ZK Marine Inc and Southern Offshore Yachts Inc (the plaintiffs) had previously brought an admiralty action against the carrier and its agents (the defendants) seeking to recover for damage to four yachts and the loss of one yacht carried on deck during ocean transit. On 8 January 1991, this Court held that 46 USC ss 1300 ff (COGSA), with its USD 500 per package limitation on carrier liability, did not apply by force of law in this case because COGSA does not automatically extend to goods carried on deck. However, the Court went on to hold, based on the language of the bills of lading, that the parties had contractually extended COGSA's provisions to the shipment. Partial summary judgment was therefore granted to the defendants, limiting their liability to USD 500 per yacht. The plaintiff now moves the Court to reconsider its 8 January 1991 opinion, asserting that the Court erred in its original determination of the facts and law of this case.

Held: Motion denied.

While the Court remains confident that its conclusion was correct, it recognises that some of the language of its 1991 opinion was confusing and may have caused the plaintiffs to believe that the Court had misapprehended the law or the parties' arguments. The order stated:

The language of the paramount clause in the bills of lading does not directly refer to COGSA. Rather, it appears to require that the Hague or Hague/Visby Rules be applied. The Hague Rules were, however, codified in COGSA. Thus the parties appear to have stipulated by contract that COGSA would apply to these bills of lading. Accordingly, this Court finds that COGSA applies to this situation.

While the result that COGSA applies is correct, COGSA is not identical to either the Hague or the Hague Visby Rules, and the Court did not mean to imply that COGSA applies for that reason. Rather, COGSA controls because the paramount clause, cl 3, read in conjunction with cll 9 and 18, evidences the parties' intent to extend COGSA to this contract for the on-deck carriage of the five yachts.

COGSA is the US codification of the original Hague Rules and is generally applicable to goods shipped from foreign ports to ports in the United States: 46 USC §§ 1300-1315; Sunkist Growers Inc v Adelaide Shipping Lines Ltd 603 F 2d 1327 (9th Cir 1979) cert denied, 444 US 1012, 100 S Ct 659, 62 L Ed 2d 640 (1980). It is undisputed that COGSA does not apply ex proprio vigore to this contract because the definition of 'goods' provided in 46 USC § 1301(c) does not include carriage of 'on-deck' cargo. Nonetheless, it is well established that COGSA can be extended to contracts to which it does not apply of its own force if the parties so agree: Colgate Palmolive Co v S/S Dart Canada 724 F 2d 313 (2d Cir 1983), cert den 466 US 963, 104 S Ct 2181, 80 L Ed 2d 562 (1984); Pannell v The American Flyer 157 F Supp 422 (SD NY 1957), mod 263 F 2d 497 (2d Cir 1959), cert denied 359 US 1013, 79 S Ct 1151, 3 L Ed 2d 1037 (1959). The defendants contend that although COGSA does not apply ex proprio vigore, the bills of lading evidence the parties' agreement to extend COGSA to this contract. The plaintiffs counter that the Harter Act applies, or in the alternative, that the Hague or Hague-Visby Rules govern.

The plaintiffs contend that even if the Court was not mistaken about the applicable law or facts, reconsideration is appropriate because the Court's order is inconsistent with the Eleventh Circuit precedent established by Insurance Co of North America v M/V Ocean Lynx 901 F 2d 934 (11th Cir 1990), cert den 498 US 1025, 111 S Ct 675, 112 L Ed 2d 667 (1991) (CMI1438). That case directly addressed the issue of extending COGSA to acts and circumstances not mandated by its language. However, the Ocean Lynx opinion simply sets out the 'notice and opportunity' test that courts, including this Court, have been using for some time. The Ocean Lynx Court held that to contractually extend COGSA's liability limitation the carrier must:

1. give the shipper adequate notice of the USD 500 liability limitation by including a paramount clause in the bill of lading expressly adopting the provisions of COGSA, and
2. give the shipper a fair opportunity to avoid COGSA's liability limitation by declaring excess value.

Both prongs of this two-part test were met by the carrier in the instant case.

