UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2001
(Argued: November 13, 2001 Decided:
May 17, 2002)
Docket No. 01-7374
SENATOR LINIE GMBH & CO. KG,
a/k/a Senator Lines,
SUNWAY LINE, INC. and ZEN CONTINENTAL
CHINA NATIONAL CHEMICALS IMPORT &
EXPORT CORPORATION, a/k/a
Tianjin Chemicals Import & Export Corporation,
ITOCHU SPECIALTY CHEMICALS INC.,
DINZHOU PHOSPHORIC FERTILIZER FACTORY,
EASTERN SUNWAY LINE, INC.,
Before:SOTOMAYOR, KATZMANN, and B.D.
PARKER, JR., Circuit Judges.
Plaintiff carrier Senator Linie GMBH & Co.
KG appeals from that part of the judgment of the United States District
Court for the Southern District of New York (Miriam Goldman Cedarbaum,
granting motions for judgment to defendant shippers China National Chemicals
Import & Export Co., Inc.; Sunway Line, Inc.; and Zen Continental Co.,
Inc. The district court erred in holding that in order for liability to
be imposed on a shipper of inherently dangerous goods under § 4(6)
of the U.S. Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1304(6),
the shipper must have had preshipment knowledge of the danger. We vacate
and remand, holding that where neither the carrier nor the shippers had
actual or constructive knowledge of the inherently dangerous nature of
shipped goods, § 1304(6) imposes strict liability on the shippers
for damages and expenses arising out of the shipment of those goods.
Vacated and remanded.
STEPHEN H. VENGROW, Cichanowicz, Callan, Keane,
Vengrow & Textor, LLP, New York, N.Y., for Plaintiff-Appellant.
NICHOLAS E. PANTELOPOULOS, Beidermann,
Hoenig, Massamillo & Ruff, P.C., New York, N.Y. (Christopher Losquadro,
on the brief), for Defendants-Appellees.
SOTOMAYOR, Circuit Judge:
This appeal poses the question of whether, under
§ 4(6) of the U.S. Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.
§ 1304(6), a shipper may be held strictly liable for damages and expenses
resulting directly or indirectly from shipments of inherently dangerous
goods when neither the shipper nor the carrier had actual or constructive
preshipment knowledge of the goods' dangerous nature. Plaintiff-appellant
Senator Linie GMBH & Co. KG ("Senator"), which incurred damages arising
from the spontaneous combustion of a chemical cargo aboard its ship, the
M/V Tokyo Senator, argues that defendants-appellees shippers (collectively,
"the Shippers" or "defendants-appellees") are liable under § 1304(6)
even if, prior to the shipment, they did not know and could not have known
that the chemical cargo was inherently dangerous.
The Shippers respond by arguing that §
1304(6) sets forth a negligence- or knowledge-based rule and that liability
under that provision may be imposed only if Senator can show that the Shippers
had actual or constructive preshipment knowledge of the inherent danger
of the chemical cargo. The Shippers further contend that § 1304(6)
codified a well-settled federal maritime common-law rule that shippers
could not be held to give an absolute warranty for the fitness of cargo,
and that in 1936, when COGSA was enacted, this rule was chiefly represented
by a decision of this Court, The Wm. J. Quillan, 180 F. 681 (2d
Cir. 1910). We disagree.
An examination of the plain meaning of the
statute reveals that § 1304(6) sets forth a risk-allocating rule that
renders a shipper strictly liable for damages in the event that neither
the shipper nor the carrier knew or should have known that shipped goods
were inherently dangerous. Contrary to the Shippers' position, we are unpersuaded
that COGSA, which "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 [the `Hague Rules']," J.C.B. Sales
Ltd. v. Wallenius Lines, 124 F.3d 132, 134 (2d Cir. 1997), incorporated
the shipper liability rule set forth in Quillan. As discussed below,
while the history of COGSA and the Hague Rules is largely silent as to
the kind of liability that the drafters intended when they adopted §
1304(6), that history is not inconsistent with a rule of strict liability
for shippers of inherently dangerous goods.
Even if COGSA legislators had set out to codify
general maritime law, they would have found no firmly established rule
of shipper liability in the dangerous-goods context. Pre-COGSA case law
reflected disagreement over the nature and scope of such liability. In
light of this unsettled law, and because § 1304(6) speaks directly
to the issue of shipper knowledge and liability, we conclude-as did the
House of Lords in Effort Shipping Co. v. Linden Mgt. SA, 
A.C. 605 (H.L. 1998), with respect to the British counterpart of §
1304(6)-that enactment of § 1304(6) established a rule of strict liability
for a shipper of inherently dangerous goods when neither the shipper nor
the carrier had actual or constructive preshipment knowledge of the danger.
This construction of § 1304(6) is consonant with COGSA's goals of
fostering international uniformity in sea-carriage rules and allocating
risk between shippers and carriers in a manner that is consistent and predictable.
Application of § 1304(6) to the unusual
facts of this case presents an issue of first impression in this Circuit.
Because this case involves the rare circumstance in which neither party
had actual or constructive preshipment knowledge of the cargo's inherently
dangerous nature, we hold that the Shippers are strictly liable for the
damages incurred by Senator. We therefore vacate that part of the district
court's judgment granting the Shippers' motions for judgment, and remand
for proceedings consistent with this opinion.
The stipulated facts in the parties' Joint
Pretrial Order together with the district court's factual findings form
the basis of the following summary.
On April 28, 1994, a fire broke out in the
forward hold of the M/V Tokyo Senator (the "Tokyo Senator") as she made
for the coast of Norfolk, Virginia. The vessel was bound from Pusan, Republic
of Korea, where she had taken on a cargo of 300 drums of thiourea dioxide
("TDO") originally exported from the People's Republic of China. At about
10:30 pm on April 28, the captain observed smoke coming from hold number
2, in which the TDO container was stowed. The contents of the TDO container
were emitting heat, smoke, and chemical residue. After the fire had been
brought under control, a fire expert, discovering that a number of TDO
drums were charred, concluded that the fire had broken out within the TDO
container. In a separate but related action in the Southern District of
New York, Judge Lynch noted that "at least one of the thiourea dioxide
drums spontaneously ignited. Other containers then caught fire . . . ."
Continental Co., Inc. v. Intercargo Ins. Co., 151 F. Supp. 2d 250,
255 (S.D.N.Y. 2001).
TDO is a white, odorless powder used as a
reducing agent and in the bleaching of protein fibers such as paper, paper
pulp, and textiles. At the time of the shipment in question, TDO was considered
a stable compound under normal conditions.1
According to trial testimony which the district court in the instant case
found credible, the fire resulted from an exothermic (or heat-releasing)
reaction within the container holding the TDO drums. M/V Tokyo Senator,
2001 WL 238293, at *1. Although there are several possible causes of an
exothermic reaction in TDO-including exposure to excessive heat or to moisture2-the
district court found that the plaintiffs3
below had failed to establish the actual cause of the exothermic reaction
or that any particular party was responsible. Id.4The
fire resulted in damage to the vessel and other cargo. At trial, Senator
proved damages in the amount of $439,785.88. Id. at *3. The district
court found that defendants-appellees Zen, Sinochem, Sunway, and Eastern
Sunway were all shippers in relation to Senator. Id. at *1, *4.5
Defendants-appellees do not dispute this finding.
At the time of the shipment in this case,
TDO was not named as a hazardous or dangerous cargo in the International
Maritime Dangerous Goods Code ("IMDGC") or in the Department of Transportation
Hazardous Materials Table. Id. at *2. It was not until 1998 that
TDO was specifically listed as a hazardous or dangerous material in the
IMDGC, and not until 1999 that TDO was listed as a dangerous cargo in the
Code of Federal Regulations. The district court found, moreover, that at
the time of the incident aboard the Tokyo Senator, "the vast majority of
the available literature did not describe an exothermic reaction as a likely
result of the decomposition of TDO." M/V Tokyo Senator, 2001 WL
238293, at *1. In a faxed message dated March 18, 1994-a little more than
a month before the incident-Senator's Marine Operation Department for Dangerous
Goods in Bremen advised Senator's San Francisco office: "ACCORDING TO ALL
AVAILABLE INFORMATION THIS PRODUCT [TDO] IS NOT CLASSIFIED IS [sic]
HAZARDOUS FOR SEA TRANSPORT." The TDO shipment was not listed on the Tokyo
Senator's hazardous cargo manifest. A note from Sinochem, addressed to
"Steamship Company," advised that "[o]ur merchandise are all regular chemicals,
The district court noted that only one contemporaneous
document submitted by the plaintiffs below-a technical data report on TDO
prepared by the FMC Corporation (the "FMC document") and alleged by the
plaintiffs to have been in the defendant shippers' possession one day after
the fire-referred to TDO in connection with an exothermic reaction. The
court found no evidence, however, that the FMC document had been available
in the People's Republic of China at the time of the accident, and further
found that the document stated only that contact of reducing agents with
chemicals similar to TDO, such as hydrogen peroxide, can result in an exothermic
reaction. M/V Tokyo Senator, 2001 WL 238293, at *1. The court concluded
that "[n]one of the literature received into evidence was sufficient to
put any party on notice that an exothermic reaction of the severity of
the one in this case was possible during the transport of the TDO." Id.
The district court granted the Shippers' motion
for judgment with respect to Senator's claims, holding, inter alia,
that 46 U.S.C. § 1304(6) does not impose liability on a shipper of
inherently dangerous goods unless it can be shown that the shipper actually
or constructively knew of the dangerous nature of the cargo prior to shipment
and failed to disclose that nature to the carrier. M/V Tokyo Senator,
2001 WL 238293, at *4. The court further held that general maritime law
in the Second Circuit and the United Kingdom, as reflected in Quillan,
180 F. at 682-84, and Brass v. Maitland,  6 El. & Bl.
470 (Q.B. 1856), did not impose an absolute warranty on the part of the
shipper that its cargo was not hazardous. M/V Tokyo Senator, 2001
WL 238293, at *4. Having determined that neither COGSA nor the general
maritime law imposes liability on a shipper of dangerous goods absent the
shipper's knowledge of the danger, the court granted the Shippers' motions
for judgment because Senator had not proven by a preponderance of the credible
evidence that the Shippers "knew or should have known based on the knowledge
in the industry, that TDO could decompose exothermically." Id. This
I. Jurisdiction and Standard of Review
The district court had jurisdiction of this
admiralty action pursuant to 28 U.S.C.
