This case concerned the liability of contracting/performing carriers for the damage that occurred to a container containing machine equipment which was transported from Copenhagen, Denmark, to Hudson, Illinois, USA.

If Skadeforsäkring AB (If Skadeforsikring) argued that Blue Water Shipping A/S (Blue Water) should be ordered to pay it DKK 340,743.52. Blue Water applied for acquittal, alternatively acquittal against payment of USD 14,500. Blue Water also submitted a claim that Cosco Container Lines America Inc, North America Operation Centre (Cosco) be required to indemnify Blue Water from any claim, including interest and costs, which Blue Water may be ordered to pay.

In December 2014, Blue Water undertook with Kongskilde Industries A/S (Kongskilde) in Sorø to transport a container of machine equipment from Sorø to Kongskilde's department in Hudson, Illinois, USA. Blue Water subcontracted this transport to Cosco. The container was driven from Sorø to Copenhagen, where it was loaded on a ship to Rotterdam. In Rotterdam it was transhipped onto another ship for New York. From New York to Chicago, the container was transported by train and from there to Hudson by truck.

The relevant bill of lading contained the following provisions:

(1) CLAUSE PARAMOUNT:

All carriage under this Bill of Lading to or from the United States shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, 46 U.S.C sections 1300-1315 (hereafter 'COGSA') ...

The provisions of applicable law as set forth above shall apply to carriage of goods by inland waterways and reference to carriage by sea in such Rules or legislation shall be deemed to include reference to inland waterways. Except as may be otherwise specifically provided herein, said law shall govern before the goods are loaded on and after they are discharged from the vessel whether the goods are carried on deck or under deck and throughout the entire time the goods are in the custody of the carrier. ...

(2) DEFINITIONS ...

2.7. 'Goods' means the cargo described on the face of this Bill of Lading and, if the cargo is packed into container(s) supplied or furnished by or on behalf of the Merchant, include the container(s) as well. ...

BASIC LIABILITY ...

6.2. If it is established that the loss of or damage to the goods occurred during sea carriage, liability shall be governed by the legal rules applicable as provided in Section 1 of this Bill of Lading ...

6.5. If it cannot be determined when the loss of or damage to the goods occurred, it shall be presumed that such loss or damage occurred during sea carriage and liability shall be governed as provided in Section 6.2 above ...

6.7. Carrier shall not be liable for any loss or damage arising from ...

(c) handling, loading, stowage or unloading of the goods by or on behalf of Merchant ...

(e) lack or insufficiency of or defective condition of packing in the case of goods,

which by their nature are liable to wastage or damage when not packed or when not properly packed. ...

COMPENSATION FOR LOSS AND DAMAGE:

7.1. Unless otherwise mandated by compulsorily applicable law, Carrier’s liability for compensation for loss of or damage to goods shall in no case exceed the amount of US $500 per package or per customary freight unit ...

7.4. On shipments involving carriage by land in the United States ... , loss of or damage to goods shall be limited to US $50 per pound of goods lost or damaged ...

(10) CONTAINER PACKED BY MERCHANT

If Carrier receives the goods already packed into containers: ...

10.2. Merchant warrants that the stowage and seals of the containers are safe and proper and suitable for handling and carriage and indemnifies Carrier for any injury, loss or damage caused by breach of this warranty ...

It follows from COGSA § 1304(2)(n) that the carrier is not liable for damage to goods caused by 'insufficiency of packing'. It also follows from § 1304(5) that the carrier's liability is limited to '$500 per package'.

Held: Judgment in full for the plaintiff.

On the basis of the information on the extent of the damage and the photographic material presented, the Court finds that the container has been violently shaken while the goods were in the custody of the carrier. This caused major damage to the transported machine parts, which had considerable weight. Blue Water cannot, on the basis of the available evidence, including the survey report, be considered to have proved that the conditions for freedom from liability in the bill of lading and COGSA § 1304 are fulfilled. Blue Water's acquittal claim is thus not upheld.

In support of its subsidiary claim, Blue Water has argued that it is not clear when in the transport chain the damage occurred, and that the damage is therefore considered to have occurred on the sea route, with the consequence that its liability is limited to USD 500 per package.

Regarding the time of the occurrence of the damage, it is stated in the survey report that the damage must have occurred 'after the discharge in New York or at the rail head in Chicago'. The surveyor emphasises, among other things, that it is unlikely that a 'main line container company' or a 'third party container terminal' would accept receipt of a damaged container, and that the seal on the container was unbroken upon delivery.

The Court agrees with the assessment stated in the survey report, and notes that upon receipt of a damaged container, written comments would have been added to the transport document. The Court therefore finds that, when deciding on the limitation of liability issue, it must be assumed that the damage occurred during land transport. Blue Water's view that the presence of rust in the container indicates that the damage occurred during sea transport cannot lead to a different assessment. On this basis, the Court cannot accept that Blue Water can limit its liability to USD 500 per package unit.

On the whole, taking into account the above, the Court accepts If Skadeforsikring's full claim. Blue Water shall pay DKK 340,743.52 to If Skadeforsikring, plus costs and interest. Cosco shall indemnify Blue Water.