The plaintiffs sought to ship seismic equipment from Houston, Texas, to Poti, Georgia. Pentagon Freight Services Inc (Pentagon) provided freight forwarding services and negotiated with Stellar Line Ocean Transport Ltd (Stellar Line), the non-vessel operating common carrier (NVOCC), to ship the plaintiffs’ equipment. The bill of lading ultimately issued by Stellar Line stated on p 1 that the cargo consisted of 34 packages of seismic equipment ‘as per attached rider’. The attached rider listed the 34 packages and, above the list, contained the notation in all capital letters ‘CONTAINERS & FLAT RACKS STOWED ON DECK’. While in transit, the vessel encountered very heavy seas and part of plaintiffs’ seismic equipment fell overboard and was lost.

The plaintiffs sued Stellar Line and the other defendants and alleged that they were negligent and breached their obligations under COGSA/the Hague Rules to safely and properly load, stow and carry plaintiffs’ cargo. Stellar Line and the other defendants moved for partial summary judgment. In addition, Stellar Line filed a counter-claim against plaintiffs seeking indemnity for the loss of plaintiffs’ cargo and seeking to recover its attorneys’ fees. Stellar Line alleged that the plaintiffs breached the warranty clause in the bill of lading and that this breach precluded plaintiffs from asserting their COGSA/Hague Rules claim against Stellar Line.

Held: Construing an indemnification clause in the bill of lading as a release of plaintiffs’ COGSA/Hague Rules claims against Stellar Line would be a violation of COGSA/the Hague Rules, art 3.8. The Court reasoned that the indemnification clause in the bill of lading may apply to third-party claims but not to the plaintiffs' own cargo claim as it would avoid COGSA/the Hague Rules’ established structure of shifting burdens of proof and amount to a lessening of carrier’s liability prohibited by COGSA/the Hague Rules, art 3.8. Thus, Stellar Line’s counter-claim was denied.

In addition, to exclude COGSA/the Hague Rules coverage of on-deck cargo, the bill of lading must state that cargo is being carried on deck. Absent an agreement to the contrary, the statement should be on the face of the carrier’s bill of lading. In this case, there was a clear reference on the face of the Stellar Line bill of lading to the ‘attached rider’ that clearly reflected that flat racks were stowed on deck. However, disputes existed as to whether there was a 'definite agreement' authorising on-deck stowage of the cargo and whether on-deck stowage of the cargo was ‘reasonable and customary’ at the ports in question. Thus, defendants’ motion for partial summary judgment was denied.