§ 1333(1). The court entered final judgment
on March 29, 2001, with respect to the claims now on appeal, and we exercise
jurisdiction pursuant to 28 U.S.C. § 1291. This Court reviews a district
court's findings of fact for clear error and its conclusions of law de
novo. Thypin Steel Co. v. Asoma Corp., 215 F.3d 273, 277 (2d
Cir. 2000); Ezekwo v. New York City Health & Hosps. Corp., 940
F.2d 775, 780 (2d Cir. 1991); see also McAllister v. United States,
348 U.S. 19, 20 (1954) ("No greater scope of review is exercised by the
appellate tribunals in admiralty cases than they exercise under Rule 52(a)
of the Federal Rules of Civil Procedure."); Venus Lines Agency, Inc.
v. CVG Int'l Am., Inc., 234 F.3d 1225, 1228 (11th Cir. 2001) ("We review
a district court's factual findings when sitting without a jury in admiralty
under the clearly erroneous standard [and] the district court's conclusions
of law de novo.") (internal citations omitted). Factual findings
of the district court "will not be set aside unless they are without adequate
support in the record, are against the clear weight of the evidence, or
are the product of an erroneous view of the law." Ezekwo,
940 F.2d at 780.
II. The Parties Lacked Knowledge of TDO's
Because we are asked to determine whether
a shipper's liability for damages under 46 U.S.C. § 1304(6) arises
when neither the shipper nor the carrier had actual or constructive preshipment
knowledge of the cargo's inherently dangerous nature,6
we must address, as a threshold matter, the parties' contentions regarding
what was known or knowable about TDO at the time of the shipment in April
1994. On appeal, Senator argues that the district court clearly erred in
finding that the FMC document did not put the Shippers on actual or constructive
notice of TDO's dangerous nature. Specifically, Senator contends that Zen
telefaxed the FMC document to Senator at the latter's request on April
29, 1994-one day after the fire aboard the Tokyo Senator-and that Zen's
possession of the document at that time raises a presumption that it possessed
the document before the incident. The Shippers reply that the document
faxed by Zen on April 29, 1994, was not the FMC document at all, but an
entirely different material safety data sheet dated July 9, 1993. The latter
document described TDO as ordinarily a "stable compount [sic]" that
should not be exposed to high temperatures, humidity, or direct light,
but it did not characterize TDO as a dangerous or hazardous chemical and
did not mention any propensity of TDO to react exothermically or to ignite
We find no clear error in the district court's
conclusion that "[n]one of the literature received into evidence was sufficient
to put any party on notice that an exothermic reaction of the severity
of the one in this case was possible during the transport of the TDO."
Tokyo Senator, 2001 WL 238293, at *1. None of the documents reproduced
in the record on appeal indicates that the maritime industry in April 1994
considered TDO to be an inherently dangerous chemical capable of spontaneous
exothermic reaction or combustion. With respect to the parties' arguments
concerning the FMC document and the material safety data sheet, the Shippers'
position appears to be the more persuasive one. The copy of the July 1993
material safety data sheet submitted at trial bears the fax line, "04-29-1994
12:34PM FROM ZEN-NYC," whereas the FMC document bears the fax line, "05/23/94
14:00:48." Although the parties' briefs do not discuss the significance
or authenticity of the fax lines, these dates tend to support the Shippers'
contention that it was the material safety data sheet, and not the FMC
document, that Zen faxed to Senator one day after the fire aboard the Tokyo
Even if the FMC document was in the Shippers'
possession prior to the mishap, Judge Cedarbaum did not clearly err in
holding that the Shippers lacked knowledge of TDO's dangerous propensities.
The court found that the FMC document stated only that contact of reducing
agents with chemicals similar to TDO, such as hydrogen peroxide, could
result in an exothermic reaction. M/V Tokyo Senator, 2001 WL 238293,
at *1. Thus, even if the Shippers did possess and fax the FMC document
on the day after the fire, the court did not clearly err in concluding
that the document failed to provide notice of TDO's inherently dangerous
character. In sum, no clear error existed in the district court's finding
that neither the Shippers nor Senator had actual or constructive preshipment
knowledge of the inherently dangerous nature of TDO.
III. A Shipper's Liability Under
46 U.S.C. § 1304(6) Does Not Require Its Actual or Constructive Knowledge
of the Inherent Danger of Shipped Goods.
The U.S. Carriage of Goods by Sea Act ("COGSA"),
46 U.S.C. §§ 1300 et seq., which "represents the codification
of the United States' obligations under [the `Hague Rules']," J.C.B.
Sales Ltd., 124 F.3d at 134, was enacted in 1936 and "applies ex
proprio vigore to all contracts for carriage of goods by sea between
the ports of the United States and the ports of foreign countries," Nippon
Fire & Marine Ins. Co. v. M.V. Tourcoing, 167 F.3d 99, 100 (2d
Cir. 1999) (citing 46 U.S.C. §§ 1300, 1312). Because the instant
case involves cargo shipped by sea under bills of lading between the Republic
of Korea and the United States, COGSA applies. See 46 U.S.C. §
1300 ("Every 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, shall have effect subject to the provisions
of this chapter.").
Although the district court concluded, and
defendants contend, that 46 U.S.C.
§ 1304(6) imposes liability on a shipper
of inherently dangerous goods only if it can be shown that the shipper
had actual or constructive preshipment knowledge of the dangerous nature
of the goods, a close analysis of § 1304(6) leads us to reject such
a shipper scienter requirement. To determine whether shipper liability
under § 1304(6) is strict or knowledge- based, we begin by examining
the plain meaning of the statutory provision together with the few cases
interpreting it. We then survey the legislative purpose and history of
COGSA. Inasmuch as the language of COGSA was "lifted almost bodily from
the Hague Rules," Robert C. Herd & Co. v. Krawill Mach. Corp.,
359 U.S. 297, 301 (1959), we examine as well the history of the Hague Rules
and certain early model provisions that preceded the Hague Rules and COGSA.
We then turn to the general maritime law of shipper liability in the dangerous-goods
context as set forth in pre-COGSA American and British case law, and inquire
whether in 1936 federal maritime common law had firmly settled the question
of whether a shipper's liability for dangerous goods was strict or knowledge-based.
In this regard, we give special attention to The Wm. J. Quillan,
180 F. 681 (2d Cir. 1910). Finally, we ask whether COGSA § 1304(6)
codified the general maritime law concerning shipper liability in the dangerous-goods
A.Plain Meaning and the COGSA Case Law
We begin, as we must, with the language of
the statute. Williams v. Taylor, 529 U.S. 420, 431 (2000); Smaldone
v. Senkowski, 273 F.3d 133, 136 (2d Cir. 2001); see also Griffin
v. Oceanic Contractors, Inc., 458 U.S. 564, 571 (1982) ("There is,
of course, no more persuasive evidence of the purpose of a statute than
the words by which the legislature undertook to give expression to its
wishes.") (internal quotation marks omitted). Section 1304(6) reads, in
Goods of an inflammable, explosive, or dangerous
nature to the shipment whereof the carrier, master or agent of the carrier,
has not consented with knowledge of their nature and character, may at
any time before discharge be landed at any place or destroyed or rendered
innocuous by the carrier without compensation, and the shipper of such
goods shall be liable for all damages and expenses directly or indirectly
arising out of or resulting from such shipment.8
The only reference to "knowledge" in this
provision implicates the carrier. A plain-meaning approach would suggest
that it is the carrier's knowledge of the goods' dangerous nature, not
the shipper's, that conditions shipper liability. Cf. William Tetley,
Cargo Claims 465 (3d ed. 1988) (noting that, according to Article 4(6)
of the Hague Rules, from which the language of
§ 1304(6) derives, "the shipper is responsible
for all the consequences of having shipped dangerous goods whether
he knew of their nature or not. His only defence is that the carrier knew
or should have known of their dangerous nature.").
Instead of employing a plain-meaning approach,
however, the district court in the instant case concluded that under §
1304(6), "a shipper that knowingly ships hazardous cargo without
disclosing the hazardous nature of the cargo to the carrier will be liable
for damage that results regardless of whether it otherwise exercised due
care." M/V Tokyo Senator, 2001 WL 238293, at *4 (emphasis added).
To support this importation of a shipper scienter requirement into
the text of § 1304(6), the court pointed to the only other decision
in this circuit to address
§ 1304(6) directly, Borgships, Inc.
v. Olin Chemical Group, No. 96 Civ. 6734, 1997 WL 124127 (S.D.N.Y.
Mar. 19, 1997). In Borgships, a carrier had sued a shipper under
§ 1304(6) as a result of the shipper's failure to warn the carrier
of a hazardous chemical that led to a shipboard fire in the port of Barcelona.
The court ruled that the shipper's compliance with certain Department of
Transportation regulations did not, as a matter of law, satisfy the shipper's
duty to warn, and that the carrier had therefore stated a cause of action
under COGSA. Id. at *4.
In interpreting the scope of the shipper's
duty under the parties' bills of lading, the Borgships court exited
from COGSA and relied instead on general maritime law for the proposition
that "a shipper is not held to an absolute warranty with respect to the
safe nature of its cargo, but rather is chargeable only with that knowledge
actually or constructively within its possession." Id.9Borgships
did not discuss or expressly rely on Quillan, but it did note parenthetically
that Quillan had been cited by Sucrest Corp. v. M/V Jennifer,
455 F. Supp. 371 (D. Me. 1978), which similarly found that the maritime
common law requires shipper scienter in the dangerous-goods context.10
Although Borgships implies that COGSA § 1304(6) incorporates
general maritime law, the Borgships court did not address the fundamental
question of whether § 1304(6) codifies preexisting maritime common
law on this issue. Moreover, Borgships subjected the carrier's separate
claim for negligent failure to warn to the same analysis that it had used
for the carrier's § 1304(6) claim, Borgships, 1997 WL 124127,
at *4, thus eliding, again without discussion, any distinction between
COGSA and the general maritime law. The few other courts to address §
1304(6) have not reached the specific question of strict liability, but
instead disposed of the issue on alternative grounds.11
The district court in the instant case further
concluded that "[t]he general rule under COGSA is that `a shipper shall
not be responsible for loss or damage sustained by the carrier or the ship
. . . without the act, fault, or neglect of the shipper.' 46 U.S.C. §
1304(3)." M/V Tokyo Senator, 2001 WL 238293, at *4. It is true that
§ 1304(3) of COGSA sets forth a basic fault- or negligence-based theory
of shipper liability.12
This "general rule" is in tension, however, with the specific rule for
a shipper's dangerous-goods liability under § 1304(6). U.S. courts
considering facts involving dangerous cargoes or injurious events aboard
ships have been surprisingly silent on the interplay of §§ 1304(3)
It may be that the cargoes or conditions in those cases were not deemed
inherently dangerous, or that the parties did not plead § 1304(6)
as a cause of action. In any event, courts in the United States simply
have not examined the text of § 1304(6) either on its own terms or
in the light of its history and policy.
