The shipper/assured, Wuerttembergische & Badische Versicherungs-Aktiengesellschaft, was the owner of a winding block for a nuclear reactor. It contracted with the carrier, Hapag-Lloyd Aktiengesellschaft (Hapag-Lloyd), to ship the block from Antwerp, Belgium, to Norfolk, Virginia, USA. The block was fully enclosed in a shipping crate. During loading at Antwerp, stevedores hired by the carrier negligently caused the crate to fall off the container flat, resulting in a total loss of USD 193,791. The assured, with its cargo underwriter (the cargo interests), claimed for cargo loss against the M/V Stuttgart Express, and Hapag-Lloyd Aktiengesellschaft, the vessel's owner. While Hapag-Lloyd conceded the amount of damage as claimed by the assured, Hapag-Lloyd admitted liability only to the amount of USD 500 pursuant to the package limitation contained in s 4(5) of the US Carriage of Goods by Sea Act (COGSA) (46 USC § 1304(5)).

The District Court for the Eastern District of Louisiana held that the carrier's liability was limited to USD 500. The underwriter appealed.

The issue was whether the USD 500 package limitation in COGSA was applicable to this particular loss under the bill of lading issued by the carrier and the text of the tariff which the carrier had on file with the Federal Maritime Commission. A related issue concerned the obligation upon the carrier of the goods to make available adequate opportunity to the shipper to increase the liability valuation and avoid the USD 500 per package limitation of liability.

The cargo interests argued that the option was not offered in this case to comply with the COGSA requirement because the bill of lading and the tariff did not adequately inform the shipper of optional freight rates applicable to shippers who did not wish to be limited by the USD 500 package limitation. Citing cases from the Court of Appeals for the Ninth Circuit, the cargo interests argued that the bill of lading must on its face contain provision for declaration of value to escape the package limitation of liability: Pan American World Airways v California Stevedore & Ballast Co 559 F 2d 1173 (9th Cir 1977) (CMI1798); Nemeth v General Steamship Corp Ltd 694 F 2d 609 (9th Cir 1982) (CMI1787).

Held: Judgment affirmed.

COGSA is applicable to the shipment since it originated in a foreign port with intended delivery to the United States: 46 USC § 1300. COGSA provides that the carrier must offer the shipper an opportunity to avoid the USD 500 per package limitation of liability.

In Brown & Root Inc v M/V Peisander 648 F 2d 415 (5th Cir 1981) (CMI1469), the Court concluded that the published tariff of the carrier is law and is controlling. In that case the published tariff clearly gave the shipper a choice of valuations. In this case the tariff is in terms incorporated into the bill of lading. The tariff specifically 'offers shippers a choice of freight rates dependent upon whether the shipment is made subject to Bill of Lading limit of value, or at a higher limit of value ...'. The tariff then states the rates and goes ahead to state a specific rate in case of a higher declared value. While the bill of lading states the value as 'invoice value', it is well established that such a provision cannot apply to alter the COGSA package limitation. COGSA controls the shipment, and must supersede any contrary provision of the bill of lading: 46 USC § 1300; Peisander 420. The COGSA limitation is the valuation applicable, unless a higher value has been selected with payment of higher freight or, as is claimed here, the option to place a higher value was not given.

In contrast to the case law of the Ninth Circuit, Peisander established that the option need not be included on the face of the bill of lading. Peisander 425. Further, it was concluded the shipper carries the burden of proving that an opportunity for choice of evaluations and rates did not in fact exist. Peisander 424. As to the burden of proof issue, the Court agreed with the position in Petition of Isbrandtsen Co 201 F 2d 281, 285 (2d Cir 1953).

Under COGSA, the valuation per package is USD 500. The option to increase valuation by declaration and paying a higher freight was clear in the tariff, which was in terms incorporated into the bill of lading. The USD 500 per package limitation applied, as this option was not exercised.