The carrier, Eurogulf Lines Inc, operated the S/S Acadia Forest and the LASH Barge CG-204. LASH (lighter aboard ship) barges are floating containers used to carry cargo to or from inland ports. The LASH barges themselves are carried on an oceangoing parent vessel which anchors at a deep water port from which the LASH barges are dispensed either to deliver or collect cargo from inland ports via inland waterways. LASH barges have no self-propulsion capability.

In November 1970, a shipment of 113 bundles of iron plates was delivered by the shipper, ALS Herman Ludwig, to the carrier in good order and condition at the Port of Bremen, located on the Weser River in West Germany. The cargo was loaded onto the LASH Barge and the carrier issued a bill of lading.

The bill of lading called for transportation from Brake, Germany, to New Orleans, Louisiana, USA, and designated the LASH Barge as the carrier. Clause 3(a) of the bill of lading stated:

The contract evidenced by this Bill of Lading, and all disputes arising thereunder, shall be governed by Belgian Law, in which the Hague Rules, as adopted by the Brussels Convention of 25 August, 1924, are incorporated (Article 91 of Book II of the Belgian Commercial Code). This clause shall apply without any prejudice to legal provisions stated in clauses hereafter.

Clause 3(c) of the bill of lading stated:

If liability for any loss or damage to the goods is to be determined by the law of a country which does not recognize or give effect to the foregoing Belgian law, or which does not give effect to the foregoing provisions of Paragraph b) of this clause, this Bill of Lading shall have effect subject to the provisions of the United States Carriage of Goods by Sea Act, approved April 16, 1936, or to the Hague Rules, as enacted in that country, which shall govern throughout the entire time the goods are in the Carrier's custody, including periods of the Carrier's actual custody, if any, before the goods are loaded on the barge and after discharge therefrom, and nothing herein contained is to be deemed a surrender by the Carrier of its rights, immunities, exemptions or limitations or an increase of any of its responsibilities or liabilities thereunder.

Clause 1 of the LASH Barge Conditions of Carriage provided:

1. After the loading of the goods into/on the barge named herein at the barge loading point, said barge will be towed/pushed to the rendezvous point where the barge and its contents will be loaded on the ocean vessel named herein, or substitute, for ocean transportation to the de-barging point named herein or as near thereto as the ocean vessel may safely get, lie and leave, always afloat, where the barge will be discharged from the ocean vessel and then towed/pushed to the barge destination named herein or so near thereto as said barge may safely get, lie and leave, always afloat.

The bill of lading provided in pertinent part:

2. The term Carrier wherever used in this Bill of Lading, shall mean Eurogulf Lines, Inc., and shall include the barge named herein or substitute.

Other relevant terms included the following:

CARRIERS' OPTION CLAUSE: Carrier has the right to decide in its own option and discretion which cargoes will be shipped in LASH-barges and which will be shipped in General ships. In case of carriage by LASH barge, only LASH-SHIP TERMS AND CONDITIONS WILL APPLY. In case of carriage by General ship, only General ship terms and conditions will apply. …

DEFINITION. Whenever the term Merchant is used in this Bill of Lading it shall be deemed to include the Shipper, the Receiver, the Consignee or any other Holder of the Bill of Lading authorized as such by [illegible], as well as the Owner of the [illegible]. The term Carrier only shall refer to Eurogulf Lines, Inc.

On 27 November 1970, the LASH Barge was the lead barge in a flotilla of six LASH barges being towed down the Weser River to Bremerhaven. The LASH Barge struck a lock wall and sank. The cargo on the LASH Barge, owned by Wirth Ltd and Hoesch Siegerlandwerke AG Siegen (the plaintiffs), suffered damage.

The plaintiffs claimed, and the carrier sought exoneration. The carrier relied on the statutory defences found in the US Carriage of Goods by Sea Act (COGSA), 46 USC ss 1300 ff, and specifically the defence of negligent navigation (COGSA s 1304(2)(a)) by its agent, the master of the Hanseat II, the tug which was towing the LASH Barge at the time of the incident.