In contrast, the British House of Lords in
Shipping Co. v. Linden Mgmt. SA,  A.C. 605 (H.L. 1998), addressed
the relationship between Articles 4(3) and 4(6) of the Hague Rules, the
identically-worded U.K. counterparts of our §§ 1304(3) and 1304(6).14
In Effort Shipping, a cargo of ground-nut extractions had been shipped
by ocean carrier from Senegal to the Dominican Republic. Unknown to both
the shippers and the carriers, the ground-nut cargo was infested with Khapra
beetle at the time of shipment, and the contamination resulted in expensive
delays, fumigations, and cargo-dumping. On appeal from the Court of Appeal,
the House of Lords held that where none of the parties had knowledge of
the dangerous infestation, U.K.'s Article 4(6) imposed strict liability
on the shippers. In reaching this conclusion, Lord Lloyd of Berwick undertook
a close textual analysis of the dangerous-goods provision. He began by
observing that, in the first half of the first sentence, the right of the
carrier to render innocuous or to destroy dangerous goods shipped without
the carrier's knowledge of the danger
[o]bviously . . . cannot be dependent
in any way on whether the shipper has knowledge of the dangerous nature
of the goods. Yet the sentence continues, without a break, "and the shipper
of such goods shall be liable." It is natural to read the two halves of
the first sentence as being two sides of the same coin. If so, then the
shippers' liability for shipping dangerous goods cannot be made to depend
on the state of his knowledge. His liability is not confined to cases where
he is at fault.
Effort Shipping,  A.C. at 614; see
also id. at 622 ("The natural construction is . . . that in neither
the first nor the second parts . . . are the rights of owners conditional
upon the actual or constructive knowledge, or due diligence, of shippers.")
Lord Lloyd went on to supplement this plain-meaning,
syntactical analysis with a comparison of Articles 4(3) and 4(6) that drew
upon the canon of statutory interpretation known as generalia specialibus
non derogant-general provisions do not qualify specific ones. To the
shippers' argument that Article 4(6) is qualified by the negligence- or
knowledge- based liability described in Article 4(3), Lord Lloyd replied,
"The very breadth of [Article 4(3)] (`shall not be responsible for loss
or damage . . . arising or resulting from any cause . . .') makes it unlikely
that it was intended to qualify the specific provisions of [Article 4(6)]:
specialibus non derogant." Effort Shipping,  A.C. at 614;
cf. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992)
("[I]t is a commonplace of statutory construction that the specific [provision]
governs the general."). We find the House of Lords' analysis in Effort
Shipping to be generally persuasive and applicable to the corresponding
U.S. COGSA provisions. The specific language and subject matter of COGSA
§ 1304(6) indicate that the latter provision is an exception to, rather
than a special application of, the fault-based standard of § 1304(3).
Moreover, our conclusion that §§
1304(3) and 1304(6) contemplate distinct kinds of liability ensures that
the latter provision will not be rendered superfluous within the scheme
of COGSA. See Duncan v. Walker, 533 U.S. 167, 174 ( 2001) ("It is
our duty to give effect, if possible, to every clause and word of a statute.")
(internal quotation marks omitted); Washington Market Co. v. Hoffman,
101 U.S. 112, 115-16 (1879) ("As early as in Bacon's Abridgment, sect.
2, it was said that `a statute ought, upon the whole, to be so construed
that, if it can be prevented, no clause, sentence, or word shall be superfluous,
void, or insignificant.'"). Inasmuch as
§ 1304(3) already provides for liability
based on "the act, fault, or neglect of the shipper,"
§ 1304(6) would appear to be carrying
coals to Newcastle if its purpose were simply to specify that shipper liability
in the dangerous-goods context requires knowledge on the shipper's part
of the danger to which it is exposing the ship and other cargo.15
In sum, the foregoing analysis of the plain meaning of § 1304(6) and
its relationship to § 1304(3) strongly suggests that the two provisions
have separate and distinct roles to play in COGSA's allocation of risk
between shippers and carriers, and that § 1304(6) sets forth a rule
of strict liability for a shipper of inherently dangerous goods when neither
shipper nor carrier had actual or constructive preshipment knowledge of
the cargo's dangerous nature. Cf. Griffin, 458 U.S. at 570 ("Our
task is to give effect to the will of Congress, and where its will has
been expressed in reasonably plain terms, that language must ordinarily
be regarded as conclusive.") (internal quotation marks omitted).
The Shippers invoke a different rule of statutory
construction: "[S]tatutes are legislated against a background of well established
common law adjudicatory principles." Conceding that Britain's counterpart
of COGSA § 1304(6), as construed by Effort Shipping, codifies
the British maritime common-law rule that shippers are strictly
liable for inherently dangerous goods,16
the Shippers go on to contend that our § 1304(6) codifies the "well
established rule under American law" that shippers of dangerous goods are
held strictly liable. The Shippers base their understanding of the pre-1936
American maritime common law of shipper liability almost entirely on one
case: The Wm. J. Quillan, 180 F. 681 (2d Cir. 1910). Before proceeding
to discuss Quillan and other relevant case law, however, we must
examine the legislative purpose and history of COGSA and the Hague Rules.
We do so not because we find
§ 1304(6) to be ambiguous, but rather
because this historical background will assist us in contextualizing §
1304(6) and in assessing the Shippers' argument that the provision codified
a specific rule of general maritime law in the United States.
B.Legislative Purpose and History of COGSA
and the Hague Rules
The legislative history of COGSA shows that
the Act "was lifted almost bodily from the Hague Rules of 1921, as amended
by the Brussels Convention of 1924, 51 Stat. 233." Robert C. Herd &
Co., 359 U.S. at 301. The purpose of the Hague Rules was "to establish
uniform ocean bills of lading to govern the rights and liabilities of carriers
and shippers inter se in international trade." Id. COGSA
in its turn was designed to provide uniformity in the law governing carriage
of goods by sea. "One important aspect of the international agreement and
its United States counterpart is the standardization of liability expectations.
In essence, the purpose of these laws is to allow international maritime
actors to operate with greater efficiency and under a mantle of fairness."
State Ins. Co. v. M/V Caraibe, 825 F. Supp. 1113, 1123 (D.P.R. 1993)
(citing Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty
§ 3-24, at 143-44 (2d ed. 1975)). Given its overarching goal of international
uniformity, COGSA could not deviate substantially from the Hague Rules.
"There was no real dickering over the terms, no process of drafting and
revision. The history of Congress's enactment of the COGSA therefore sheds
fairly little light on its intent." Servicios-Expoarma, C.A. v. Indus.
Maritime Carriers, Inc., 135 F.3d 984, 990 (5th Cir. 1998).17
We note at the outset, therefore, that COGSA legislators appear to have
been more intent on preserving the international consensus embodied in
the language of the Hague Rules, and getting carriers and shippers to agree
to that language, than on codifying particular rules of general maritime
law as expressed in U.S. case law.
The historical evolution of COGSA reaches
back into the nineteenth century and extends forward through various versions
of the Hague Rules in the early 1920s and numerous House and Senate Bills
in the 1920s and 1930s, before coming to rest in the statute as passed
by Congress in 1936.18
That history is remarkable for the extensive participation of shippers
and carriers in discussing the provisions that would eventually come to
govern bills of lading under the laws of many nations. Throughout the various
incarnations of what eventually became
§ 1304(6) of COGSA, while the language
concerning carriers' rights to land or destroy dangerous goods underwent
various alterations in form and emphasis, the language describing shippers'
liability remained virtually unchanged. The phrase, "and the shipper of
such goods shall be liable for all damages and expenses directly or indirectly
arising out of or resulting from such shipment," underwent only one uneventful
change from the first draft of the Hague Rules in 1921 through Congress's
enactment of COGSA in 1936.19
During the decades of debate over the language
of the Hague Rules and COGSA, almost no comment was directed at the language
of shipper liability in what eventually became
§ 1304(6). Cf. Effort Shipping,
 A.C. at 623-24 ("The resort to the travaux préparatoires
[of the Hagues Rules] provided nothing worthy of consideration in the process
of the interpretation of article IV, r. 3 and article IV, r. 6.") (Lord
Steyn). Instead, discussants focused on the carrier's knowledge of dangerous
goods or the problem of adequate notice to the carrier of a cargo's dangerous
We have discovered only one recorded instance of a challenge to the language
of shipper liability in what eventually became § 1304(6). Among the
statements presented by various nations at the 1923 International Conference
on Maritime Law in Brussels, the Norwegian government suggested that the
provisions that would later become §§ 1304(3) and 1304(6) of
COGSA should be deleted entirely "because the real purpose of the convention
was to regulate the obligations of the carrier" and the provisions for
shipper liability "followed general legal principles."21
Clearly, Norway was raising the question of whether such shipper liability
need be addressed at all in the carriage provisions, not whether that liability
should be strict or fault-based.
