J.C.B. Sales Ltd. v. Wallenius Lines (Wallenius Lines North America Inc.), In Personam

• Citation: 124 F.3d 132
• Decision Date: 21 August 1997
• Docket Number: 693,Nos. 692,D,s. 692
• Parties: J.C.B. SALES LTD., Plaintiff-Appellee, Caterpillar, Inc. and Land Rover Exports, Ltd., Consolidated Plaintiffs-Appellees, v. WALLENIUS LINES (WALLENIUS LINES NORTH AMERICA INC.,) In Personam, Defendant-Cross-Claimant-Appellant, M/V Seijin, her engines, boilers, etc., in rem, Defendant-Third-Party-Plaintiff-Appellant, San Clemente Shipping S.A., Defendant-Claimant-Cross Defendant. ockets 96-7621, 96-7661.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 132

124 F.3d 132

1997 A.M.C. 2705

J.C.B. SALES LTD., Plaintiff-Appellee Caterpillar, Inc. and Land Rover Exports, Ltd., Consolidated Plaintiffs-Appellees, v. WALLENIUS LINES (WALLENIUS LINES NORTH AMERICA INC.,) In Personam, Defendant-Cross-Claimant-Appellant M/V Seijin, her engines, boilers, etc., in rem Defendant-Third-Party-Plaintiff-Appellant San Clemente Shipping S.A., Defendant-Claimant-Cross Defendant.

Nos. 692, 693, Dockets 96-7621, 96-7661.

United States Court of Appeals, Second Circuit.

Argued Feb. 24, 1997.

Decided Aug. 21, 1997.

Alan S. Loesberg, New York City (Caspar F. Ewig, T.E. Willoughby, Hill Rivkins Loesberg O'Brien Mulroy & Hayden, New York City, James D. Skeen, Wright, Constable & Skeen, Baltimore, MD, of counsel), for Plaintiffs-Appellees.

Christopher H. Mansuy, New York City (William E. Lakis, Walker & Corsa, New York City, of counsel), for Defendant-Third-Party-Plaintiff-Appellant M/V Seijin.

Joseph F. De May, Jr., New York City (Paul M. Keane, Cichanowicz Callan & Keane, New York City, of counsel), for Defendant-Cross-Claimant-Appellant Wallenius Lines.

Before: VAN GRAAFEILAND, MESKILL and KEARSE, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

M/V Seijin, in rem, and Wallenius Lines (Wallenius Lines North America, Inc.), the vessel's charterer, appeal from judgments of the United States District Court for the Southern District of New York (Pollack, J.) awarding damages to J.C.B. Sales Ltd., a British corporation, and Caterpillar, Inc., an Illinois corporation, for damage to machinery and equipment sustained during a voyage from Antwerp, Belgium and Southampton, England to Baltimore, Maryland. A third appellee, Land Rover Exports, Ltd., compromised its claim after the appeals against it were filed and is no longer a party. Liability has been stipulated. The only issue is the amount of the awards.

On February 28, 1995, Caterpillar delivered fifteen items of construction equipment to the M/V Seijin at Antwerp for carriage to Baltimore. The carrier, Wallenius, gave Caterpillar a Datafreight Receipt ("DFR"), which is prominently marked as non-negotiable and states that it:

is not a document of title to the goods [but] is deemed to be a contract of carriage which is subject to the exceptions, limitations, conditions and liberties ... set out in the Carrier's standard Terms and Conditions applicable to the voyage covered by this Datafreight Receipt and operative on its date of issue. Every reference in the Carrier's Standard Conditions of Carriage to the words "Bill of Lading" shall be read and construed as a reference to the words "Non-Negotiable Datafreight Receipt" and the terms and conditions thereof shall be read and construed accordingly.

Among the excerpts from the carrier's standard terms and conditions of carriage reproduced on the DFR is the following:

RESPONSIBILITY

11. Clause Paramount

(1) .... During any periods of carriage by water under this [DFR] the carriage shall be subject at all such times to

(a) The Hague Rules (meaning the provisions of the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924) as enacted in the country of shipment, or if no such enactment is in force, as enacted in the country of destination, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the U.S. Carriage of Goods by Sea Act ... shall be considered incorporated herein as if set forth at length; or (b) The Hague Visby Rules (meaning the Hague Rules as amended by the Protocol signed at Brussels on 23rd February 1968) in courts where they apply compulsorily.

