This appeal arose from a claim of cargo damage to hot-rolled steel plates. The cargo was to be shipped from Antwerp, Belgium, to Charleston, Jacksonville, Savannah, and Houston, United States, on the SS Eurounity. During the voyage, the vessel faced an 'ultra-bomb' storm, Beaufort scale 11 winds, chaotic cross seas, and 11.5 m waves. The vessel owner and charterer had apportioned liability on the basis of unseaworthiness and stowage respectively. The District Court held that the defendants (owner and charterer) were jointly and severally liable to the plaintiffs, Thyssen Inc and Associated Metals & Minerals Corp. The defendants appealed, stating that the District Court was wrong in finding a prima facie case for cargo damage.

Held: The judgment of the District Court is affirmed.

The issue in dispute was whether Thyssen proved that the steel was delivered to the vessel in good condition prior to the vessel's departure from Antwerp. It is well settled that a clean bill of lading, ordinarily, is prima facie evidence of delivery in good condition: see Spencer Kellogg Div of Textron Inc v SS Mormacsea 703 F 2d 44 (2d Cir 1983); Caemint Food Inc v Brasileiro 647 F 2d 347 (2d Cir 1981). The defendants contended that the bills of lading here could not support the plaintiffs' prima facie case, since they included the notations 'rust stained', 'partly rust stained', and 'wet before shipment'. The defendants argued that these notations contradicted the District Court's finding that the steel was in good condition.

There was ample evidence that the steel was in good condition when delivered to the vessel for loading. The deposition testimony of Captain Tijan, an Antwerp surveyor, and the trial testimony of Franz Ernst, a freight forwarder specialising in steel products at Antwerp for four years, which the District Court found credible, demonstrated that the clauses on the bills of lading indicated that the steel was of good condition. Ernst testified that the Port of Antwerp had used these standardised notations for approximately 30 years to refer to non-damaging, atmospheric rust which did not affect the value of steel. Tijan testified that steel is considered to be in 'prime' condition when the bills of lading include these standardised notations. The record is devoid of any evidence that controverts Thyssen's claim that the notations on the bills of lading indicate anything other than the sound condition of the steel upon loading. Additionally, a survey report of the steel loaded onto the vessel, which was made prior to the vessel’s departure from Antwerp, stated: 'Amount of depreciation caused by any rust condition observed: none'. Since the bills of lading indicated that the steel was in good condition prior to the voyage, and it was uncontroverted that the steel was in a damaged condition at discharge, the plaintiffs had established their prima facie right to recover for damages. In Couthino Caro & Co v MV Sava 849 F 2d 166 (5th Cir 1988) it was held that steel which was in good condition upon delivery to carrier was not precluded by exceptions noting rust in bills of lading for cold-rolled steel.

Once the plaintiffs established a prima facie case, the burden shifted on the defendants to prove that they should not be held liable because the seawater damage was due to one of the exceptions set forth in the Carriage of Goods by Sea Act (COGSA), 46 USC s 1304(2). The defendants sought refuge under COGSA s 1304(2)(c), which reproduces the peril of the sea exception found in art 4.2.c of the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924 (Hague Rules). A peril of the sea occurs when conditions 'are of an extraordinary nature or arise from irresistible force or overwhelming power, and which cannot be guarded against by the ordinary exertions of human skill and prudence': see J Gerber & Co v SS Sabine Howaldt 437 F 2d 580 (2d Cir 1971). The determination of whether the particular conditions constitute a peril of the sea is wholly dependent on the facts of each case, and is not amenable to a general standard: see Duche v Thomas & John Brocklebank Ltd 40 F 2d 418 (2d Cir 1930); Kane International Corp v MV Hellenic Wave 468 F Supp 1282 (SD NY 1979). Relevant factors that should guide a court's determination include wind strength, the nature and extent of damage to the ship, and the extent of cross-seas: J Gerber 596. Courts also must be cognisant that their ultimate conclusions should turn on whether the weather conditions were foreseeable, given the location and time of the year: see In re Tecomar SA 765 F Supp 1150 (SD NY 1991).

