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August 3, 2001


The opinion of the court was delivered by: Motley, J.


Plaintiff, a shipper, shipped steel products from Durban, South Africa to ports in San Juan, Tampa, New Orleans and Houston on a vessel called the IBN Abdoun (the "Abdoun"). On June 24, 1999, plaintiff filed this suit pursuant to this court's admiralty jurisdiction, claiming that the cargo was damaged en route by exposure to water, resulting in damages in excess of $1 million.

Plaintiff filed this suit against defendant United Arab Shipping Co. ("United Arab"), the carrier responsible for transporting the steel goods from South Africa to U.S. ports, for sweat contamination, physical damage caused during the voyage and rust damage caused by seawater.*fn1 In addition, plaintiff is suing Cargill Marine and Terminal Inc. ("Cargill"), the carrier hired to transport the goods from New Orleans to Chicago, for rust damage caused by freshwater.*fn2 On January 1, 2001, plaintiff filed a motion to strike United Arab's defense of a $500 per package liability limitation imposed by the Carriage of Goods by Sea Act ("COGSA") and for summary judgment as to United Arab's liability. On January 17, 2001, defendant United Arab responded with a cross-motion for summary judgment as to COGSA's liability limitation and opposition to plaintiff's motion for summary judgment. This court heard argument on the summary judgment motions on June 14, 2001.*fn3

As set forth below, United Arab has not presented prima facie evidence that plaintiff had a fair opportunity to opt out of COGSA's $500 per package liability limitation. In addition, United Arab has not contested its liability for a portion of the damage to the steel shipment. Therefore, plaintiff's motion to strike the affirmative defense of limitation of liability and for summary judgment on liability is granted.

I. Background

The underlying facts pertinent to the summary judgment motions are, for the most part, undisputed. In June, 1998, plaintiff's shipment of steel products was loaded aboard the Abdoun in Durban, South Africa. During the voyage to ports in San Juan, Tampa, New Orleans and Houston, the steel was exposed to seawater as a result of leaky hatches aboard the Abdoun. As a result of the exposure to seawater, the steel suffered rust damage. Defendant United Arab does not contest, for the purposes of this action, that the Abdoun was unseaworthy. United Arab also admits that the unseaworthiness of the Abdoun was responsible for at least part of the damage to the steel products.

The parties have presented two contracts regarding limitation of liability for damage to the shipment. The first contract, the bill of lading regarding the shipment (the "Bill of Lading"), bore no explicit reference to any liability limitation but contained only the following clause regarding liability:

(2) General Paramount Clause

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

Trades where Hague-Visby Rules apply.*fn4

In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on February 23rd 1968 — The Hague-Visby Rules — apply compulsorily, the provisions of the respective legislation shall apply.

The country of shipment, South Africa, has enacted the Hague Rules setting a limitation on collectable damages of two SDRs per kilo. United Arab does not dispute that if the standard of two SDRs per kilo applies, the limitation would be approximately $2.66 per kilo, higher than the actual damage claimed in this case. Therefore, if the Hague Rules as adopted by South Africa apply to the shipment at issue, the limitation on damages would be moot.

The second contract at issue is a charter party which has been proffered by United Arab (the "Charter Party").*fn5 The Bill of Lading states on its face "TO BE USED WITH CHARTER-PARTIES / CODE NAME: COGENBILL." United Arab claims the proffered Charter Party is a standard form referred to as a Cogenbill. United Arab claims that the Charter Party, read in conjunction with the Bill of Lading, reflects the totality of its contract of carriage with plaintiff.

The Charter Party, presented to this court as defendant's Exhibit D, consists of a 15-page document including a facsimile cover page. The second page is a cover page to the contract setting forth the parties to the contract and providing, inter alia, a space for their signatures. The terms of carriage are set forth on pages 3 through 15 of the Charter Party. Pages 3 through 5 of the Charter Party appear to be boilerplate language. No reference is made in this boilerplate to a choice of rules governing the shipment. Each of the pages thereafter bears the heading "RIDER CLAUSES TO M.V. "IBN ABDOUN" CHARTER PARTY DATED 2 JUNE 1998," (the "Rider ...

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