United States - jurisprudence on interpretation of the Bill of Lading Convention 1924 and 1968 and 1979 Protocols - Paramount Clause

United States

Foster Wheeler Energy Corp. v. An Ning Jiang MV and Industrial Maritime Carriers, United States Court of Appeals for the Fifth Circuit 13 September 2004 (2004 AMC 2409)

On December 13, 2000, Foster Wheeler filed suit against the An Ning Jiang, in rem, and IMC, as the carrier, in the Eastern District of Louisiana seeking to recover damages in the amount of $ 228,576.73 as a result of IMC's alleged breach of its duties under COGSA, 46 U.S.C. §§ 1300 et seq., and/or the Harter Act, 46 U.S.C. §§ 190 et seq. IMC answered that pursuant to the terms of the bills of lading, the quantum of its liability, if any, should be limited in accordance with COGSA's $500 per package limitation, which in this case would cap IMC's exposure for cargo damage at $39,453.74. The three bills of lading at issue contained the following pertinent conditions of carriage:

2. General Paramount Clause

IMC filed a motion for partial summary judgment seeking a declaration that, pursuant to the Jurisdiction clause, COGSA and its $500 per package liability limitation governed this action rather than the Hague-Visby Rules referenced in the bills' General Paramount Clause. Foster Wheeler opposed IMC's motion, contending that the Hague-Visby Rules as enacted in Spain and their higher limitation-of-liability provision, not COGSA, governed this carriage by operation of law and by incorporation into the bills of lading, entitling it on the facts of this case to a full recovery. Foster Wheeler further asserted that because Spain's Hague-Visby Rules applied compulsorily by force of law, Article III (8) of these Rules nullified any contractual term in the bills of lading - namely, the Jurisdiction clause - to the extent that it invoked COGSA's lower per package limitation.

Foster Wheeler's uncontroverted summary judgment evidence included the affidavit testimony of an expert on Spanish maritime law attesting that a voyage from Spain to China is a trade line to which the Spanish enactment of the Hague-Visby Rules applies compulsorily.
Nonetheless, on September 30, 2002, the district court granted IMC's motion, reasoning that the Jurisdiction clause designating "U.S. law" was a forum selection and choice-of-law clause "call[ing] for the application of COGSA" and, as such, was entitled to a presumption of validity that Foster Wheeler failed to overcome.

The district court also found that, as a matter of contractual interpretation, the Jurisdiction Clause was specific, and therefore could not "be trumped by the terms of an amorphous General Paramount clause" that merely "suggest[ed] that in some circumstances the Hague-Visby rules might apply." In order to expedite Foster Wheeler's ability to appeal the district court's summary judgment ruling, the parties filed a joint notice of consent to entry of judgment. Accordingly, on December 9, 2002, the district court entered final judgment in favor of Foster Wheeler, calculating the quantum of damages owed under COGSA. Foster Wheeler filed notice of appeal.

Held, by the Court of Appeals, V Circ., that:[1] Pursuant to the General Paramount clause, the Hague-Visby Rules as enacted in Spain govern claims involving cargo damage occurring during the tackle-to-tackle period, whereas U.S. law applies under the Jurisdiction clause to the litany of non-cargo maritime claims that may be brought as well as to cargo claims stemming from damage outside the tackle-to-tackle period.

The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th of August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments in which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.

Trades where Hague-Visby Rules ApplyIn trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on February 23, 1968-the Hague Visby Rules apply compulsorily, the provisions of the respective legislation shall be considered incorporated into this Bill of Lading. The Carrier takes all reservations possible under such applicable legislation, relating to the period before loading and after discharging and while the goods are in charge of another carrier, and to deck cargo and live animals.3. JurisdictionAny lawsuit arising under this Bill of Lading shall be filed at New Orleans, the Carrier's principal place of business, in the U.S. District Court for the Eastern District of Louisiana. U.S. Law shall apply.

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