There is equally little discussion of COGSA's
language of shipper liability for dangerous goods in the more than ten
years of Congressional deliberations over the various bills that eventually
became COGSA. Although the shippers' lobby was vocal, the legislative history
does not show that shippers commented on the nature of the liability contemplated
In one exchange during House hearings, a representative of the American
Institute of Marine Underwriters appeared to take it as given that a shipper
would be "naturally responsible" where its goods were "explosive" or "of
such a nature that they cause damage to other goods."23
In any event, one point of consensus that emerges unambiguously from the
legislative history of COGSA is that, as a cotton exporter put it in a
letter printed in a House Report, "the purpose of this [bill] is to establish
international uniformity of ocean bills of lading on a basis fair to ocean
carriers, cargo owners, insurers, and bankers. As far as we know, no one
is opposing this bill."24
Again and again, Congress stressed that "[t]his bill . . . is an important
step in a world- wide movement for uniformity in ocean bills of lading."25
In sum, the history of COGSA and the Hague
Rules tells us little about the kind of liability that legislators and
drafters thought they were adopting in § 1304(6) and its earlier versions.26
Legislative silence can be made to tell many stories, of course, and we
decline to force any specific conclusions from such a record. On the whole,
however, it appears to us that Congress was chiefly concerned with preserving
intact the hard- won international consensus reflected in the language
of the Hague Rules, and securing the agreement of American shipper and
carrier interests to that language. We would be surprised to learn that
these legislators simultaneously sought to square each COGSA provision
with particular features of general maritime law in the United States.
The Shippers in the instant case imply that the absence of debate concerning
dangerous-goods liability shows that something as drastic as strict liability
for shippers was never contemplated by COGSA legislators. But if, as the
§ 1304(6) simply codified a "well settled"
and "established" American maritime rule that shippers could not be held
strictly liable, then this Court must find that such a rule was in fact
established and settled in American maritime common law prior to 1936.
As indicated below, we do not find such a firmly established rule.
C.The Wm. J. Quillan
In drawing conclusions regarding general maritime
common law, the district court in the instant case observed that in the
1910 case of The Wm. J. Quillan, the Second Circuit "rejected the
absolute warranty theory [for shippers of inherently dangerous cargo]."
Tokyo Senator, 2001 WL 238293, at *4. The Shippers argue that
holding "represented (and continues to represent) the federal maritime
common law in the United States." Clearly, much of the Shippers' case rests
upon this contention and the companion assertion that Congress codified
the fault- or knowledge- based rule of Quillan when it enacted COGSA.27
The facts of Quillan are straightforward.
In 1905, a cargo owner chartered the schooner William J. Quillan to carry
a cargo of tankage (a dry powder derived from processed street garbage)
from Barren Island, New York, to Savannah, Georgia. Tankage, observed the
Court, "has been the subject of transportation for 25 or 30 years, and
shippers and shipowners must be taken to have knowledge of its character."
Quillan, 180 F. at 681. One day into the voyage, the cargo was discovered
to be on fire. The schooner put into Norfolk for refuge, and city fire
engines poured water into the hold, in the process damaging a large quantity
of tankage that had escaped the flames unscathed. The cargo owner's insurer
filed a libel against the vessel, alleging that the schooner owed the insurer
a substantial sum in reimbursement or as contribution in general average.
The Wm. J. Quillan, 175 F. 207, 208 (S.D.N.Y. 1910). The schooner
defended itself by arguing that the tankage cargo was in an improper condition
through the neglect and fault of the shipper. Id. at 209-10.
The district court, applying the rule of strict
liability for shippers of inherently dangerous goods as set forth in Pierce
v. Winsor, 19 F. Cas. 646 (C.C.D. Mass. 1861) (No. 11,151) (Clifford,
Circuit Justice), dismissed the libel on the ground that the shipper must
be held responsible for shipping dangerous cargo, "although neither he
nor the carrier knew of its dangerous condition." Quillan, 180 F.
at 682. The Second Circuit reversed, holding that a shipper could not be
deemed to give an absolute warranty for the fitness of cargo. Id.
at 684-85. In the process, the Quillan Court expressly disagreed
with the strict-liability holding of Pierce and conformed its own
holding to what it took to be the British maritime common-law rule respecting
shipper liability, which the Court interpreted as requiring knowledge or
fault on the part of the shipper. Id. at 683-84.
It is far from certain that Quillan
exclusively represented general maritime law in 1936. In Pierce,
decided in 1861, U.S. Supreme Court Justice Clifford, sitting on circuit,
had adopted a rule of strict liability for shippers of inherently dangerous
goods, and Pierce was still persuasive fifty years later when the
district court in Quillan relied on it almost exclusively. See
Quillan, 175 F. at 211 ("I find nothing in the law of general average
which would take this case out of the principles expressed in Pierce
v. Winsor . . . ."). Pierce involved a chartered voyage from
Boston to San Francisco28
during which a new article called mastic-bituminous matter formed into
cakes-melted and stuck to the vessel and other cargo. Concluding that neither
the carrier nor the shipper had had prior knowledge of mastic's dangerous
nature, Justice Clifford ruled that the shipper should be held strictly
liable, because it was "more just and expedient" that the party better
able to discover the danger should be the one to suffer. Pierce,
19 F. Cas. at 651. In reaching this conclusion, Justice Clifford relied
heavily on the English case of Brass v. Maitland,  6 El. &
Bl. 470 (Q.B. 1856), which, until the House of Lords' recent decision in
Shipping, was generally regarded as the leading case on maritime common-law
strict liability for shippers.29
The Quillan Court explicitly disagreed
with Pierce's rule of strict liability for shippers, largely because
the Quillan panel, which also sought to conform American maritime
common law to its British counterpart, concluded that Brass v. Maitland
did not set forth a general rule of strict liability for shippers of inherently
dangerous goods. Relying on the then- recent British case of Greenshields
v. Stephens,  1 K.B. 51 (C.A. 1907),30
the Quillan Court observed that the majority opinion in Brass
"does not show that the defendants [in that case] would have been held
liable if they had not known that the contents of the casks were dangerous."
180 F. at 684. Yet, despite the Quillan Court's apparent effort
to distinguish the packing of the casks in Brass from their dangerous
contents, the Brass majority stated a broad principle when, over
the dissent of Crompton, J., it rejected the defendant shipper's plea of
ignorance concerning the dangerous nature of the cargo and its packing:
[T]he ignorance of the [shippers],
and those employed by them, can be no excuse for putting on board without
notice the dangerous goods insufficiently packed. . . . The [shippers],
and not the [carrier], must suffer, if from the ignorance of the [shippers]
a notice was not given to the [carrier], which the [carrier was] entitled
to receive, and from the want of this notice a loss has arisen which must
fall either on the [carrier] or on the [shippers].
Brass,  6 El. & Bl. at 486.
In light of this language, Brass has come to be generally regarded
as establishing a rule of strict liability for shippers of dangerous goods.
The House of Lords in Effort Shipping reaffirmed
this interpretation of Brass when they unanimously concluded that
both Brass and the British counterpart of our COGSA
§ 1304(6) impose strict liability on
a shipper of dangerous goods where the carrier did not give informed consent
to the shipment, whether or not the shipper knew of the danger. Effort
Shipping,  A.C. at 619 (Lord Lloyd); see also The "Athanasia
Comninos,"  1 Lloyd's Rep. 277, 282 (Q.B. 1979) ("My own
view is that the weight of authority supports the absolute character of
the warranty [found by the Brass majority]."). The decision of the
Law Lords suggests that Justice Clifford in Pierce correctly interpreted
the strict-liability holding of Brass.31
Pierce is a decision that must be reckoned
with in any attempt to determine what COGSA legislators thought about shipper
liability at American maritime common law. The Shippers in the present
case miscite the Pierce court as "D. Mass," when, in fact, Pierce
was an appeal from a judgment of the district court of Massachusetts to
one of the old circuit courts that had federal appellate jurisdiction of
certain cases, including appeals in admiralty. See Richard H. Fallon
et al., Hart & Wechsler's The Federal Courts and the Federal System
28-29 (4th ed. 1996). It was not until 1891 that the Circuit Court of Appeals
Act transferred the circuit courts' appellate authority to the newly-created
circuit courts of appeals. Id. at 37 & n.66. Therefore, the
divergence between Pierce and Quillan may have constituted,
in 1936, something akin to a circuit split over the liability of shippers
of dangerous goods.32
Consequently, we are unconvinced that attentive COGSA legislators would
have ignored this divergence or would simply have chosen, without comment,
the Quillan position over the rule in Pierce.
Moreover, Quillan was not the only
pre-1936 Second Circuit decision to weigh in on the strict-liability rule
of Pierce and Brass. In The Santa Clara, 281 F. 725
(2d Cir. 1922), this Court held that where a charterer misleads a carrier
as to the nature of cargo, with the result that the cargo is improperly
loaded, "the damages resulting from the improper loading should fall upon
the charterer, and not upon the shipowner." Id. at 736. Although
this case did not involve strict liability for shippers of inherently dangerous
goods, the Santa Clara panel, in contrast to the Quillan
panel, cited amply and approvingly the strict-liability holdings of Pierce
Brass to support its policy conclusion that, as between a charterer
possessed of knowledge that would ensure the safety of cargo and a shipowner
lacking such knowledge, it is "fair and proper" that any loss should fall
upon the former. Id. "The conclusion reached," said the Court, "seems,
under the circumstances, as just and expedient as that reached in Brass
v. Maitland." Id. Thus, The Santa Clara, a case decided
ten years after Quillan, suggests that the Second Circuit's views
concerning the leading shipper-liability cases in the dangerous-goods context
were less settled and established than the Shippers here suggest.33
D. COGSA § 1304(6) Did Not Codify
Preexisting General Maritime Law
Regarding Liability for Shippers of Dangerous
For the foregoing reasons, we are not persuaded
that COGSA legislators would have found the federal maritime common law
of shipper liability sufficiently coherent or settled for purposes of codification.
