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Admiralty Jurisdiction

Suits under the 1936 Carriage of Goods by Sea Act have routinely been held to be within the admiralty jurisdiction of the federal courts. This is generally not a contentious issue, however, because the 1936 Act is typically limited to situations that would otherwise be within admiralty jurisdiction under 28 U.S.C. § 1333(1). The proposed bill specifies that the proposed Act shall provide an independent basis for admiralty jurisdiction even in cases that might not otherwise be within the admiralty jurisdiction under 28 U.S.C. § 1333(1). This result is justified because the goods are in the stream of maritime commerce throughout the period governed by the contract of carriage. The proposed bill thus answers, with respect to the proposed Act, the question that the Supreme Court has explicitly left open with respect to the Limited Liability Act, 46 U.S.C. App. § 181 et seq., and the Admiralty Extension Act, 46 U.S.C. App. § 740. See Sisson v. Ruby, 497 U.S. 358, 359 n.1 (1990); see also Foremost Insurance Co. v. Richardson, 457 U.S. 668, 677 n.7 (1982) (declining to decide if the Admiralty Extension Act provides an independent basis for admiralty jurisdiction).

The proposed bill has no impact on the availability of a non-admiralty forum under the “saving to suitors clause" of 28 U.S.C. § 1333(1). Thus cargo claimants will have the same rights they now have to bring cases in state courts or on the "law" side of federal court under 28 U.S.C. § 1331 (federal question), § 1332 (diversity), or § 1337 (commerce regulations); the bill neither limits not expands the COGSA plaintiff's forum choices outside of admiralty. But it does require all courts to apply the proposed Act in covered cases. See “Suits Outside of COGSA," supra page 23.

Qualifying Statements

Under subsection 3(3) of the 1936 Carriage of Goods by Sea Act, the carrier is required to issue a bill of lading if the shipper desires one, and the bill of lading must show certain things, such as the number of packages or pieces, or the quantity or weight of the cargo. A proviso to subsection 3(3), however, excuses the carrier from the obligation to indicate the number, quantity, or weight of the cargo when there is no reasonable means of checking the accuracy of the statement.

With containerized cargo, in particular, this rule has created difficulties. The carrier is generally unable to determine the number of packages or pieces

cargo claimant's lien priority, which can depend on whether an action is characterized as in contract or tort. See, e.g., Associated Metals & Minerals v. M/V Alexander's Unity, 41 F.3d 1007, 1011-17 (5th Cir. 1995); All Alaskan Seafoods, Inc. v. M/V Sea Producer, 882 F.2d 425, 428-430, 1989 AMC 2935, 2939-42 (9th Cir. 1989); Oriente Commercial, Inc. v. M/V Floridian, 529 F.2d 221, 222-223, 1975 AMC 2484, 2485-88 (4th Cir. 1975).

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inside a container without opening the container, and opening a sealed container is among the last things that either party desires. There are also situations in which the carrier is unable to verify this information for non-containerized cargo. In some ports and under some circumstances, the carrier may even be unable to determine the weight of the cargo. Although the carrier would be entitled to omit statements regarding number or weight from the bill of lading in all of these cases, the shipper — for independent commercial reasons — would nevertheless like to have the information included in the bill of lading. Thus the carrier will typically rely on information provided by the shipper but will qualify the relevant statement. For example, the description of the goods might read, "one container said to contain 500 packages of electronic parts." Or a clause such as "shipper's weight, load, and count" might be included in the description.