The paramount clause in the bill of lading, cl 3, reads as follows:

This Bill of Lading shall have effect subject to the provisions of any legislation incorporating the Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading dated Brussels, August 25th 1924 (the Hague Rules) or those Rules as amended by the Protocol signed at Brussels February 23rd 1968 (the Hague Visby Rules) and which is compulsorily applicable to the contract of carriage contained herein. If no such legislation is compulsorily applicable, the Hague Rules or, if applicable, the Hague Visby Rules as enacted in the country of the port of loading shall apply. When no such enactment is in force in the country of the port of loading, the corresponding legislation of the country of the port of discharge shall apply and in the absence of any such legislation, the terms of the 1924 Convention as amended by the 1968 Protocol shall apply.

The parties agree that subcl 1 does not control because no legislation is compulsorily applicable to this contract. Subclause 2 then dictates that the Hague or Hague-Visby Rules as enacted in the country of the port of loading be applied. Taiwan (the country of the port of loading) has not enacted legislation corresponding to either the Hague or the Hague-Visby Rules, so subcl 2 is inapplicable as well. Thus, subcl 3 which requires resort to the corresponding legislation of the country of the port of discharge will control. The plaintiffs do not dispute that the country of the port of discharge is the US, or that COGSA is the 'corresponding legislation' enacted in the US to codify the original Hague Rules. Thus, if the bills of lading meet the requirements established in the Ocean Lynx test, COGSA will apply.

The first prong of the Ocean Lynx test requires that the shipper give adequate notice of the USD 500 liability limitation by including a paramount clause in the bill of lading expressly adopting the provisions of COGSA. The plaintiffs argued that 'expressly' means that the terms 'COGSA' or 'Carriage of Goods by Sea Act' must appear in the paramount clause. This argument represents an unreasonably narrow reading of the Ocean Lynx holding. The Court's intention was to warn shippers that COGSA contains a USD 500 liability limitation and to inform them that they may avoid the limitation by declaring excess value and paying an increased sum. The decision was not an attempt to force carriers to describe in explicit detail the applicable law in the paramount clause of every bill of lading.

The second part of the Ocean Lynx test was undoubtedly satisfied by the carrier in the instant case. The plaintiffs argue that the liability limitation provision must be set out in the paramount clause itself. This is clearly wrong.The paramount clause is a general provision which identifies the governing law. It is not a place to delineate specific provisions of that law. The carrier can meet the notice and fair opportunity requirements simply by incorporating COGSA into the bill of lading and publishing a tariff with the Federal Maritime Commission that provides the shipper with the opportunity to declare excess value.

In this case, the carrier has gone far beyond what is required for notice and opportunity. In capital letters on the face of the bills of lading it states: 'VALUE OF GOODS MAY BE DECLARED PROVIDED MERCHANT GIVES PRIOR NOTICE AND AGREES TO PAY GREATER FREIGHT AD VALOREM BASIS SEE CL 18 ON BACK HEREOF.' Clause 18 addresses 'Limitation of Value' and explicitly spells out the USD 500 limitation on carrier liability in language almost identical to that used in COGSA. The plaintiffs' argument that they were not notified of the liability limitation and afforded the opportunity to declare higher value is therefore obviously without merit.

The plaintiffs further argue that COGSA was not clearly and unambiguously extended to this contract for the on-deck carriage of the yachts. For COGSA to apply to an on-deck shipment, it must be plain from the face of the bill of lading both that this is a contract for on-deck carriage and that COGSA is to be applied. Clause 9 of the bill of lading addresses on-deck carriage of goods, and makes it clear that the carrier may limit its liability consistent with the terms of the bill of lading and applicable law, be it the Hague or Hague Visby Rules or 'any such legislation', ie COGSA. It is undisputed that the contract at issue was for on-deck shipment and was marked 'ON DECK AT SHIPPER'S RISK'. Clause 9 appears approximately five inches below the paramount clause in the same column and on the same side of the page on the face of each bill of lading. Reading the two clauses together it is apparent that the parties agreed to extend COGSA's provisions to this contract.

Taken as a whole, cll 3, 9, and 18 of the bills of lading evidence a clear intent to subject the parties to the COGSA USD 500 liability limitation. The bills of lading were short and the parties were all relatively experienced shippers.

The outcome of this case may well have been different given a different factual situation. The Court does not mean to imply that a carrier would never be required to spell out more explicitly what law and what provisions of that law apply to a given contract. In fact, the most prudent policy would of course be to include such detailed language in every bill of lading. However, such a requirement would unduly burden large international shipping companies and their clients who routinely use standard form bills of lading in their dealings. Here the plaintiffs made a business decision not to pay a higher rate for increased coverage, and they should not now be permitted to avoid the consequences of that decision.