... began to set out on the face of the bill various ‘exceptions’ [to liability].” Id. § 3-22 at 140. “Bills came to include stipulations that the carrier was not to be liable even for the results of his own negligence or that of the ship’s people ... Instead of being absolutely liable, irrespective of negligence, [the carrier] enjoyed an exemption from liability, regardless of negligence, as wide as his bargaining position enabled him to contract for.” Id. § 3-23 at 142. The dissatisfaction of American cargo interests with these exemptions from liability prompted Congress to enact the Harter Act of 1893, the predecessor to COGSA. Id. § 3-24 at 142-43.
COGSA, therefore, prevents international ocean carriers from contracting out of certain specified obligations, including the responsibility to stow cargo properly.
See Nichimen Co. v. M.V. Farland,
The relevant COGSA provision reads:
Any clause ... in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from ... obligations provided in this section ... shall be null and void and of no effect.
§ 30701 Note § 3(8).
The Hague-Visby Convention sets out an identical rule — in haee verba — and the parties here have incorporated the Convention and its rules into the Clauses Paramount of the Voyage Charter Party and the bill of lading. If COGSA applies as a matter of law, the free-in-and-out provision is unenforceable insofar as it is a waiver of in rem liability. If the cargo damage rules of Hague-Visby apply as a matter of contract, the same result is reached.
The applicability of either approach, however, is not self-evident. Both COGSA and Hague-Visby contain the following provision:
“[C]ontract of carriage” applies only to contracts of carriage covered by a bill of lading or any similar document of title, in so far as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.
§ 30701 Note § 1(b); Hague-Visby Rules, Art. I. For convenience sake, we will refer to this provision as “the Applicability Provision” or “Provision”.
We have sometimes labored to treat charter parties and bills of lading as proxies for private and public carriage, respectively.
See, e.g., Madow Co. v. S.S. Liberty Exporter,
Application of the public-private carriage analysis probably favors appellees, as the district court held, because the voyage here involved multiple cargos and multiple shippers. However, the Fifth Circuit has recently refused to treat carriers that transport multiple shippers’ cargo as
per se
subject to COGSA.
See Tradearbed Inc. v. Western Bulk Carriers K/S,
Based on the “governing-instrument” standard, appellants argue that COGSA does not apply because the bill of lading here was only a receipt and the Voyage Charter Party — with the free — in- and-out provision — is the governing document. It is established that a bill of lading issued under a charter party is only a receipt when it remains in the hands of the shipper-charterer.
See Nichimen,
The adoption of either the “public/private carriage” or the “governing instrument” interpretation of the Applicability Provision might well, therefore, affect the outcome in this matter. However, we need not resolve the various issues raised because the Voyage Charter Party’s Clause Paramount incorporates the Hague-Visby Rules. Even if COGSA does not apply, therefore, the Voyage Charter Party provides rules regarding the imper-missibility of a waiver of in rem liability— Hague-Visby — identical to those of COG-SA.
The Clause Paramount of the Voyage Charter Party reads:
Notwithstanding any other provisions in this contract, any claims for loss or damage to cargo shall be governed by the Hague-Visby rules as if compulsorily applicable by law, and any other clauses herein repugnant to the Hague-Visby rules shall be null and void and of no force or effect as respects cargo claims. Any clauses in this contract allocating responsibility or risk with respect to loading, stowing, stevedoring, lashing, securing, dunnaging, discharging and delivery shall be deemed to apply only as price terms and shall not be interpreted to alter in any way the responsibilities of the owner and the ship as carriers as defined in the Hague rules as respects claims for cargo loss and damage.
In maritime law, a Clause Paramount “identifies the law that will govern the rights and liabilities of all parties to the bill of lading,”
Sompo Japan Ins. Co. Of America v. Union Pac. R.R. Co.,
The Clause Paramount, therefore, incorporates Hague-Visby’s prohibitions on waivers of
in rem
liability into the Voyage Charter Party.
See Koppers Conn. Coke Co. v. McWilliams Blue Line Inc.,
A final matter. We noted above a concern that the applicability of Hague-Vis-by’s rules invalidating a waiver of a carrier’s obligations was not self-evident. That
We also note that courts have read charter parties incorporating COGSA to incorporate the substantive rules of COGSA governing cargo damage claims whether or not the Applicability Provision would normally render COGSA inapplicable.