The impact of these clauses has been a source of some confusion under the 1936 Act. To resolve this confusion, the proposed bill modifies the existing subsection 3(3), which becomes subsection 3(3)(i), and adds two new paragraphs to subsection 3(3). Proposed subsection 3(3) (ii) covers non-containerized shipments. It permits the contracting carrier to qualify the description of the goods with respect to marks, number, quantity, or weight information (but not with respect to the apparent order and condition of the goods) when no carrier had a reasonable means of checking the information furnished by the shipper. A carrier who has properly qualified the bill of lading description in accordance with this subsection is not responsible for the accuracy of the statement to the extent that it has been qualified. Thus a claimant suing the carrier for cargo loss or damage cannot rely solely on the description of the goods in the bill of lading, to the extent that the description has properly been qualified, to establish a prima facie case. The claimant must either obtain independent evidence to establish a carrier's receipt of the goods as described, or present evidence that a carrier in fact had a reasonable means of checking the information furnished by the shipper (thus forcing the contracting carrier to prove that it was entitled to qualify the description of the goods).

Proposed subsection 3(3) (iii) covers containerized shipments, and it provides separate rules for marks, number, and quantity information (in paragraph (a)) and weight information (in paragraph (b)). Under paragraph (a), the contracting carrier may generally qualify the description of the goods with respect to marks, number, or quantity information (using a phrase such as “said to contain" or "shipper's load, stow, and count") whenever a container is received that has been loaded and sealed by the shipper, or someone acting on behalf of the shipper. A claimant will have no opportunity to show that a carrier had a reasonable means of checking the contents of the container, opening a sealed container for inspection is inevitably too great a burden to impose. There is one exception to this general rule: the contracting carrier may not qualify the bill of lading description of the goods if a carrier has in fact verified the information. Thus if a

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carrier has an agent present when the container is stuffed who tallies the goods as they are loaded, or if a carrier in fact opens the container to inspect its contents, then the contracting carrier must include the information that has been verified without qualification.

Under paragraph (b), the contracting carrier may generally qualify the description of the goods with respect to weight information when a container is received that has been loaded and sealed by the shipper, or someone acting on behalf of the shipper, and no carrier has weighed the container. In this situation, however, the qualification must be in the form of an express statement that the container has not been weighed. Furthermore, the contracting carrier may not qualify the weight information included on the bill of lading if it agreed with the shipper in writing prior to the receipt of the container that the container would be weighed. Thus the shipper can protect itself at the time it books the cargo if there is a need to have the weight verified.

Under either paragraph of subsection (3)(3)(iii), a carrier is not responsible for the accuracy of the statement regarding marks, number, quantity, or weight information to the extent that it has been properly qualified — if the container is delivered intact and undamaged with the seal intact and undamaged. Thus if the integrity of the container or the seal has been compromised, the cargo claimant can rely on the bill of lading description to establish a carrier's receipt of the goods as described in the bill of lading, without regard for the qualifying statement. But if a carrier apparently delivered the same item that was received (an undamaged, sealed container), then the burden will be on the claimant to prove with independent evidence that the carrier in fact received the cargo described on the bill of lading. The carrier will not be subject to the presumption (which is often impossible to rebut) that the bill of lading statement regarding the goods inside the container is accurate. A claimant can avoid this result if the carrier was not entitled to qualify the statements (e.g., if the carrier is unable to prove that no carrier verified the contents of the container or weighed the container, as the case may be) or if the claimant can prove that the carrier was not acting in good faith.

The following illustrations may help to clarify the intended operation of the proposed amendments to subsection 3(3):

Illustration 1. A shipper delivered a cargo of iron ore to a carrier with documents indicating the weight. Because no scale was available to the carrier at the port before the ship's scheduled departure, the carrier was not reasonably able to verify the weight. The carrier therefore issued the bill of lading stamped "shipper's weight." On delivery to the consignee, the ore weighed ten percent less than the weight shown on the bill of lading. If the consignee seeks to recover from the carrier for short delivery, it may not rely on the bill of lading as prima facie evidence that the carrier in fact

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received the weight shown on the bill of lading. But if the consignee is able to prove with other evidence that the carrier in fact received the weight shown on the bill of lading, the carrier may nevertheless be liable for the short delivery.

