The plaintiff, Mesocap Industries Ltd (Mesocap), contracted with the defendant, Torm Lines (Torm), to ship three containers of goods from Savannah, Georgia, United States of America, to Calabar, Nigeria, on Torm's vessel, the M/V Esteturm. However, on 13 March 1996, the containers were discharged at Cotonou, Benin. On 16 March 1996, Mesocap obtained 'a pre-clearance approval/advanced release' from Torm's agent at Cotonou permitting the shipment of the containers to continue on to Calabar, Nigeria. However, Torm did not ship the containers to Calabar. Mesocap then made arrangements with OT Africa Lines to complete the shipment of the containers. OT Africa Lines shipped two of the three containers to Port Harcount, Nigeria, in December 1996.

The cargo in the third container was discovered to be 'moldy and rotten' due to salt water damage.

On 25 September 1998, Mesocap, together with the other plaintiff, Tradelink Exports Corp (Tradelink), brought an admiralty action to recover from Torm. The plaintiffs alleged that the damage, in the sum of USD 110,646.55, occurred onboard the vessel.

Torm moved to dismiss Mesocap's complaint because it was filed more than one year after the delivery of goods or the date when the goods should have been delivered. Torm relied on the one-year limitation period of the Carriage of Goods by Sea Act (COGSA), 46 USC ss 1300-1315. Section 1303(6) provides in relevant part that:

the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.

At first instance, the District Court for the Southern District of Georgia granted Torm’s motion to dismiss based on the reasoning in Bunge Edible Oil Corp v M/V Torm Rask 756 F Supp 261 (ED La 1991), affirmed in 949 F 2d 786 (5th Cir 1992), ie that an unreasonable deviation by a carrier does not prevent the carrier from invoking COGSA's one-year limitation period because the limitation has no conceptual nexus with cargo risk allocation.

Dissatisfied, the plaintiffs appealed. While conceding that the suit was not brought within COGSA's one-year limitation period, and that the carrier was discharged from all liability (in respect of loss or damage) if COGSA applied, the plaintiffs argued that the time limitation defence was precluded. The plaintiffs argued that Torm substantially deviated from the contract's delivery terms, and that the contract of carriage was nullified by that unreasonable deviation, making COGSA inapplicable. The plaintiffs cited Unimac Co Inc v CF Ocean Service 43 F 3d 1434, 1437 (11th Cir 1995).

Torm conceded, for the purposes of this appeal, that it unreasonably deviated from the contract of carriage, but argued that, as a matter of law, it nevertheless must prevail, and that the first instance judgment was correct. Torm argued that Mesocap's claim was time-barred because Mesocap had custody and control of the cargo no later than December 1996 when Mesocap made arrangements with OT Africa Lines to transport the cargo to Contonou, Nigeria. However, Mesocap did not file its complaint until 25 September 1998, more than one year after delivery.

Thus, the issue before the Court of Appeals for the Eleventh Circuit was whether an unreasonable course deviation by an ocean common carrier prevents the carrier from invoking COGSA's one-year time bar.

Held: Judgment affirmed.

COGSA is a comprehensive statute intended to limit the liability of carriers engaged in international shipping: Unimac 1436. It applies to 'all contracts for carriage of goods by sea to or from ports of the United States in foreign trade': Unimac 1436, citing 46 USC s 1312. COGSA defines 'foreign trade' as 'the transportation of goods between the ports of the United States and ports of foreign countries': Unimac 1436, citing 46 USC s 1312. Because the dispute between Mesocap and Torm stems from a contract for the shipment of goods from Savannah, Georgia, United States of America, to Calabar, Nigeria, COGSA governs this transaction.

The effect of a deviation on the COGSA time bar is unsettled in this Circuit. Two District Court cases from the Southern District of Florida have reached different conclusions: Birdsall Inc v Tramore Trading Co Inc 771 F Supp 1193, 1198-1199 (SD Fla 1991), and Allstate Insurance Co v International Shipping Corp 1982 AMC 1763, 1769 (SD Fla 1981), affirmed on other grounds, 703 F 2d 497 (1983).

