On 7 March 1994, the Jalavihar was docked at the Electro-Coal facility on the east bank of the Mississippi River. After loading coal owned by the cargo owners, Usinas Siderugicas de Minas Geras SA and Usiminas Importacao e Exportacao SA (collectively, Usiminas), the vessel was to depart the facility and proceed to a nearby anchorage to await Usiminas' instructions regarding the next loading port. Scindia Steam Navigation Co Ltd (Scindia) owned the vessel. The vessel was chartered by Vale do Rio Doce Navegacao SA Docenave (Docenave) and subchartered to Usiminas. The contract between Usiminas and Scindia included a 'New Jason clause'. The New Jason clause was also included in the charter agreement between Docenave and Scindia and incorporated into the subcharter between Docenave and Usiminas. The clause read in part:

In the event of accident, danger, damage or disaster before or after commencement of the voyage, resulting from any cause whatsoever whether due to negligence or not, for which or for the consequence of which, the Owner is not responsible by statute, contract, or otherwise, the goods, shippers, consignees or owners of the goods shall contribute with the carrier in general average to the payment of any sacrifices, losses or expenses of a general average nature that may be made or incurred in respect of the goods.

In departing the facility, the vessel contacted with other barges and subsequently ran aground. The vessel's steering mechanism was destroyed. The cargo onboard had to be unloaded. Scindia declared the grounding a general average event and demanded contribution from Usiminas. Usiminas refused. Scindia sued. The District Court for the Eastern District of Louisiana found for the carrier. The Court found that the accident was caused by navigational or managemental error, an excepted cause under the US Carriage of Goods by Sea Act (COGSA), 46 USC ss 1300 ff, which therefore created a general average event. Because a vessel owner's duty to provide a seaworthy vessel only applies prior to the commencement of the voyage, the Court addressed the question of whether the voyage had begun. The voyage of the vessel had commenced at the time it left the dock, and therefore any subsequent events did not render it unseaworthy. No unseaworthy conditions existed because the voyage had commenced. Even if the unseaworthy conditions alleged by Usiminas caused the accident, Scindia satisfied its burden of showing due diligence prior to the voyage. Scindia exercised due diligence to render the vessel seaworthy before beginning its voyage.

Usiminas appealed. First, Usiminas argued that the Court had applied the wrong burden of proof. The rule of The Pennsylvania 86 US 125 (1873) should have been applied instead. Second, Usiminas argued that any error in navigation that causes damage to a vessel prior to the commencement of a voyage should be considered a lack of due diligence, citing Louis Dreyfus Corp v 27,946 Long Tons of Corn 830 F 2d 1321 (5th Cir 1987); American Mail Line Ltd v United States 377 F Supp 657 (WD Wash 1974). Therefore, Scindia was not entitled to its general average claim. Usiminas asserted that the Court erred in finding that Scindia had proven navigational or managemental error. Usiminas also argued that the voyage had not commenced. Third, Usiminas argued that the Court erred in finding that none of the alleged unseaworthy conditions caused the grounding of the vessel. Scindia argued that Avondale Industries v International Marine Carriers 15 F 3d 489 (5th Cir 1994) supported the proposition that the master's failure to adequately discuss the manoeuvre constituted negligence on the part of the master. Any negligence of the master concerning the movement of the vessel would be considered a navigational or managemental error, not an unseaworthy condition. Usiminas' response was that Scindia's lack of a company policy requiring the master to discuss routine manoeuvres with the pilot constituted an unseaworthy condition.

Held: Judgment affirmed.

The District Court correctly found that the damage to the vessel was caused by an exception to liability under COGSA. Scindia may therefore recover in general average pursuant to the New Jason clause in its contract with Usiminas.

COGSA provides immunity to a carrier where the damage was caused by an error in navigation or management (COGSA s 4(2)(a)), but not for damage caused by unseaworthiness unless the carrier exercised due diligence to prepare the vessel for its voyage (COGSA s 4(1)). Once a carrier has shown that the accident was caused by an error in navigation or management, it is entitled to general average unless the cargo owner shows that the vessel was unseaworthy and that the unseaworthy condition was a concurrent cause of the accident. Once unseaworthiness and causation have been established, the burden shifts back to the carrier to demonstrate the exercise of due diligence in preparing the vessel for departure: Deutsche Shell Tanker Gesellschaft v Placid Refining Co 993 F 2d 466 (5th Cir 1993).

The principle of general average provides that losses for the common benefit of participants in a maritime venture be shared rateably by all who participate in the venture. Pacific Employers Insurance Coverage v M/V Captain WD Cargill 751 F 2d 801, 803 (5th Cir 1985). A vessel owner at fault is not able to collect a general average contribution from the cargo owner. However, the New Jason clause requires a general average contribution even if the carrier is negligent, unless the carrier is found liable under COGSA.