After taking on Caterpillar's cargo, the M/V Seijin journeyed to Southampton where Wallenius and Caterpillar contracted to ship twenty-four additional items of construction equipment to Baltimore. Wallenius issued a second DFR, the terms of which are substantially the same as those of the Antwerp DFR. The Southampton DFR also states that it is non-negotiable and incorporates the "Carrier's Standard Conditions of Carriage applicable to the voyage," but recites from those standard conditions the following clause:

2. responsibility.

The Hague Rules contained in the international convention for the unification of certain rules relating to bills of lading, dated Brussels the 25th August, 1924 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 of shipments to which no such enactments are compulsory [sic] applicable, the terms of the said convention shall apply.

It also provides that the "Carrier's Standard Conditions of Carriage incorporate the Hague Rules contained in the Brussels Convention dated 25th August 1924 and any compulsorily applicable national enactment of these rules."

At Southampton, the M/V Seijin also took on for carriage to Baltimore eighty-one pieces of construction equipment from JCB for which it issued a DFR identical to Caterpillar's Southampton DFR. After a stop in Halifax, the M/V Seijin delivered the bulk of the cargo at Baltimore in seriously damaged condition. In the district court, the defendants sought unsuccessfully to limit their liability to $500 per package pursuant to the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.App. §§ 1300 et seq.

COGSA represents the codification of the United States' obligations under the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, August 25, 1924, 51 Stat. 233. This convention, which is also known as the Hague Rules, was the culmination of a multinational effort "to establish uniform ocean bills of lading to govern the rights and liabilities of carriers and shippers inter se in international trade." Robert C. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 301, 79 S.Ct. 766, 768, 3 L.Ed.2d 820 (1959). Among the more prominent features of COGSA is its limitation of liability in the event of damage to or loss of cargo to "$500 per package ... or ... per customary freight unit ... 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).

The Hague Rules, as enacted in COGSA, have remained the law in the United States since 1936 notwithstanding dramatic changes in the shipping industry. These changes prompted the convening of a diplomatic conference in 1968 which adopted a Protocol amending several provisions of the Hague Rules. Among other things, this Protocol, known as the Visby Amendments, increased the limitation on the carrier's liability to the higher of "the equivalent of 10,000 francs per package or unit or 30 francs per kilo of gross weight of the goods lost or damaged." Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Feb. 23, 1968, reprinted in 6 Benedict on Admiralty 1-25 to 1-29 (7th ed.1997). A subsequent 1979 Protocol further amended the limitation to provide for its calculation based on "special drawing rights," fluctuating units of account determined by the International Monetary Fund. Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, Dec. 21, 1979, reprinted in 6 Benedict, supra, at 1-32.2 to 1-32.5.

Because the United States ratified neither the Visby Amendments nor the 1979 Protocol, the $500 liability limitation controls in cases where COGSA applies. Both Belgium and the United Kingdom, however, employ the higher limitation set out in the 1979 Protocol. The difference in liability schemes is significant. If the $500 limitation of COGSA had been applied, defendants' liability to JCB would have been $18,061.84 rather than the $648,662.35 determined by the special drawing right. Similarly, defendants' liability to Caterpillar would have been $5,094.06 rather than the $128,141.36 pursuant to the special drawing right. The dispute in this case focuses primarily on whether the language in the DFRs expressing an intent to apply the "Hague Rules ... as enacted in the country of shipment" includes the Hague Rules as amended by the subsequent protocols.

In an opinion reported at 921 F.Supp. 1168 (S.D.N.Y.1996), Judge Pollack ruled that COGSA did not apply to the shippers' claims because the DFRs were not documents of title and therefore could not be bills of lading as that term is used in 46 U.S.C.App. § 1301(b). The district court went on to hold that the "as enacted" language of the DFRs evinced an intent to apply the Hague Rules that were in force in the countries of shipment, i.e. the Hague Rules as amended by the protocols.

Appellants contend that the district court made a number of errors. We turn first to Wallenius's contention that the district court erred in holding COGSA inapplicable on the ground that a DFR is not a "bill of lading or similar document of title" within the meaning of COGSA. COGSA applies to "all contracts for carriage of goods by sea to or from ports of the United States in foreign trade." Id. § 1312. However, the enacting clause of COGSA provides that it regulates rights and liabilities under "[e]very bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade." 46 U.S.C.App. § 1300. Section 1301(b) defines "contract of carriage" as applying "only to contracts of carriage covered by a bill of lading or any similar document of title, insofar as such document relates to the carriage of goods by sea."

Wallenius concedes that the DFRs are not documents of title, a concession compelled by the disclaimers appearing on the face of the documents. However, despite taking great pains to distance the DFRs from bills of lading, as evidenced by the...