Tunisacier International SA (Tunisacier) shipped 402 galvanised steel coils under bills of lading on the Sea Phoenix from Bizerte, Tunisia, to the United States. The coils were consigned to the order of Ferrostaal (the appellant). The shipment was to be discharged at the Novolog terminal in Philadelphia. The Sea Phoenix unloaded the coils in Gloucester City in New Jersey. The appellant claimed that 280 coils were damaged during transit.

At the relevant time, Trans Sea Transport NV (TST) chartered the Sea Phoenix from its owner, Delaro Shipping Company (Delaro). The time charterparty was issued on the New York Produce Exchange form. Clause 24, in part, provided:

It is also mutually agreed that this Charter is subject to … all the exemptions from liability contained in [COGSA]. It is further subject to the following clauses, both of which are to be included in all bills of lading issued hereunder:

USA Clause Paramount

This bill of lading shall have effect subject to [COGSA], which shall be deemed to be incorporated herein, and nothing contained herein shall be deemed a surrender of the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act.

The bills of lading did not contain such a clause. They were issued on the CONGENBILL 1994 form, which included a 'General Paramount Clause'. Clause 2(a) read:

The Hague Rules ... as enacted in the country of shipment, shall apply to this Bill of Lading. 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 to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.

Delaro and TST (the respondents) claimed that the Carriage of Goods by Sea Act, 46 USC § 1300 ff (COGSA) limited their liability to USD 500 per package. Section 4(5) of COGSA provides:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding USD 500 per package lawful money of the United States ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.

The bills of lading did not include a declaration of the 'nature and value of such goods'. Their total liability should accordingly be USD 140,000.

The appellant argued that the USD 500 limit did not apply. The respondents did not provide the appellant with notice of the limit and an opportunity to declare a higher value for its goods in the bill of lading. Hence, the fair opportunity doctrine rendered the USD 500 limit unenforceable. The Hamburg Rules, a competing set of terms for shipping agreements with a higher limit, should apply instead.

The District Court found that COGSA, rather than the Hamburg Rules, applied to the shipment. The bills of lading indicated an intent to contract into COGSA rather than the Hamburg Rules. The appellant had not shown that Tunisian law required the application of the Hamburg Rules. The District Court applied the fair opportunity doctrine and concluded that the bills of lading provided the appellant with the necessary opportunity.

The appellant appealed.

Held: Appeal dismissed.

The Court of Appeals agreed with the District Court that COGSA governed the transaction. Section 4(5) of COGSA should be applied as written. There was no basis for concluding that the respondents must offer a choice of rates or provide Tunisacier with notice of the USD 500 limit, or for placing the initial burden of proof on the respondents. The USD 500 limit was ordinarily available to the carrier. The appellant, who bore the burden to declare a higher value, did not do so and have that value inserted in the bills of lading. The appellant's recovery was thus limited to USD 500 per package. The fair opportunity doctrine was not to be found in the text of COGSA and had no place in the application of COGSA. It was unnecessary to reach the question, notwithstanding it was answered by the District Court in the affirmative, of whether the appellant had a 'fair opportunity' on the facts of this case.

COGSA was the United States' 1936 enactment of the Hague Rules. Its text tracks the text of the Hague Rules almost exactly. The Hague Rules, drafted in 1921 and adopted at an international conference in 1924 to create international uniformity and simplicity, was the first of two major international conventions to produce standardised shipping terms, and had been enacted by most nations. One significant goal of the Hague Rules was to free bills of lading from highly particularised statements of rights under particular national laws. Article 4.5 of the Hague Rules specified a liability limit of GBP 100 instead of USD 500 and differed from s 4(5) of COGSA in several other inconsequential ways. The liability limit was a compromise between carrying and shipping interests and intended to be applied uniformly around the world. A later protocol - the Hague-Visby Rules - was adopted in 1968 and amended the Hague Rules to set an inflation-neutral liability limit. The United States was not a signatory to the Hague-Visby Rules and had never enacted them.