The peril of the sea defence is premised on the fact that the storm encountered during the voyage was unique because of the winds and cross-seas created by the rapid decrease in pressure incidental to the storm. This is not proven by evidence. The vessel's bridge logbook, which the District Court relied upon, recorded Beaufort scale winds that did not exceed a level of 10 or 11. Expert testimony at trial indicated that there were significant waves of between 10 and 11.5 m. The testimonies of the meteorological expert witnesses for both sides revealed that, for the most part, the weather conditions experienced by the vessel were not unusual in the North Atlantic Ocean in the wintertime: In re Tecomar SA 1176; Kane International Corp 1285. Dr Austin Dooley, the defendants' expert witness, testified that level 11 winds and significant waves of 10 to 11.5 m were foreseeable. Similarly, the plaintiffs' expert, Robert Raguso, testified that the weather conditions encountered by the vessel were foreseeable. Although the vessel experienced strong cross-seas, perhaps stronger than usual, due to the decrease in pressure attributable to the ultra-bomb, both experts indicated that cross-seas generally could have been expected. The District Court also found that the vessel 'sustained some damage to deck equipment resulting from the intensity of the wind and the waves'. However, this statement did not indicate that the damage was extraordinary. Moreover, the District Court also found that 'the vessel took waves over the hatch covers throughout the voyage, suffered strong rolling and was hove to in the winds of only 6, 7, 8, and 9 of the Beaufort Scale'. Given that severe storms occur on a regular basis in the North Atlantic, and that the winds, waves, and cross-seas experienced by the vessel were to be expected, the defendants have not proven that they are entitled to exoneration of liability based on a peril of the sea.

Defendants next argued that, with regard to the Jacksonville and Charleston cargoes, the District Court erred in calculating Thyssen’s damages under the market discount theory instead of the remediation rule, which was applied in Weirton Steel Co v Isbrandtsen-Moller Co 126 F 2d 593 (2d Cir 1942). COGSA 46 USC s 1304(5) limits the carrier’s liability to amount of damage actually sustained: see Internatio Inc v MS Taimyr 602 F 2d 49 (2d Cir 1979). Weirton Steel did not apply to the present case. In Weirton Steel, the remediation costs incurred represented the proper measure of damages under the circumstances of that case. There, the shipper-consignee did not immediately resell the damaged cargo, consisting of tin plates, but instead reconditioned the tin plates and manufactured them into oil cans. The consignee then sold its oil in the reconditioned cans. However, in the subsequent action for damages, it was never clearly established whether the consignee sold the oil in the reconditioned cans at a discount compared to oil sold in tin cans that had not been damaged. In light of these facts, it was held that only the costs of reconditioning were appropriate damages. In this case, however, there simply was no occasion for the District Court to apply the measure of damages that was applied in Weirton Steel. Thyssen did not recondition the steel and resell it at the market rate; instead, after its surveyors appraised the damaged cargo, Thyssen sold the steel to its Charleston and Jacksonville customers at a discount. Therefore, the market discount test clearly was the appropriate measure of damages: see Thyssen Inc v SS Fortune Star 777 F 2d 57 (2d Cir 1985), which applied the market discount measure of damages to the resale of steel pipe by the consignee at discount without reconditioning.

Thyssen also argued that the judgment should be modified to hold each defendant severally liable up to the full package limitation of COGSA s 1304(5), thereby allowing Thyssen to recover its full damages. Thyssen argued that the disjunctive language of COGSA s 1304(5) meant that the COGSA package limitation is designed to protect the carrier and vessel, separately, and does not limit a plaintiff’s recovery in toto where more than one defendant is liable for the loss. COGSA s 1304(5) establishes that a plaintiff is entitled to a single recovery not to exceed the equivalent of USD 500 per package. According to Thyssen's theory, plaintiffs would effectively side-step COGSA's limitation of the amount of damages that a plaintiff is entitled to recover whenever multiple defendants were subject to liability. In Secrest Mach Corp v SS Tiber 450 F 2d 285 (5th Cir 1971), the argument for separate package limitation recovery from each defendant was found to be inconsistent with the bill of lading. The damages awarded by the District Court, subject to the package limitation of COGSA s 1304(5), represent the only recovery to which Thyssen was entitled. If Thyssen desired to protect its interest in the cargo beyond the package limitation amount, it ought to have contracted for that right as provided in COGSA s 1304(5): see General Electric Co v MV Nedlloyd 817 F 2d 1022 (2d Cir 1987). Accordingly, the District Court properly applied the package limitation.