This was an appeal from HDI Global Insurance Co v Kuehne + Nagel Inc (CMI2613), in which the District Court for the Southern District of New York held, in a case involving the loss of a container load of electrical wire harnesses, that the larger pallets containing the smaller cartons, rather than the smaller cartons themselves, should be considered 'packages' for US COGSA limitation purposes.

Held: District Court judgment affirmed.

The question of what constitutes a COGSA package 'is largely and in the first instance a matter of contract interpretation': Allied Chem Intl Corp v Companhia de Navegacao Lloyd Brasileiro 775 F 2d 476, 485 (2d Cir 1985). 'The number appearing under the heading "NO. OF PKGS." is our starting point': Seguros 'Illimani' SA v M/V Popi P 929 F 2d 89, 94 (2d Cir 1991) (CMI1828). That number does not control, however, where it is 'plainly contradicted by contrary evidence of the parties' intent'. Id.

Here, the number listed in the 'Number of Packages' column on the front of the relevant sea waybills reflects the number of cartons. However, the significance of that number is plainly contradicted by the terms and conditions on the reverse side of the waybills. Clause 6.1(c) provides:

For limitation purposes under COGSA, it is agreed that the meaning of the word 'package' shall be any palletised ... assemblage of cartons which has been palletised ... for the convenience of the Merchant, [including the shipper and consignee,] regardless of whether said pallet ... is disclosed on the front hereof.

Clause 6.1(c) expressly identifies the pallets as the relevant packages for COGSA limitation purposes and displaces the number listed on the front of the waybills.

HDI cites Monica Textile Corp v SS Tana 952 F 2d 636, 643 (2d Cir 1991) (CMI1749) to argue that boilerplate clauses on the back of a bill of lading 'carry little weight toward establishing intent'. The issue in Monica Textile was whether a ship's 20-foot shipping container constituted the relevant COGSA 'package': id 637. The Court 'rejected any notion that container and non-container cases were interchangeable; they were then and remain now separate lines of authority': id 640. Although the Court takes 'a critical look at clauses purporting to define the container as the COGSA package', in 'non-container cases we ... generally defer ... to the parties' intent, as manifested by their bill of lading': id 641.

Here, the parties have not attempted to define the word 'package' by their agreement 'in a manner that might be repugnant to [COGSA]': Allied Int'l Am Eagle Trading Corp v SS 'Yang Ming' 672 F 2d 1055, 1062 (2d Cir 1982) (CMI2709). The parties unambiguously agreed that pallets, not cartons, are the relevant 'packages' for COGSA limitation of liability purposes.

This Court agrees with the District Court that the definition of 'package' in cl 1 of the waybills applies when the more specific definition in cl 6.1(c) does not apply. If, for example, the cargo had not been palletised, or had been palletised for the convenience of the carrier rather than the shipper or consignee, cl 6.1(c) would not apply and cl 1's definition of 'package' would control. The requirement to give a 'reasonable and effective meaning to all terms of a contract' compels the rejection of a construction of cl 1 that would read cl 6.1(c) out of the waybills entirely: Sompo Japan Ins Co of Am v Norfolk S Ry Co 762 F 3d 165, 179 (2d Cir 2014).

To the extent that the meaning of 'package' in the waybills might be considered ambiguous, the District Court resolved any ambiguity by considering parol evidence and finding that, consistent with a longstanding course of dealing between the parties, the pallet was the relevant shipping unit.