In Attorney General of Canada v. R.J. Reynolds Tobacco Holdings,
268 F.3d 103 (2d Cir. 2001), this Court noted that "where a common-law
principle is well established . . . the courts may take it as given that
Congress has legislated with an expectation that the principle will apply
except when a statutory purpose to the contrary is evident." Id.
at 127 (internal quotation marks omitted); see also Isbrandtsen Co.
v. Johnson, 343 U.S. 779, 783 (1952) ("Statutes which invade the common
law or the general maritime law are to be read with a presumption favoring
the retention of long-established and familiar principles, except when
a statutory purpose to the contrary is evident."); In re Oswego Barge
Corp., 664 F.2d 327, 335 (2d Cir. 1981) (stating that one factor in
assessing a statute's preemptive effect on general maritime law is whether
the judge-made law at issue represents a "`long-established and familiar
principle' of the `common law or the general maritime law'") (quoting
343 U.S. at 783).
In Attorney General of Canada, this
Court held that the "revenue rule," which provides that courts of one sovereign
will not enforce final tax judgments or unadjudicated tax claims of other
sovereigns, had not been abrogated by the enactment in 1970 of the Racketeer
Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§
1961 et seq. Unlike the shipper liability rule set forth in Quillan,
however, the revenue rule, which also had its origins in early English
court decisions, is a "time-honored common law prudential rule" whose continuing
vitality was amply acknowledged by the U.S. Supreme Court and numerous
other courts and commentators in the years before enactment of RICO. Attorney
Gen. of Canada, 268 F.3d at 129. Moreover, in contrast to the Quillan
rule, it is clear that Congress "was and is aware of the revenue rule."
To sum up, we conclude that the nature of
a shipper's dangerous-goods liability under general maritime law in the
United States was not firmly settled in 1936. The rule of The Wm. J.
Quillan diverged diametrically from that of Pierce v. Winsor;
and whereas this Court in Quillan disagreed with Pierce's
holding and interpreted Brass v. Maitland to require shipper scienter
in the dangerous-goods context, the Court twelve years later in The
Santa Clara cited Pierce and Brass approvingly for the
policy behind their strict-liability holdings. This state of affairs cannot
remotely be likened to the "time-honored" common-law rule described in
General of Canada or the "long-established and familiar principles"
referred to in Isbrandtsen. We hold that in enacting § 1304(6),
Congress did not codify a general maritime rule requiring proof of a shipper's
knowledge of the inherent danger of shipped goods before liability could
be imposed on the shipper for damages resulting directly or indirectly
from such shipment.
E. COGSA § 1304(6) Supersedes Otherwise
Maritime Law Regarding Liability for Shippers
of Dangerous Goods.
Having concluded that COGSA § 1304(6)
did not codify preexisting maritime common law regarding liability for
shippers of inherently dangerous goods, we turn to the related question
of whether § 1304(6) would displace otherwise inconsistent maritime
common law. We hold that it does. The Supreme Court has stated that where
the issue is whether federal statutory or federal common law governs, "we
start with the assumption that it is for Congress, not federal courts,
to articulate the appropriate standards to be applied as a matter of federal
law." City of Milwaukee v. Illinois, 451 U.S. 304, 317 (1981) (internal
quotation marks omitted); see also id. at 314 (noting that federal
common law is a "necessary expedient" and that "when Congress addresses
a question previously governed by a decision rested on federal common law
the need for such an unusual exercise of lawmaking by federal courts disappears").
"While federalism concerns create a presumption against preemption of state
law, including state common law, separation of powers concerns create a
presumption in favor of preemption of federal common law whenever it can
be said that Congress has legislated on the subject." Oswego Barge,
664 F.2d at 335 (internal citations omitted); see also Cummings v. Miller
Time, 705 F. Supp. 62, 64 (D.P.R. 1988) ("In contrast with the stricter
federal preemption standard, `evidence of a clear and manifest purpose
is not required' to show that Congress intended to supersede, foreclose,
or supplant federal common law.") (quoting City of Milwaukee, 451
U.S. at 317).
Because the federal judiciary traditionally
has had a more expansive role to play in the development of maritime law
than in the development of non- maritime federal common law, see Northwest
Airlines, Inc. v. Transp. Workers Union, 451 U.S. 77, 95-96 (1981),
the Second Circuit has recognized that the presumption of statutory preemption
applies "somewhat less forcefully to judge-made maritime law," Oswego
Barge, 664 F.2d at 336. "Even in admiralty, however, where the federal
judiciary's lawmaking power may well be at its strongest, it is our duty
to respect the will of Congress." Northwest Airlines, 451 U.S. at
96. The Second Circuit has looked to several factors in determining whether
the presumption in favor of statutory displacement of general maritime
law has been overcome: (1) whether statutory language explicitly preserves
or preempts judge-made law, or whether evidence of Congressional intent
to achieve such results may be found in the legislative history; (2) the
scope of the legislation; (3) whether applying judge-made law "would entail
`filling a gap left by Congress' silence' or `rewriting rules that Congress
has affirmatively and specifically enacted,'" Oswego Barge, 664
F.2d at 339 (quoting Mobil Oil Corp. v. Higginbotham, 436 U.S. 618,
625 (1978)); and finally (4) whether the judge-made law at issue represents
a "`long-established and familiar principle' of the `common law or the
general maritime law,'" id. (quoting Isbrandtsen, 343 U.S.
With respect to the first factor, COGSA and
its legislative history, as noted above, offer no discussion of the relationship
between § 1304(6) and preexisting maritime common law. Where COGSA
does exclude or qualify the reach of its provisions, its intention to do
so is made expressly clear in the statute.34
As to the second factor, by setting forth in detail the rights, duties,
liabilities, and immunities of carriers, COGSA extensively governs the
relations of carriers and shippers with respect to "all contracts of carriage
of goods by sea to or from ports of the United States in foreign trade."
46 U.S.C. § 1312; cf. Sea-Land Serv., Inc. v. J & W Import/Export,
Inc., 976 F. Supp. 327, 330 (D.N.J. 1997) ("COGSA extensively governs
the responsibilities, liabilities, rights, and immunities of parties who
enter into contracts for the carriage of goods by sea."); Sturley, The
Fair Opportunity Requirement Under COGSA Section 4(5), supra,
at 2 ("[COGSA] is the central statute in commercial admiralty, governing
over $200 billion worth of American foreign commerce annually.").
We must therefore ask whether the legislative
scheme of COGSA speaks directly to the question of strict liability for
shippers of inherently dangerous goods. "[W]hen [a maritime code] does
speak directly to a question, the courts are not free to `supplement' Congress'
answer so thoroughly that the Act becomes meaningless." Higginbotham,
436 U.S. at 625. "There is a basic difference," observed the Supreme Court
in Higginbotham, "between filling a gap left by Congress' silence
and rewriting rules that Congress has affirmatively and specifically enacted."
see also Public Adm'r v. Angela Compania Naviera, S.A., 592 F.2d
58, 63 (2d Cir. 1979) ("The Higginbotham Court made it clear that,
where Congress has made a judgment regarding the shape of wrongful death
recoveries, the courts are not free to substitute their own judgments.").35
Because we have determined that § 1304(6),
by its plain meaning, does not imply a shipper scienter requirement,
we conclude that the provision does speak directly to the question of whether
a shipper of inherently dangerous goods may be held liable for damages
resulting directly or indirectly from such shipment when neither the shipper
nor the carrier had actual or constructive preshipment knowledge of the
danger. We hold that § 1304(6) answers that question in the affirmative.
It follows that Quillan and other pre-1936 decisions that set forth
a rule of general maritime law that is inconsistent with § 1304(6)
have been superseded by that provision,36
and that post-1936 decisions, such as Borgships, that construe §
1304(6) as incorporating such an inconsistent common-law rule are incorrect.37
To hold that the rule of Quillan governs the facts of the present
case would be "to `supplement' Congress' answer so thoroughly that [§
1304(6)] becomes meaningless." Higginbotham, 436 U.S. at 625;
cf. Miller Export Corp. v. Hellenic Lines, Ltd., 534 F. Supp.
707, 710 (S.D.N.Y. 1982) ("[T]his Court has held that the exclusive application
of COGSA cannot be avoided by couching claims in terms of negligence or
other common law causes of action."); see also Effort Shipping,
 A.C. at 622 ("[P]ro tanto the Hague Rules upon their enactment displaced
the common law.") (Lord Steyn).
In determining that § 1304(6)'s strict-liability
rule displaces otherwise inconsistent general maritime law, we have been
mindful of COGSA's overarching purpose to "allocat[e] risk of loss and
creat[e] predictable liability rules on which not only carriers but others
can rely." Stolt Tank Containers v. Evergreen Marine Corp., 962
F.2d 276, 279 (2d Cir. 1992). The recognition that, in the rare circumstances
of a case such as this, the strict-liability rule of § 1304(6) supersedes
the varying and uncertain rule of maritime common law will help ensure
predictability in the allocation of risk between maritime parties. Moreover,
just as eighty years ago we observed that the policy- based rule of Pierce
and Brass v. Maitland was "just and expedient," The
Santa Clara, 281 F. at 736, we conclude today that a strict-liability
construction of § 1304(6) will foster fairness and efficiency in the
dealings of commercial maritime actors.38
In contrast to a carrier, which typically is in the position of taking
aboard its vessel a large quantity and variety of cargoes, a shipper can
be expected to have greater access to and familiarity with goods and their
manufacturers before those goods are placed in maritime commerce. If an
unwitting party must suffer, it should be the one that is in a better position
to ascertain ahead of time the dangerous nature of shipped goods. That
party in many cases will be the shipper.39
We note, furthermore, that in conforming our
construction of COGSA § 1304(6) to that given to its British counterpart
by the House of Lords in Effort Shipping, we are furthering another
broad purpose of COGSA and the Hague Rules: international uniformity in
the law of carriage of goods by sea. One point on which pre-1936 Second
Circuit cases agreed unanimously was that "in matters of commercial law
our decisions should conform to the English decisions, in the absence of
some rule of public policy which would forbid." The Turret Crown,
297 F. 766, 776-77 (2d Cir. 1924); see also Lehigh & Wilkes-Barre
Coal Co. v. Globe & Rutgers Fire Ins. Co., 6 F.2d 736, 738-39 (2d
Cir. 1925) ("It is certainly important that on such a subject as [the meaning
of "collision" in maritime law] the courts of this country should be in
agreement, and it is also desirable, if possible, that the courts of England
and of the United States in like manner should be in accord."); Quillan,
180 F. at 683 ("The conclusion arrived at by the highest courts of the
greatest commercial nation in the world [i.e., Great Britain] ought
to have weight everywhere.").40
Today we reaffirm our earlier decisions in recognizing the importance of
international uniformity in the laws governing the maritime trade.
For the foregoing reasons, we vacate that
part of the district court's judgment granting the Shippers' motions for
judgment, and remand for proceedings consistent with this opinion.