The Hamburg Rules, the second major international set of shipping terms, was intended as a complete replacement for the Hague Rules. Comparatively few countries had enacted the Hamburg Rules. The United States had not enacted them; Tunisia had. Article 6 of the Hamburg Rules includes the general limitation of liability rules of the Hague Rules, but with the inflation-neutral mechanism of the Hague-Visby Rules and a moderately higher limit. Article 6.1.a of the Hamburg Rules provides:

The liability of the carrier for loss resulting from loss of or damage to goods according to the provisions of article 5 is limited to an amount equivalent to 835 units of account per package or other shipping unit or 2.5 units of account per kilogram of gross weight of the goods lost or damaged, whichever is the higher.

Article 6.4 provides: 'By agreement between the carrier and the shipper, limits of liability exceeding those provided for in paragraph 1 may be fixed.'

Based on the exchange rates on 15 January 2003, the Hamburg Rules limited liability to USD 3.40 per kilogram or USD 1,135.89 per package, whichever was higher. This limit was substantially higher than the limit under the Hague Rules, and was high enough to cover all of the appellant's alleged losses.

Article 10 of the Hague Rules specified that they applied 'to all bills of lading issued in any of the contracting States'. COGSA went further, making itself applicable to '[e]very bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade'. The bills of lading stated that the coils were to be discharged in the United States, and they were. Therefore, by its own terms, COGSA applied to this shipment. The Hamburg Rules were even broader - they apply whenever the port of loading or the port of discharge is in a contracting state (arts 2.1.a and 2.1.b) as in COGSA, whenever the bill of lading is issued in one (art 2.1.d) as in the Hague Rules, or when the bill of lading provides that they are applicable (art 2.1.e).

The appellant sought to establish that Tunisian law applied to the shipment. The appellant argued that proper consideration of Tunisian law required the application of the Hamburg Rules instead of COGSA. The appellant, however, had not demonstrated that the Hamburg Rules were the law of Tunisia. The appellant only provided the text of the Hamburg Rules and a list of nations, including Tunisia, that had enacted them into law as record evidence on the scope of Tunisian shipping law. The appellant did not provide expert testimony, the text of the actual enactment, Tunisian court decisions, excerpts from treatises, or any other authoritative sources. The Court could not tell whether Tunisia enacted the Hamburg Rules with significant modifications, whether it had amended its laws since 1980, whether Tunisian law would provide the defendants with other relevant defences, or even whether Tunisia would consider its own law applicable to this shipment.

The appellant's argument that the bills of lading should be read to select the Hamburg Rules was also unconvincing. COGSA permitted a carrier 'to surrender in whole or in part all or any of his rights and immunities or to increase any of his responsibilities and liabilities under this chapter, provided such surrender or increase shall be embodied in the bill of lading issued to the shipper.' Thus, to the extent that the bills of lading 'embody' a choice to adopt the Hamburg Rules, COGSA would not stand in the way of provisions more favorable to the shipper, such as the higher limit of liability. However, the bills of lading did not embody such a choice. The General Paramount Clause began by selecting the 'Hague Rules ... as enacted in the country of shipment'. Since Tunisia had not enacted the Hague Rules, this selection did not apply.

The appellant argued that the mere fact that the bills of lading did not exclude the Hamburg Rules created an ambiguity. The use of a provision selecting the Hague Rules was better understood as a decision not to select the Hamburg Rules than a decision to make an ambiguous selection. If the parties had forgotten about the Hamburg Rules, it could hardly have been their intent to select them. Similarly, no ambiguity was created by referring to the Hague Rules rather than to a particular local enactment of them, such as COGSA.

It made no difference that the Hamburg Rules purported to apply to every shipment from a contracting state and that they purport to void any deviation from them. Even if it had been demonstrated that the Hamburg Rules were the law of Tunisia, their self-stated compulsory application would not be relevant to the Court's interpretation of the terms of the bills of lading even if it might have been relevant in a Tunisian court. It was similarly irrelevant that the Hamburg Rules were first adopted after the CONGENBILL form was drafted. The contract between Tunisacier and TST (of which the appellant was a beneficiary) was executed well after the adoption of the Hamburg Rules.