In Unimac, a distinction was drawn between the COGSA time bar and the USD 500 limitation of liability defence: Unimac 1437 n 5. However, the issue of whether a deviation would preclude a carrier from relying on both defences (or, following the Fifth Circuit, merely the limitation of liability defence) was left undecided: Unimac 1437 n 5.

Hale Container Line Inc v Houston Sea Packing Co 137 F 3d 1455 (11th Cir 1998) quoted Unimac for the following proposition:

The doctrine of deviation provides that, when a ship deviates from the contract of carriage or varies the conduct in the carriage of goods, increasing the risk of shipment of the goods, COGSA does not apply because the bill of lading, which acts as the contract of carriage, is nullified.

However, Hale did not distinguish between the USD 500 liability limitation and the one-year limitation as Unimac indicated was necessary: Hale 1469. Furthermore, all discussion in Hale related to the USD 500 liability limitation; not the time limitation: Hale 1469.

In Bunge, the Fifth Circuit specifically addressed the issue at hand when it held that the deviation doctrine only nullifies COGSA's USD 500 per package liability limitation, not its one-year statute of limitation: Bunge 756 F Supp 261, 266, affirmed, 949 F 2d 786, 788. The Fifth Circuit reasoned that the filing limitation provision had little to do with the parties' risk of loss allocation with respect to the cargo. Hence, an unreasonable deviation logically disturbs only the parties' expectations concerning the risk of loss, but not their expectations about when they can sue. To nullify COGSA's limitation period merely because a carrier veers off course is unjustified: Bunge 756 F Supp 261, 263-66. See also Francosteel Corp v NV Nederlandsch Amerikaansche, Stoomvart-Maatschappij 249 Cal App 2d 880, 57 Cal Rptr 867 (1967); Birdsall Inc v Tramore Trading Co Inc 771 F Supp 1193, 1198-1199 (SD Fla 1991).

In contrast, cases siding with Mesocap on this issue are distinguishable or unpersuasive. Two decisions did not provide a basis or rationale when deciding that an unreasonable deviation precluded the carrier from relying on COGSA's time bar defence: Northwestern Nat’l Ins Co v Galin 1988 AMC 878, 879 (SD NY 1987), citing Cerro Sales Corp v Atlantic Marine Enterprises Inc 403 F Supp 562, 566 (SD NY 1975). The following cases cited by Mesocap did not discuss whether an unreasonable deviation eliminated the time bar defence; they only dealt with the USD 500 liability limitation: Yang Machine Tool Co v Sea-Land Service Inc 58 F 3d 1350 (9th Cir 1995), General Electric Co Int’l Sales Division v SS Nancy Lykes 706 F 2d 80 (2nd Cir 1983), Sedco Inc v SS Strathewe 800 F 2d 27, 32, 1986 AMC 2801 (2nd Cir 1986) (CMI1827), Asahi America Inc v M/V Arild Maersk 602 F Supp 25, 1986 AMC 53 (SD NY 1985), and Nemeth v General Steamship Corp 694 F 2d 609, 613 (9th Cir 1982) (CMI1787). Finally, Yutana Barge Lines Inc v Northland Services Inc 574 F Supp 1003, 1005-1006 (WD Wash 1983) held that since an unreasonable deviation deprives the carrier of contractual and statutory limitations of liability (because the deviation subjects the cargo to risks the shipper did not anticipate), a defendant may not rely upon its (1) time-bar, (2) package/customary freight unit limitation, and peril of the sea defences.

Bunge is persuasive. An unreasonable course deviation, while increasing the risk of loss (hence the need for elimination of the per package limitation defence), has no bearing on a plaintiff's ability to timely file a lawsuit. In other words, a deviation in the delivery terms creates no greater risk that the plaintiff will not be able to file suit within the statutory period. Accordingly, an unreasonable course deviation does not nullify COGSA's one year statute of limitation.

Separately, the Court, in a footnote, noted that Cerro Sales Corp v Atlantic Marine Enterprises Inc 403 F Supp 562, 565 (SD NY 1975), holds that the delivery date is of no importance and the limitation period runs from the date the goods should have been delivered, citing Western Gear Corp v States Marine Lines Inc 362 F 2d 328 (9th Cir 1966).

Subsequently, on 10 July 2000, an attempt to have the matter reheard en banc was denied: 2000 US App LEXIS 29166.