The TDO in this case had been
manufactured by an entity based in China, the Dinzhou Phosphoric Fertilizer
Factory ("Dinzhou"), which sold 30 tons of the chemical to defendant-appellee
China National Chemicals Import & Export Corp. ("Sinochem"). The 30
tons of TDO were placed in drums at the Dinzhou facility in January 1994.
In March 1994, Sinochem sold 15 tons of the TDO to a U.S. importer, Itochu
Specialty Chemicals Inc. ("Itochu"), and employed defendant-appellee Zen
Continental Co., Inc. ("Zen"), a non-vessel operating common carrier ("NVOCC")
and freight forwarder, to arrange for the booking, containerization, and
carriage of the TDO shipment from China to Norfolk.
Zen booked a "feeder" ocean carrier
to transport the TDO from the origin port of loading in Tianjin, China,
to the transshipment port in Pusan, Korea. The bill of lading covering
the transshipment from Tianjin to Pusan identified Zen as the "Shipper"
and defendant-appellee Eastern Sunway Line, Inc. ("Eastern Sunway") as
the "Consignee." Zen, as a NVOCC, also issued a bill of lading that covered
carriage of the TDO from Tianjin to Norfolk, and named Sinochem as the
"Shipper" and Itochu as the "Notify" party. Both Sunway and Eastern Sunway
were "apparent subsidiaries" of Zen. Intercargo Ins. Co., 151 F.
Supp. 2d at 255.
On or about March 25, 1994, Eastern
Sunway, acting as Zen's Korean agent, issued a shipping order requesting
that Senator carry the containerized TDO shipment from Pusan to Norfolk
aboard its vessel, the Tokyo Senator, and identified Eastern Sunway as
the "Shipper/Exporter"; defendant-appellee Sunway Line, Inc. ("Sunway")
as the "Consignee"; and Sunway as the "Notify" party. Senator's bill of
lading showed the same identifications and stated that the container holding
the TDO was "SHIPPER'S LOAD AND COUNT." The reverse side of the bill of
lading was stamped by Zen and signed by Sunway.
The district court entered a default
judgment against Dinzhou for the full amount of Senator's proven damages,
plus costs. Ins. Co. of N. Am. v. M/V Tokyo Senator, No. 95 Civ.
3303, 96 Civ. 0008, 2001 WL 238293, at *5 (S.D.N.Y. Mar. 9, 2001). Dinzhou
is not participating in this appeal. Both Itochu and Aceto Corporation,
defendants below, were U.S. purchasers and importers of the TDO cargo.
Prior to trial, Senator voluntarily discontinued its action against these
two parties. Senator does not appeal from that part of the district court's
judgment dismissing its claims against Eastern Sunway.
The district court found "extremely
credible" the testimony of a chemistry expert that without exposure to
"high temperature," an exothermic reaction could not have occurred. M/V
Tokyo Senator, 2001 WL 238293, at *1. Yet the court also found credible
the testimony of another expert that he "could not identify the actual
cause of the reaction of the TDO in this case, but believed by process
of elimination that there was probably some feature in the cargo itself
which was responsible." Id. at *2. The court did not conclude that
any external source of heat or humidity caused the exothermic reaction.
The action below consolidated
two cases: a suit by Senator against the Shippers, and a suit by the Insurance
Company of North America against Senator and several other parties. This
appeal involves the former lawsuit only.
The parties devote significant
attention in their briefs to the issue of causation-that is, whether the
fire was caused by the inherent propensities of TDO or by some external
source. However, in light of (1) the undisputed fact that TDO is now recognized
as a hazardous material capable of combustion under various circumstances,
and (2) the district court's elimination of typical external causes-such
as crew error, improper stowage, or a defect in the design or manufacture
of the TDO, M/V Tokyo Senator, 2001 WL 238293, at *2-it appears
likely that the fire resulted, directly or indirectly, from the TDO's inherently
dangerous character. Further, a relaxed view of causation under these circumstances
is consistent with the language of 46 U.S.C. § 1304(6)-the dangerous-goods
provision at the center of this case-which provides that the "shipper of
[dangerous] goods shall be liable for all damages and expenses directly
or indirectly arising out of or resulting from such shipment."
Under COGSA, Zen qualified
as a shipper in its capacity as a NVOCC. 46 U.S.C.
§ 1702(17)(B) & (21)(E).
In addition, the district court found that Sunway, which was described
as a "Consignee" and a "Notify" party in Senator's bill of lading and in
Eastern Sunway's shipping order, was also a shipper. M/V Tokyo Senator,
2001 WL 238293, at *1, *4.
We do not address the issue
of whether, in the event that a shipper had preshipment knowledge of the
goods' dangerous nature and did not inform the carrier of the danger, the
shipper's liability would arise under § 1304(6) or instead under 46
U.S.C. § 1304(3), which states: "The shipper shall not be responsible
for loss or damage sustained by the carrier or the ship arising or resulting
from any cause without the act, fault, or neglect of the shipper, his agents,
or his servants."
We note that, to the extent
COGSA is based on the Hague Rules, the analytical approach outlined above
is consistent with our framework for interpreting treaties and international
agreements. See Kahn Lucas Lancaster, Inc. v. Lark Int'l Ltd., 186
F.3d 210, 215 (2d Cir. 1999) ("Treaties are construed in much the same
manner as statutes."); Smith/Enron Cogeneration Ltd. P'ship, Inc. v.
Smith Cogeneration Int'l, Inc., 198 F.3d 88, 93 (2d Cir. 1999) ("The
starting point in construing a treaty is its text.") (citing Eastern
Airlines, Inc. v. Floyd, 499 U.S. 530, 534 (1991)); see also
Vienna Convention on the Law of Treaties, May 23, 1969, art. 31.1, 1155
U.N.T.S. 331, 340 ("A treaty shall be interpreted in good faith in accordance
with the ordinary meaning to be given to the terms of the treaty in their
context and in the light of its object and purpose."); Restatement (Third)
of Foreign Relations Law § 325(1) (1987) (same).
The remainder of § 1304(6)
reads as follows: "If any such goods shipped with such knowledge and consent
[of the carrier, master or agent of the carrier] shall become a danger
to the ship or cargo, they may in like manner be landed at any place, or
destroyed or rendered innocuous by the carrier without liability on the
part of the carrier except to general average, if any."
We note that Borgships
and certain other decisions discussed in this opinion have not paid sufficient
attention to the language of COGSA. Cf. Michael F. Sturley, The
Fair Opportunity Requirement Under COGSA Section 4(5): A Case Study in
the Misinterpretation of the Carriage of Goods by Sea Act, 19 J. Mar.
L. & Com. 1, 2-3 (1988) ("American courts have paid remarkably little
attention to COGSA's plain language when that language has been inconsistent
with American judicial doctrines that developed before COGSA's enactment.").
The district court in the instant
case also cited Sucrest. But in Sucrest, which involved a
carrier's counterclaim against a sugar- cargo owner for hull damage and
other expenses, the court determined that the charter party, and not COGSA,
governed the rights and liabilities of the parties. Sucrest, 455
F. Supp. at 380 n.16. Having so determined, the court applied general maritime
law to the question of a cargo owner's duty to warn of inherent dangers
of cargo. Id. at 384-85. Moreover, the parties had agreed that "the
governing standards of COGSA and of the charter party are similar in all
presently material respects," id. at 380 n.16, and the carrier "[did]
not argue that the cargo owner warrants absolutely that the cargo contains
no inherent dangers unknown to the shipowner," id. at 385 n.20.
Therefore, Sucrest did not address the relationship of COGSA to
general maritime law and did not discuss § 1304(6).
See Ente Nazionale
Per L'Energia Elettrica v. Baliwag Navigation, Inc., 605 F. Supp. 355,
363 (E.D. Va. 1984) (assuming arguendo that the coal shipment at
issue was "dangerous" and "inflammable" within the meaning of § 1304(6),
the court concluded that the shipowner did not prove that the ship's master
lacked knowledge of the cargo's susceptibility to spontaneous combustion),
on other grounds, 774 F.2d 648 (4th Cir. 1985); The Stylianos Restis,
1974 A.M.C. 2343 (S.D.N.Y. 1972) (ruling that a cargo of fishmeal was not
dangerous within the meaning of § 1304(6) and that the carrier gave
informed consent to the carriage); Skibs A/S Gylfe v. Hyman-Michaels
Co., 304 F. Supp. 1204, 1221 (E.D. Mich. 1969) (finding no liability
§ 1304(6), because the carrier
was aware, prior to loading, of the hazard posed by a cargo of steel turnings),
438 F.2d 803 (6th Cir. 1971).
The provision reads in its
entirety: "The shipper shall not be responsible for loss or damage sustained
by the carrier or the ship arising or resulting from any cause without
the act, fault, or neglect of the shipper, his agents, or his servants."
46 U.S.C. § 1304(3).
See, e.g., Williamson
v. Compania Anonima Venezolana de Navigacion, 446 F.2d 1339, 1341 (2d
Cir. 1971) (holding that under § 1304(3), shipper need not supply
absolutely safe container on which longshoremen or crew may walk, but need
only avoid negligence; § 1304(6) not mentioned); Excel Shipping
Corp. v. Seatrain Int'l S.A., 584 F. Supp. 734, 747 (E.D.N.Y. 1984)
(holding, in action alleging improper packing, that § 1304(3) "abolish[ed]
any common law warranty" and required proof of shipper's "fault or neglect";
§ 1304(6) not mentioned); Poliskie Line Oceaniczne v. Hooker Chem.
Corp., 499 F. Supp. 94, 101-02 (S.D.N.Y. 1980) (finding shipper liable
for improper stowage of hazardous chemical under theories of negligence
and express warranty, but mentioning neither § 1304(3) nor §
1304(6)); Di Gregorio v. N.V. Stoomvaart Maatschappij "Nederland,"
411 F. Supp. 331, 334 (S.D.N.Y. 1975) (holding that, where longshoreman
was injured by collapsing crate, shipper's liability was "expressly limited"
by § 1304(3); § 1304(6) not mentioned), aff'd, 531 F.2d
1143 (2d Cir. 1976); Serrano v. United States Lines Co., 238 F.
Supp. 383, 388 (S.D.N.Y. 1965) (holding that, where injury resulted from
exploding tire aboard vessel, § 1304(3) "overrule[d]" any implied
warranty of shipper that shipment was reasonably fit for carriage; §
1304(6) not mentioned).