The appellant's argument that the phrases 'such enactment' and 'shall apply' in the General Paramount Clause failed to exclude the Hamburg Rules was wholly without merit. 'Such enactment' in the second sentence of the clause, referred back to the '[Hague Rules] as enacted' in the first sentence. The Hamburg Rules explicitly require any contracting state to denounce the Hague Rules, so the '[Hague Rules] as enacted' could not refer to the Hamburg Rules. Saying that one body of law 'shall apply' logically excluded all others.

The appellant's other claim on appeal was that the fair opportunity doctrine precluded enforcement of the USD 500 limit. In general, in those Courts of Appeals that apply the doctrine, the carrier might not enforce the limit unless it presented a prima facie case that it offered the shipper a fair opportunity to avoid the limit by declaring a higher value.

The common law carrier liability doctrine had been superseded by s 4(5) of COGSA in two ways. First, it made the first USD 500 of damage completely non-disclaimable. Second, it limited the carrier's liability to USD 500 'unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading'. Thus, COGSA reversed the default rule for cases in which no value was declared; a 'declared' value by which a shipper could demand full liability protection replaced an 'agreed' value by which a carrier could exonerate itself. The USD 500 minimum is pro-shipper compensation for this change, part of the basic compromise between shippers and carriers at the heart of the Hague Rules and of COGSA.

Section 4(5) of COGSA could not be read to permit, much less to require, the fair opportunity doctrine. Its first sentence unambiguously placed on the shipper the responsibility to declare a higher value for its goods if it wished to avoid the USD 500 limit. The enforceability of the USD 500 limit was made conditional only upon the shipper's failure to declare a higher value. The portion in s 4(5) which reads '[b]y agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed' emphasises that the 'agreement' of the shipper and carrier was required to vary the limitation from USD 500. Since a bill of lading was issued by the carrier, no declaration of value could be 'inserted' in it without the carrier's consent. However, the fair opportunity doctrine required the carrier to show, in effect, that it would consent to any declaration made by the shipper. It would pervert the meaning of these phrases to read them as requiring the carrier to take affirmative steps to enforce the USD 500 limitation. The Court found it more natural to read them at face value. The carrier would not be liable in excess of USD 500 per package unless it has acknowledged a higher value or agreed to a higher limit.

The Court was also unable to locate in s 4(5) any basis for placing an initial burden of proof of a fair opportunity on the respondents. Before COGSA, when the carrier could rely only on the bill of lading, it was appropriate to require the carrier to bear the initial burden of showing a fair opportunity. But COGSA, as governing law, relieved the carrier from liability beyond USD 500; the respondents, by producing a bill of lading, had easily satisfied its burden of showing that the case fell within COGSA. Ultimately, the issue was not the opportunity to declare but the declaration itself. Section 4(5) was not 'evidence of the opportunity to avoid the limitation' but the limitation. It was therefore incorrect to speak of the carrier presenting 'prima facie evidence' of the opportunity, because COGSA placed no burden of production on the carrier in the first place.

A fair opportunity doctrine did not come within s 4(5) of COGSA from the policies embodied in that section. COGSA s 4(5) did not require that the shipper have paid a higher rate to enjoy the benefits of having declared a higher value, thus implying that the fair opportunity doctrine's occasional concern with a choice of rates was misplaced. The fair opportunity doctrine's solicitude for the unsophisticated shipper was misplaced in commercial legislation such as COGSA. The typical disclosure requirement was intended to warn of a departure from a legal default, protected unsophisticated parties, and applied where the parties have unequal bargaining power. However, the USD 500 limit was itself the default - most shippers are commercially sophisticated and used to dealing with COGSA. The market for oceanic carriage of goods was competitive, giving shippers substantial freedom to choose among hundreds of international shipping concerns. Under the scheme of s 4(5) of COGSA, the shipper already had an effective remedy for not being allowed to declare a higher value: it could take its business elsewhere. Accordingly, the fair opportunity doctrine did not comport with the principles of s 4(5) of COGSA any more than it comported with the text of that section.

As for the Hague Rules generally, the drafters of the Hague Rules would not have anticipated the fair opportunity doctrine. Even other Common Law countries did not have a fair opportunity doctrine; Canada had explicitly rejected the notion.