The opinion of the court was delivered by: ROBERT L. CARTER
Plaintiff, GTS Industries S.A. ("GTS"), a corporation organized under the laws of France, is engaged in the manufacture and sale of steel products including steel coated pipes. Defendants, the owners and operators of M/V Havtjeld, an ocean vessel, are engaged in the carriage of cargo by water for hire.
Plaintiff and defendants entered into a charter party dated March 14, 1991, pursuant to which defendants agreed to transport from Dunkirk, France to Philadelphia, Pa., USA a shipment of 6,431 metric tons of coated pipe, delivered duty paid to staging yard Philadelphia, for sale to Transcontinental Gas Pipe Line Corporation of Houston, Texas ("Transco"), at the price of $ 6,679,617.26. The pipe was to be used by Transco in an underground natural gas pipeline.
Pursuant to the charter party, defendants were paid some $ 452,270 in charges and fees. Clause 2 of the agreement provided for owner responsibility
for loss of or damage to the goods or for delay in delivery of the goods only in case the loss, damage or delay has been caused by improper or negligent stowage of the goods . . . or by personal want of due diligence on the part of the Owners or their Manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied . . . .
Clause 5 (b), labeled "F.I.O. and free stowed/trimmed" and provided that the
cargo shall be brought into the holds, loaded, stowed and/or trimmed . . . by the Charterers or their Agents, free of any risk, liability and expense whatsoever to the Owners.
The shipment consisted of 1,660 pieces of pipe with a three layered external coating of polyethylene and ten externally uncoated pieces of pipe. The external coating was protection against corrosion which could cause rupture or breakdown. The pieces of pipe had beveled ends to facilitate the welding of one pipe to another in the pipeline.
Prior to transport to Dunkirk for shipment, the pieces of pipe, coating and end bevels were subjected to quality control tests and inspections and were determined to be in good order and condition and in compliance with manufacturing and contractual specifications. (Pl. Ex. 4-6)
On April 3, 1991, defendants issued a bill of lading for the shipment. The bill of lading stated that the cargo was in apparent good order and condition except for 17 pieces of pipe noted as damaged on the master's protest attached to the bill of lading. The damage listed as to the coating:
2 pipes, the damage listed as 3mm in depth; 10 pipes, 2mm in depth; 1 pipe 1mm in depth. 2 pipes, damage noted to metal exposed 50 x 50mm; one pipe had an end flattened 2cm; and one pipe, there was the notation "BVI" [which I take to mean beveled end] pricked 3mm depth.
Also attached to the bill of lading was a preshipment condition survey prepared by Captain Michel de Chalvron covering the interests of the defendants. He reported that the shipment consisted of 1,670 steel pipes, 1,660 pipes with 4mm thick polyethylene external coating and "ten unprotected and rusty" pipes. He reported that the bevels at the ends of each pipe had no special protection, but the outside surfaces "and bevels at the ends were duly protected at contact points with steel wires in order to prevent chafing and bevels crushing". (Pl. Ex. 1 at 5.) The pipes were reported to be in general good condition, with no damage to bevels at the ends. There was some damage to the polyethylene coating and when damage to the coating was equal to or more than 3mm deep, repairs were done immediately. Thirteen pipes were listed as thus repaired; otherwise 20 pipes were repaired with a wraparound adhesive polyethylene tape; one of these was "found with the tape slightly unadhesive", and 2 pipes were partially repainted in the inner side at the request of a U.S. inspector. (Id. at 6.)
There was no countervailing evidence as to the condition of the pipes after being loaded and stowed on board the vessel at Dunkirk, for departure on April 3, 1991, en route to Philadelphia. The vessel docked at Philadelphia on or ...