Illustration 2. A shipper delivered 800 cases of electronic parts to a carrier stacked on ten pallets, each with 80 cases. The cases were banded together on each pallet, and the pallet was shrink-wrapped in opaque plastic making it impossible for the carrier to determine the number of cases on a pallet without cutting the plastic and the bands. The carrier issued a bill of lading for a shipment of “ten pallets of electronic parts," but it was stamped "shipper's count." On delivery to the consignee, there were only nine pallets. If the consignee seeks to recover from the carrier for short delivery, it may rely on the bill of lading as prima facie evidence that the carrier in fact received the ten pallets shown on the bill of lading because the carrier would clearly have had a reasonable means of checking this information before issuing the bill of lading.

Illustration 3. Same facts as Illustration 2, except that the carrier issued a bill of lading for a shipment of "800 cases of electronic parts" stamped "shipper's count." On delivery to the consignee, there were only 64 cases on each of the ten pallets (for a total of 640 cases). If the consignee seeks to recover from the carrier for short delivery, it may not rely on the bill of lading as prima facie evidence that the carrier in fact received the 800 cases shown on the bill of lading if the carrier can demonstrate that no carrier had a reasonable means of checking this information before issuing the bill of lading. But if the consignee is able to prove with other evidence that the carrier in fact received the 800 cases shown on the bill of lading, the carrier may nevertheless be liable for the short delivery.

Illustration 4. A shipper loaded and sealed a container, and delivered it to the carrier with documents indicating that it contained 1000 television sets. The carrier, without verifying the contents of the container, issued a bill of lading for “one container said to contain 1000 television sets." The carrier delivered the container intact and undamaged with the seal intact and undamaged, but the consignee discovered that there were only 997 television sets in the container at the time it was delivered to the consignee. If the consignee seeks to recover from the carrier for the three missing television sets, it may not rely on the bill of lading as prima facie evidence that the carrier in fact received 1000 television sets. But if the consignee is able to prove with other evidence that the carrier in fact received 1000 television sets, the carrier may nevertheless be liable for the three missing television

sets.

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Illustration 5. A shipper loaded and sealed a container with television sets, but an agent of the carrier was present during loading and tallied the television sets as they were being loaded. The carrier may not qualify the description of the goods on the bill of lading. If the carrier does include a phrase such as "said to contain," it will be ineffective under subsection 3(3)(iii)(a).

Illustration 6. A shipper loaded and sealed a container, and delivered it to the carrier one hour before the ship was scheduled to sail. Thus the carrier did not weigh the container, but relied on the weight furnished by the shipper to issue a bill of lading that indicated a weight. The carrier stamped the bill of lading with an express statement that the container had not been weighed. The carrier delivered the container intact and undamaged with the seal intact and undamaged, but on delivery to the consignee the container weighed ten percent less than the weight shown on the bill of lading. If the consignee seeks to recover from the carrier for short delivery, it may not rely on the bill of lading as prima facie evidence that the carrier in fact received the weight shown on the bill of lading. But if the consignee is able to prove with other evidence that the carrier in fact received the weight shown on the bill of lading, the carrier may nevertheless be liable for the short delivery.

Illustration 7. Same facts as Illustration 6, except the bill of lading included a "shipper's weight, load, and count" clause instead of the express statement that the container had not been weighed. The consignee may rely on the bill of lading as prima facie evidence that the carrier in fact received the weight shown on the bill of lading.

Illustration 8. Same facts as Illustration 6, except the booking note contained an agreement that the carrier would weigh the container. The consignee may rely on the bill of lading as prima facie evidence that the carrier in fact received the weight shown on the bill of lading.

Illustration 9. Same facts as Illustration 6, except the consignee presents evidence that all containers are routinely weighed in the port of loading and the carrier is unable to prove that this container was not weighed. The consignee may rely on the bill of lading as prima facie evidence that the carrier in fact received the weight shown on the bill of lading.

Illustration 10. Same facts as Illustration 6, except the seal was cut when the carrier delivered the container to the consignee. The consignee may rely on the bill of lading as prima facie evidence that the carrier in fact received the weight shown on the bill of lading.