The Pennsylvania rule should not be applied, because COGSA's burden of proof structure applies. Under the Pennsylvania rule, a vessel in violation of a statute bears the burden of showing not only that the violation did not cause the damage, but also that it could not have. The Pennsylvania provides a burden of proof structure for causation in maritime incidents. However, in California & Hawaiian Sugar Co v Columbia SS Co Inc 391 F Supp 894, 898 (ED La 1972), affirmed in 510 F 2d 542 (5th Cir 1975), it was held that the rule of The Pennsylvania does not apply where COGSA provides the burden of proof structure. See also Director General of India Supply Mission v The SS Maru 459 F 2d 1370, 1375 (2d Cir 1972).

Navigational error occurring prior to the commencement of a voyage is excepted under COGSA s 1304(2)(a): Isbrandtsen Co v Federal Insurance Co 113 F Supp 357 (SD NY 1952); Mississippi Shipping Co v Zander 270 F 2d 345 (5th Cir 1959). The plain language of the statute excepts the carrier for liability from damage caused by '[a]ct, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship': COGSA s 1304(2)(a). Thus, the issue of whether a voyage had commenced in this case is irrelevant. There is no reason to restrict the navigational error exception to errors occurring after the commencement of a voyage. Therefore, any error by the pilot is a navigational error. The responsibilities of a pilot are broad and encompass 'the command and navigation of the ship': Avondale Industries. Scindia satisfied its burden of establishing navigational error.

In Isbrandtsen, the loaded vessel was moving to a temporary anchorage before departing the port. While moving, the vessel stranded, and had to be refloated and repaired. The cargo owners admitted that the stranding was caused by navigational error, but argued that the voyage had not commenced, and therefore the vessel owner could not take advantage of the navigational error exception in COGSA. The Court in Isbrandtsen rejected this argument, stating that '[t]he exception of the carrier and ship for loss or damage arising from negligence or default of the master, mariner, pilot, or servant of the carrier in the navigation or management of the ship is unconditional in [COGSA]': Isbrandtsen 358.

Next, in Mississippi Shipping, the vessel, while departing, hit the dock it was attached to and developed a hole in its hull. The hole was not discovered until two ports later, when the crew found that water had destroyed some of the vessel's cargo. The cargo owners in Mississippi Shipping conceded that the hole in the vessel was caused by negligent navigation of the vessel, an excepted cause. However, they argued that a concurrent cause of the cargo damage was the shipowner's failure to exercise due diligence to discover and repair the hole before commencing the voyage. The shipowner's duty to exercise due diligence only applies prior to the commencement of a voyage. On appeal, therefore, the issue had been distilled to whether the voyage had commenced at the time the ship hit the dock. The Court found that the voyage had commenced, and that therefore any failure to discover and fix the hole could not be characterised as a lack of due diligence.

Prior to its discussion of the commencement of the voyage, the court in Mississippi Shipping noted that both parties had agreed that the hole was caused by negligence in the navigation of the vessel. Both parties conceded that, 'unlike the former days of the Harter Act when its Section 3 error in management exception was confined to events occurring after the commencement of the voyage, COGSA's Section 4(2)(a) is now unconditional both as to due diligence and point in time': Mississippi Shipping 348. The Court in Mississippi Shipping went on to consider the result of the case if the cargo had been immediately damaged by the inrush of water, and noted that 'the Section 4 defense would have been absolute whether the ship was deemed to be on her voyage, making ready for her voyage, or simply undocking preparatory to commencing her voyage': Mississippi Shipping expressed an opinion on the resolution of the issue presently before this Court. These dicta are persuasive and should be adopted.

Louis Dreyfus Corp is distinguishable. In Louis Dreyfus Corp, the shipbuilder who constructed the vessel Louis Dreyfus improperly installed a valve position indicator system. On appeal, the shipowner argued that the engineer's negligence in flooding the engine room resulted from management error and was therefore excepted under COGSA. This argument was rejected by the Court, citing International Navigation Co v Farr and Bailey Manufacturing Co 181 US 218, 226 (1901). The Court determined that '[t]he word "management" is not used without limitation, and is not, therefore applicable in a general sense as well before as after sailing'. Based on this principle, it was held that '[b]ecause the critical error of the engineer in this case occurred before the commencement of the voyage, [the shipowner] is not shielded from liability by § 1304(2)(a)' of COGSA: Louis Dreyfus Corp 1328. American Mail is also distinguishable. American Mail considered an error in management and not an error in navigation. Likewise, International Navigation Co only considered managemental error occurring prior to the commencement of a voyage: International Navigation Co 226. In contrast, this case presents the question of whether an error in navigation which occurs when a vessel is shifting from a dock to a temporary anchorage is an excepted cause under COGSA.

To prevail on appeal, Usiminas must prove that the District Court erred in finding that Scindia exercised due diligence to make the vessel seaworthy and that an unseaworthy condition was a concurrent cause of the grounding. The District Court's finding that the alleged unseaworthy conditions did not contribute to the grounding must be upheld. Thus there is no need to decide the issues of whether the voyage had commenced, and whether Scindia exercised due diligence.