Two of the three Law Lords
who gave opinions in Effort Shipping concluded, after reviewing
the American case law, that "there appear to be no United States cases
in which the relationship between [§§ 1304(3) and 1304(6)] has
fallen for decision." Effort Shipping,  A.C. at 614 (Lord
Lloyd of Berwick). Only Lord Steyn thought that "the established position
in the United States" was that § 1304(3) (general negligence) qualifies
§ 1304(6) (dangerous-goods liability). Id. at 623. But Lord
Steyn based his opinion entirely on commentary contained in a treatise,
Michael Wilford et al., Time Charters (4th ed. 1995), which offers
only tentative conclusions: "It has been suggested that the liability to
owners that may be imposed on shippers by the second part of Section 4(6)
is reduced from an absolute obligation to an obligation of due diligence
by Section 4(3) of the same Act . . . . The American cases . . . suggest
that the obligation is so reduced . . . ." Id. at 169. The American
cases cited by the authors, many of which are discussed in this opinion
and its notes, are chiefly concerned with general maritime law and do not
address the relationship between §§ 1304(3) and 1304(6). See
id. at 173-76.
We note that when COGSA legislators
wished to specify a shipper scienter requirement regarding the nature
of shipped goods, they had no difficulty doing so in clear terms: "Neither
the carrier nor the ship shall be responsible in any event for loss or
damage to or in connection with the transportation of the goods if the
nature or value thereof has been knowingly and fraudulently misstated by
the shipper in the bill of lading." 46 U.S.C. § 1304(5).
Here, the Shippers part company
with Judge Cedarbaum. See M/V Tokyo Senator, 2001 WL 238293, at
*4 (concluding that Brass v. Maitland, generally regarded as the
leading British case on shipper liability in the dangerous-goods context,
"did not impose an absolute warranty"). We discuss below the bearing of
on the instant case.
This statement of the Fifth
Circuit is correct in the sense that the resulting language of COGSA was
in most material respects identical to that of the Hague Rules. Nevertheless,
the debate between the American shipper and carrier interests was intense
at times and played a significant role in delaying Congressional passage
of COGSA. See generally Michael F. Sturley, The History of COGSA
and the Hague Rules, 22 J. Mar. L. & Com. 1 (1991).
We note that certain pre-Hague
versions of language similar to that in § 1304(6) appeared in the
Liverpool Conference Form ("Liverpool Form") and the Hamburg Rules of Affreightment
("Hamburg Rules"), promulgated by the International Law Association in
1882 and 1885, respectively. The Liverpool Form was a model bill of lading
offered for voluntary adoption by agreement of shippers and carriers; the
Hamburg Rules were model provisions that parties could voluntarily incorporate
by reference into their bills of lading. These model documents made it
explicitly clear that shippers who agreed to adopt them as or within bills
of lading would be subject to strict liability for damages resulting from
inherently dangerous goods. See Hamburg Rules (1885) ("Shipper accountable
for any loss or damage to ship or cargo caused by inflammable, explosive,
or dangerous goods, shipped without full disclosure of their nature, whether
such shipper shall have been aware of it or not, and whether such shipper
be principal or agent: such goods may be thrown overboard or destroyed
by the master or owner of the ship at any time without compensation."),
in 2 Michael F. Sturley, The Legislative History of the Carriage
of Goods by Sea Act and the Travaux Préparatoires of the Hague Rules
116, 123 (1990) (emphasis added); Liverpool Form (1882) (same), reprinted
in id. at 62. Neither the Hague Rules nor COGSA incorporated the phrase
"whether such shipper shall have been aware of it or not" in their corresponding
provisions for dangerous-goods liability, and the recorded history of the
Hague Rules and COGSA sheds no light on why the phrase was not included.
The historical derivation of
this phrase has been fully documented. Only one small change was ever introduced
into the phrase, in a draft of the Hague Rules, as indicated below by italics:
Hague Rules (1921 International Law Association draft) (". . . and the
shipper of such goods shall be liable for all damages directly or indirectly
arising out of or resulting from such shipment"); Hague Rules of 1921 (".
. . and the shipper of such goods shall be liable for all damages and
expenses directly or indirectly arising out of or resulting from such
shipment"); Hague Rules (Comité Maritime International draft) (same);
Hague Rules of 1922 (same). The phrase, in the form adopted in the Hague
Rules of 1921, remained unchanged through every bill introduced in Congress:
H.R. 14166, 67th Cong., 4th Sess. (Feb. 2, 1923); H.R. 5080, 68th Cong.,
1st Sess. (Jan. 9, 1924); S. 3177, 68th Cong., 1st Sess. (Apr. 25, 1924);
H.R. 114447, 68th Cong., 2d Sess. (Jan. 8, 1925); H.R. 12339, 68th Cong.,
2d Sess. (Feb. 18, 1925); S. 1295, 70th Cong., 1st Sess. (Dec. 9, 1927);
H.R. 12208, 70th Cong., 1st Sess. (Mar. 19, 1928); S. 3838, 70th Cong.,
1st Sess. (Mar. 22, 1928); H.R. 3830, 71st Cong., 1st Sess. (June 10, 1929);
S. 482, 72d Cong., 1st Sess. (Dec. 9, 1931); S. 2598, 73d Cong., 2d Sess.
(Feb. 2, 1934); S. 1152, 74th Cong., 1st Sess. (Jan. 17, 1935) (enacted
as amended, Apr. 16, 1936). The textual evolution of COGSA is fully traced
in 1 Sturley, supra, at 25-86.
See, e.g., Second Day's
Proceedings of the Maritime Law Committee of the International Law Association,
The Peace Palace, The Hague (Aug. 31, 1921), reprinted in 1 Sturley,
at 179, 272-73 (discussing the manner of notice to be given by shipper
to carrier regarding the nature and character of goods); Third Session
of the International Conference on Maritime Law, Brussels (Oct. 21, 1922),
reprinted in id. at 401, 402-03 (discussing questions raised by
the Swedish delegate concerning the discretion of carriers to unload or
throw overboard dangerous goods).
Observations of Norway, International
Conference on Maritime Law, Meeting of the Sous-Commission, Brussels (Oct.
6-9, 1923), reprinted in 1 Sturley, supra, at 419, 420-21.
In 1926, for example, a "large
number of representative American shippers" addressed a memorandum to the
Secretary of State in which they objected to the U.S. government's then-contemplated
ratification by treaty of what later became COGSA. The memorandum expressed
various concerns over § 1304(6)-pointing out, for example, the fact
that goods could be inflammable without being dangerously so-but did not
raise the specific issue of strict liability for unknown, inherent dangers
of goods. Int'l Convention for the Unification of Certain Rules in Regard
to Bills of Lading for the Carriage of Goods by Sea: Hearing Before a Subcomm.
of the Sen. Comm. on Foreign Relations, 70th Cong., 1st Sess. 32, 39
(1927), reprinted in 3 Sturley, supra, at 356, 363.
Uniform Ocean Bills of Lading:
Hearings Before the House Comm. on Merchant Marine and Fisheries, 74th
Cong., 2d Sess. 51 (1936), reprinted in 3 Sturley, supra,
at 595, 649. After stating that shippers are "naturally responsible" for
damages resulting from "explosive" or dangerous cargo, the underwriters'
representative was asked by the committee chairman, "If he does not disclose
the nature of the goods?" The representative replied, "Yes," but because
disclosure of the "nature" of goods might be satisfied by a simple description
of the cargo, the representative did not indicate whether or not the shipper's
responsibility in this context required its knowledge and disclosure of
the inherently dangerous nature of the cargo. Id.
H.R. Rep. No. 2218, 74th Cong., 2d Sess.
S. Rep. No. 742, 74th Cong., 1st Sess.
Lord Steyn in Effort Shipping
observed that "at the time of the drafting of the Hague Rules the dominant
theory in a very large part of the world was that shippers were under an
absolute liability not to ship dangerous goods. This circumstance must
have been known to those who drafted and approved the Hague Rules." Effort
Shipping,  A.C. at 625. Lord Steyn's observation is based in
part on his conclusion that the general maritime rule of dangerous-goods
liability was the same in Britain and the United States prior to adoption
of the Hague Rules.
We note in passing that Quillan
addressed concerns that fall outside the scope of COGSA. First, COGSA governs
bills of lading, not charter parties (private contracts of carriage) like
the one in Quillan. 46 U.S.C. § 1305 ("The provisions of this
chapter shall not be applicable to charter parties . . . ."). Second, the
schooner Wm. J. Quillan set out from Barren Island, New York, and was bound
for Savannah, Georgia. COGSA applies exclusively to "the carriage of goods
by sea to or from ports of the United States, in foreign trade."
§ 1300 (emphasis added); see also id. § 1312 ("The term
`foreign trade' means the transportation of goods between the ports of
the United States and ports of foreign countries. Nothing in this chapter
shall be held to apply to contracts for carriage of goods by sea between
any port of the United States or its possessions, and any other port of
the United States or its possessions . . . .").
Inasmuch as Pierce involved
a coast-to-coast voyage governed by a charter party, Pierce, like
would not have fallen within the scope of COGSA.
See Tetley, supra,
at 463-64 ("In the common law, the leading case is Brass v. Maitland,
where the majority held that the [shipper's] warranty was absolute, while
Crompton J. in the minority held that it was qualified."). Tetley suggests
that in the United States, Pierce adopted the Brass majority
view, while Quillan adopted the minority view. We note that Tetley's
analysis of the general maritime law in the United States does seem to
accord with that of the Shippers. See id. at 464 ("In the United
States, under the general maritime law, the shipper's warranty was originally
considered absolute, but is now viewed as qualified and therefore the shipper
is only held to his actual or constructive knowledge."); cf. 2A
on Admiralty § 99, at 9-14 (2000) ("Prior to the enactment of
the Carriage of Goods by Sea Act, it was held that while the shipowner
impliedly warrants that his ship is fit for the voyage, and will not injure
the cargo, there was no corresponding warranty on the part of the cargo
owner that his goods will not injure or delay the ship.") (citing, inter
alia, Quillan, 180 F. 681); see also Aktieselskabet Fido
v. Lloyd Brazileiro, 267 F. 733, 736-37 (S.D.N.Y. 1919) ("It is the
law of this court that charterers are not liable for concealed defects
in the cargo or subject to any implied warranty of its fitness for shipment.")