See e.g., Itochu Int’l, Inc. v. M/V Western Avenir,
B. The Cross Appeal
Ferrostaal argues in its cross-appeal that the district court erred in holding there was no in personam liability for Akela and Almi. We disagree.
One can recover for damage to cargo under COGSA or under a bailment theory.
See Rationis Enters. Inc. of Pan. v. Hyundai Mipo Dockyard, Co., Ltd.,
Neither Akela nor Almi authorized S.M. China to issue bills of lading on their behalf. Ferrostaal could not have believed such authorization to exist when the bill of lading named only S.M. China as carrier and did not purport to be a document signed “for the master.”
See Demsey,
CONCLUSION
We affirm for the reasons stated.
Notes
. The USA Clause Paramount is a clause designating the Carriage of Goods by Sea Act, or COGSA, as the controlling law with respect to the rights and liabilities of parties to a bill of lading.
. The Clauses Paramount in the Bill of Lading reads as follows:
This Bill of Lading shall be subject to the Hague Rules contained in International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, dated at Brussels the 25th August, 1924, or the corresponding legislation of the flag state of the ship. If the stipulations of the bill of lading are wholly or partly contrary thereto, this bill of lading shall be read as if such stipulation or part thereof, as the case may be, were deleted.
Because the contract of affreightment is the Voyage Charter Party for reasons stated infra, the differences between the Voyage Charter Party Clause Paramount and the Bill of Lading Clause Paramount do not affect the disposition of this case.
. Akela and Almi filed a motion to dismiss for lack of personal jurisdiction on January 23, 2009, which was stayed pending trial on the issues of in rem and in personam liability.
. On February 9, 2009, Ferrostaal made an emergency motion to sever the in rem action and transfer it to the Eastern District of Louisiana because the Akili was expected to call at a Louisiana port. The motion was granted. Then, the Owners’ insurance company wrote a Letter of Undertaking seeking to avoid the arrest. Pursuant to a Stipulation and Consent Order entered by the parties, the in rem action was transferred back to the Southern District of New York, where it was assigned a new case number. Although the in rem and in personam claims were tried together, disposed of by a single opinion and order, and resolved by a combined judgment bearing both case numbers, the two cases were never formally consolidated.
Because the Akili filed its notice of appeal only under the docket number of the
in personam
action, Ferrostaal argues that we lack jurisdiction to consider appellant’s arguments insofar as they pertain to the
in rem
action. We are unpersuaded. The Akili timely filed notice in the district court of its intent to appeal the "judgment, order or decree” entered by the district court as it pertains to the
in rem
action. 28 U.S.C. § 2107(a). Ferros-taal received notice of the Akili’s intent to appeal, and it claims no prejudice as a result of the Akili’s failure to file the notice in both actions or to caption it with both district court case numbers. Accordingly, the Akili’s oversight is not fatal to its appeal.
See Marrero Pichardo v. Ashcroft,
. The only portion of Section 3 that applies directly to ships is Paragraph 8, which prevents parties from contracting around the ship’s coextensive liability. § 30701 Note § 3(8), discussed infra.
. The district court used a combination of maritime law and COGSA to find the Akili liable
in rem. See Man Ferrostaal v. M/V Akili,
The "implied ratification” doctrine gives rise directly to
in rem
liability. It does not render a vessel a carrier under COGSA.
See, e.g., Demsey,
[W]hen the general owner [of a vessel] intrusts the special owner with the entire control and employment of the ship, it is a just and reasonable implication of law that the general owner assents to the creation of liens binding upon his interest in the vessel, as security for the performance of contracts of affreightment made in the course of thelawful employment of the vessel. The general owner must be taken to know that the purpose for which the vessel is hired, when not employed to carry cargo belonging to the hirer, is to carry cargo of third persons; and that bills of lading, or charter-parties, must, in the invariable regular course of business be made, for the performance of which the law confers a lien on the vessel.
Id. at 190.
. Akili argues that
Insurance Company of North America v. S/S American Argosy,
. The fact that a vessel is operated under charter does not absolve it of
in rem
liability.
Demsey,
. Both
David Crystal, Inc. v. Cunará Steamship Co., Ltd.,