Thyssen Steel Co (Thyssen) and Associated Metals & Minerals Corp, the plaintiffs, entered into a contract of carriage with Europe-Overseas Steamship Lines (Eurolines) to transport steel pipe from Europe to the US on the MV Yerakas. The vessel had been time chartered to Eurolines by its owner, Dodekaton Corp (Dodekaton). The cargo was damaged on arrival. The District Court granted Dodekaton's motion for summary judgment. The plaintiffs appealed the dismissal of their claims against Dodekaton.

Held: The judgment of the District Court is reversed and remanded.

In general, under the Carriage of Goods by Sea Act (COGSA), 46 USC ss 1300 ff, a cargo owner may recover only from the carrier of the goods: see Pacific Employers Ins Co v MV Gloria 767 F 2d 229 (5th Cir 1985); Associated Metals & Minerals Corp v SS Portoria 484 F 2d 460 (5th Cir 1973). A 'carrier' is 'the owner or the charterer who enters into a contract of carriage with a shipper': 46 USC s 1301(a). A 'contract of carriage' is covered by a bill of lading or other similar document of title: 46 USC s 1301(b). To recover under COGSA, the cargo owner must establish that the shipowner or charterer executed a contract of carriage with the cargo owner: see Pacific Employers 236-37. A contract of carriage with the vessel owner may either be made directly between the parties, or by virtue of the charterer's authority to bind the shipowner, by signing the bill of lading ‘for the master: Pacific Employers 236. However, if the charterer signs the bill of lading without the authority of the shipowner, the owner does not become a party to the contract of carriage and does not become liable as a 'carrier' within the meaning of COGSA: Pacific Employers 237. The cargo owner has the burden to prove that the shipowner was a party to the contract, and its failure to do so establishes that the cargo owner did not rely on the shipowner to perform the contract: see Associated Metals 462.

The District Court held that Dodekaton was not liable for the cargo damage as a COGSA carrier. Relying in particular on cl 8 of the charterparty, the Court found that Dodekaton did not become a party to the contract of carriage because the master was the agent of Eurolines, with no authority to issue bills of lading on behalf of Dodekaton. The Court did not address the argument that the charterer (Eurolines) had the authority to sign bills of lading on behalf of Dodekaton based on charterparty provisions almost identical to those contained in Pacific Employers. In Pacific Employers, it was found that charterparty provisions, largely indistinguishable from cll 8 and 45 in the instant charterparty, authorised the charterer to sign bills of lading on behalf of the vessel owner: Pacific Employers 237-38. Yeramex International v SS Tendo 595 F 2d 943 (4th Cir 1979) is distinguishable because the Yeramex charterparty contained an indemnification of the owner by the charterer 'from all consequences arising out of Master or agents signing bills of lading in accord with charterers' instructions'. Although the instant charterparty contains provisions almost identical to those in Pacific Employers, it also contains an indemnification provision similar to that in the Yeramex charterparty. For this reason, this case is distinguishable from Pacific Employers. A careful examination of the Yeramex opinion reveals that while the Fourth Circuit may have viewed the indemnity provision as evidence that the master acted as agent for the charterer vis à vis the cargo, the Court did not interpret the provision, by itself, to relieve the vessel owner of liability to the shipper.

Under these provisions of agency and indemnity, the owner is responsible for navigation and seaworthiness of the vessels; the charterer is responsible for all matters relating to cargo other than trim and stability and other matters affecting the vessels' seaworthiness. As between the owner and the charterer, the charterer is solely responsible for notice of visible damage to cargo when accepted for loading by the charterer or its agents at port: Yeramex 947-48. In fact, a provision in a contract of carriage that purports to relieve a party of COGSA liability is expressly void under the Act: COGSA s 1303(8). The charterparty at issue attempts to do indirectly that which could not be directly done in the bill of lading, which is that it could not contractually shift COGSA liability. However, as s 1303(8) makes clear, the determination of COGSA liability is not left to the discretion of the parties, but must be resolved by reference to the statute. While s 1303(8) may not expressly void the indemnity provision contained in the charterparty, the indemnity provision can have no bearing on whether the shipowner is liable to the cargo owner as a COGSA carrier. This Court is left with a charterparty and a bill of lading, which cannot be meaningfully distinguished from the charterparty and bill of lading in Pacific Employers. Clause 45 of the instant charterparty authorised the master to allow Eurolines' agent to sign the bills of lading, and therefore to bind Dodekaton. On remand, the plaintiffs will have the burden of proving that the master in fact granted Eurolines permission to sign on his behalf. If the plaintiffs carry this burden, they will prove that Dodekaton satisfies the Pacific Employers framework. They would thus prove that Dodekaton is in privity with the plaintiffs, and thereby meets the definition of a COGSA carrier. The language of the charterparty specifically authorised the master to bind Dodekaton.

Although the District Court did not directly address the argument that the demise clause in the bills of lading shifted liability from the charterer to the vessel owner, the District Court correctly disregarded the argument because these clauses are void under COGSA s 1303(8): see Amoco Transport Co v SS Mason Lykes 768 F 2d 659 (5th Cir 1985).