(citing Quillan, 180 F. 681), aff'd on other grounds, 283
F. 62 (2d Cir. 1922).
Greenshields does appear
to have taken a view of Brass similar to that in Quillan.
however, involved a shipment of coal that spontaneously ignited at sea.
In holding that the coal shippers could claim contribution in general average,
one member of the Greenshields court stated that under Brass
and especially its dissenting opinion, "[t]here is no absolute warranty
by the shipper of safety in cases where the goods shipped may be openly
seen and are known by the shipowner to be by their nature possibly productive
of danger." Greenshields,  1 K.B. at 61-62 (Kennedy, L.J.)
(emphasis added). Lord Justice Kennedy went on to stress that the coal
shippers "merely shipped that which the shipowner knew he was taking
on board with its liability to spontaneous combustion." Id.
(emphasis added). Thus, the discussion of shipper liability in Greenshields
was shaped by the assumption that the dangers of coal were well known to
the carrier in that case, as the district court in Quillan pointed
out. See Quillian, 175 F. at 211 ("[Greenshields] covered
coal, which the ship owner knew was liable to spontaneous combustion .
. . ."). In contrast, Pierce involved a new article (mastic) whose
hazardous propensities, like those of the TDO in the instant case, were
Like the Second Circuit in
the district court in the instant case seems to have believed that it was
conforming American maritime common law to its British counterpart.
M/V Tokyo Senator, 2001 WL 238293, at *4 ("Brass [v. Maitland]
itself did not impose an absolute warranty."). The district court's failure
to mention Effort Shipping, however, undermines this attempt.
A latecomer to the judicial
debate over dangerous-goods liability for shippers under general maritime
law was Ionmar Compania Naviera, S.A. v. Olin Corp., 666 F.2d 897
(5th Cir. 1982), which held that a chemical manufacturer-shipper "had a
duty to warn [the stevedore and carrier] of the foreseeable hazards inherent
in the HTH shipment of which the stevedore and the ship's master could
not reasonably have been expected to be aware," and that "[c]onversely,
[the manufacturer-shipper] had no duty to warn [the stevedore and carrier]
of hazards of which they were aware or could reasonably have been expected
to be aware." Id. at 904. Ionmar thus seems to line up with
but the opinion makes no mention of Quillan, Pierce, or Brass.
The parties' claims sounded entirely in negligence, and the court makes
scant reference to COGSA and none at all to § 1304(6). Moreover, the
chemical at issue, HTH, was a known fire hazard that had been subject to
substantial regulation. Id. at 899. Like the decision in Greenshields,
therefore, the Fifth Circuit's analysis in Ionmar turned on what
the parties knew-an issue more appropriate for a negligence than for a
A comparison of the citation
histories of Pierce and Quillan suggests that American maritime
common law has never fully settled the nature of a shipper's dangerous-goods
liability. Cases citing Quillan for the proposition that, under
general maritime law, shippers have a duty to warn only of inherent dangers
of which they have actual or constructive knowledge include: Borgships,
1997 WL 124127, at *3; Narcissus Shipping Corp. v. Armada Reefers, Ltd.,
950 F. Supp. 1129, 1143 (M.D. Fla. 1997); Sucrest Corp., 455 F.
Supp. at 384; Aktieselskabet Fido, 267 F. at 736-37. Cases citing
(either the trial court or the circuit court opinion) for its rule that
a shipper gives an implied warranty that goods are safe for shipment include:
The Santa Clara, 281 F. at 736; Atkins, Kroll & Co. v. Nedlloyd
Line, 210 F. Supp. 315, 317 (N.D. Cal. 1962) (distinguishing Pierce
as not applicable to a consignee); Luckenbach Steamship Co. v. Coast
Mfg. & Supply Co., 185 F. Supp. 910, 919 & n.25 (E.D.N.Y. 1960);
Westchester Fire Ins. Co. v. Buffalo Housewrecking & Salvage Co.,
40 F. Supp. 378, 381-82 (W.D.N.Y. 1941) (distinguishing
the ground that the dangerous propensities of the cargo in Westchester
Fire were not unknown at the time), aff'd, 129 F.2d 319 (2d
Cir. 1942); The Wm. J. Quillan, 175 F. 207, 211 (S.D.N.Y.), rev'd,
180 F. 681 (2d Cir. 1910); Hanna v. Pitt & Scott, 121 A.D. 420,
106 N.Y.S. 145, 146-47 (2d Dep't 1907) (distinguishing
the basis of the carrier's knowledge). Several of the cases that cite Pierce
also cite Brass v. Maitland in the same context.
See, e.g., 46 U.S.C.
§ 1308 ("The provisions of this chapter shall not affect the rights
and obligations of the carrier under the provisions of the Shipping Act,
1916, or under the provisions of sections 175, 181 to 183, and 183b to
188 of this title or of any amendments thereto; or under the provisions
of any other enactment for the time being in force relating to the limitation
of the liability of the owners of seagoing vessels."); id. §
1311 ("Nothing in this chapter shall be construed as superseding any part
of sections 190 to 196 of this title, or of any other law which would be
applicable in the absence of this chapter, insofar as they relate to the
duties, responsibilities, and liabilities of the ship or carrier prior
to the time when the goods are loaded on or after the time they are discharged
from the ship."); id. § 1313 (providing that during any period
in which §§ 1301 to 1308 have been suspended by Presidential
proclamation, any contract for carriage of goods by sea that would otherwise
be subject to COGSA "shall be subject to all provisions of law now or hereafter
applicable to that part of said sections . . . suspended").
In Higginbotham, the
Supreme Court held that the Death on the High Seas Act ("DOHSA") governs
wrongful-death recoveries on the high seas, and refused to provide damages
for "loss of society" under the general maritime law when Congress had
not provided for such damages in DOHSA. Higginbotham, 436 U.S. at
Our conclusion is supported
by a leading American treatise on admiralty law, which states unreservedly
that, in the circumstances covered by § 1304(6), "the shipper is liable
for all damages and expenses." 2A Benedict on Admiralty § 99,
at 9-14 (2000). Benedict goes on to note: "Prior to the enactment
of the Carriage of Goods by Sea Act, it was held that while the shipowner
impliedly warrants that his ship is fit for the voyage, and will not injure
the cargo, there was no corresponding warranty on the part of the cargo
owner that his goods will not injure or delay the ship." Id. (citing,
alia, Quillan, 180 F. 681). Benedict thus suggests that
Congress's enactment of § 1304(6) superseded a "prior" common-law
rule of non-strict liability for shippers of dangerous goods, replacing
it with a rule of strict liability. As noted above, however, we cannot
agree with Benedict's implication that in the pre-COGSA period,
general maritime law in the United States reflected a settled rule of liability
for shippers of inherently dangerous goods.
Our holding does not affect
the potential applicability of Quillan, Borgships, and related
cases to facts not falling within the scope of COGSA.
In supplementary appellate
briefs, the parties in the instant case did not identify any significant
expectations in the maritime or insurance industry that would be unsettled
by our interpreting 46 U.S.C. § 1304(6) to impose strict liability
on the shipper in the rare event that neither party had actual or constructive
knowledge of a cargo's inherent danger. First, insofar as the parties indicated
that shippers' marine insurance policies as now commonly written exclude
coverage for damage caused by hazardous materials, we note that imposing
strict shipper liability under § 1304(6) should not alter insurance
as shippers currently know it, but instead will establish a clear allocation
of risk that should assist maritime actors and insurers in preparing for
the marginal possibility of an unknown cargo hazard. The Shippers did not
show, moreover, that additional insurance coverage for unknown inherent
dangers is unavailable or prohibitively priced. Second, to the extent that
federal laws, as the Shippers point out, already regulate transportation
of known hazardous and dangerous materials, and impose civil and criminal
penalties for knowing violations of these laws, our interpretation of §
1304(6) should not render shipper liability incoherent and uncertain, but
instead will fill a gap with respect to materials whose inherent hazards
are unknown to federal regulators.
COGSA contains a number of
carrier defenses predicated on the carrier's limited ability to know the
character of the cargo it agrees to ship. One of these is the provision
that "[n]either the carrier nor the ship shall be responsible for loss
or damage arising or resulting from . . . inherent defect, quality, or
vice of the goods." 46 U.S.C. § 1304(2)(m); see also Raphaely Int'l,
Inc. v. Waterman S.S. Corp., 972 F.2d 498, 504 (2d Cir. 1992) ("An
inherent vice is defined as any existing defects, diseases, decay or the
inherent nature of the commodity which will cause it to deteriorate with
a lapse of time.") (internal quotation marks omitted). "The theory and
policy of the [§ 1304(2)(m)] exemption," according to one noted commentator,
"is that the shipper rather than the carrier should know the inherent characteristics
of the goods shipped and should have the responsibility of guarding against
it." 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 10-30,
at 144 (3d ed. 2001). We find that a similar rationale underlies the allocation
of risk in 46 U.S.C. § 1304(6).
There is wide agreement among
scholarly commentators that international uniformity of COGSA interpretation
is desirable. See, e.g., Sukhninder Panesar, The Shipment
of Dangerous Goods and Strict Liability,  Int'l Co. & Com.
L. Rev. 136, 140 ("If we are to accept that the rule in the United States
is that Article IV, r. 6 is qualified by r. 3, then we have two different
interpretations of the Hague Rules which is clearly contrary to the principles
of uniformity in the interpretation of an international convention.");
F.D. Rose, Liability for Dangerous Goods: The Giannis N.K., 
Lloyd's Mar. & Com. L.Q. 480, 484 (stating that if there is a "rift"
between U.S. and British approaches to COGSA shipper liability, it is a
"division which the US courts may nonetheless heal if they accept that
in fact their courts have not yet clearly resolved the point and that the
House's lead [in Effort Shipping] is correct"); Sturley, The
History of COGSA, supra, at 57 ("The general acceptance of the
Hague Rules is in many ways only the beginning of an unfinished story.
Although there was then essentially world-wide uniformity in text, uniformity
of interpretation remained (and remains) a problem.").