The plaintiffs argued that COGSA did not apply as the LASH Barge was not a ship engaged in foreign commerce and, in any event, the damage was caused by unseaworthiness of the stern line running from the Hanseat II. The plaintiffs argued that COGSA s 1304(2)(a) was inapplicable to a barge (such as the LASH Barge) because a barge is more akin to a container than a ship.

Section 1304(2)(a) of COGSA provides that:

[n]either the carrier nor the ship shall be responsible for loss or damage arising or resulting from –

(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship.

Section 1301(d) defines 'ship' as 'any vessel used for the carriage of goods by sea'.

The first instance Court held that the COGSA statutory defences (including the negligent navigation defence) are applicable only to cargo-carrying ships engaged in foreign trade. The issue was therefore whether the LASH Barge was a ship for purposes of COGSA. The first instance Court found that, based on the bills of lading, the parties did not intend for the LASH Barge to be such a ship. Accordingly, the first instance Court held that the carrier could not rely on the COGSA defence of negligent navigation and dismissed the carrier's counterclaim for general average: see Wirth Ltd v S/S Acadia Forest 376 F Supp 785 (ED La 1974), 1974 WL 61132, 1974 US Dist LEXIS 8385, Civ A Nos 71-3250, 72-2914.

The defendant appealed to the Court of Appeals for the Firth Circuit.

Held: Judgment reversed and remanded.

In 1936, USA ratified the Hague Rules and enacted COGSA, which was a statutory codification of the Hague Rules. COGSA has superseded the Harter Act with respect to foreign trade and is incorporated by reference in every bill of lading for foreign transport to or from USA. However, the Harter Act still applies in coastwise transport in USA and to the period before loading or after discharge of the cargo.

LASH barges are 'ships' as defined in COGSA. The LASH transportation system must be viewed as a whole. Based on physical characteristics and the governmental status of the barges as registered under the laws of the US, LASH barges qualify as vessels authorised to engage in foreign trade to and from the US. A LASH barge is no less a COGSA 'ship' engaged in foreign commerce simply because it is designed to be carried during part of the voyage by the parent ship. Cases that have held lighters not to be ships under COGSA (Isthmian Steamship Co v California Spray Chemical Corp 290 F 2d 486 (9th Cir 1961); Remington Rand Inc v American Export Lines 132 F Supp 129, 137-38 (SD NY 1955)) can be distinguished on their facts. These cases involved harbour lighters which were not vessels used in foreign commerce, but used only for harbour transportation from between a vessel and a dock. Here, the LASH barges are perhaps the most important link in this maritime transportation system engaging in foreign commerce. The cargo is loaded onto the barge at the foreign port and is only unloaded at its final destination. Being a carrying vessel from beginning to end, the barge is involved in every stage of the foreign transport, rather than merely performing a shuttle service from ship to shore or vice versa.

The bill of lading in this case supported this view. Since this cargo was loaded into the LASH Barge, it is evident that the carrier looked upon it as such and was bound by the 'LASH' provisions of the bill of lading. Nevertheless, given that the Court's determination rests on COGSA, the dispute over whether the bill of lading is binding is moot. Given the holding that the LASH Barge is a 'ship' and the entire foreign shipment to the United States is covered by COGSA, any effort by the carrier to chop up responsibilities between the legs of the journey would fall under COGSA s 1303(8). Thus the outcome depends on statutory interpretation, rather than compliance with the language and meaning of the bill of lading: Zajicek v United Fruit Co 459 F 2d 395, 399 (5th Cir 1972). If the LASH Barge was not a ship under COGSA, the liability of (and defences available to) the carrier would vary according to the place of the injury (ie whether the barge was onboard the vessel or not) even though the carrier's obligations did not change.

Furthermore, when the lighterage phase is part of the whole transportation system, the 'tackle to tackle' coverage of COGSA has been held by courts to extend from the receiving tackle of the carrier's first lighter to the delivery tackle of the carrier's last lighter (see eg The Jupiter (Nelson v United States) 149 F 2d 692 (9th Cir 1945), 1945 AMC 1161; compare Colton v New York & Cuba Mail Steamship Co 1928 AMC 1161 (2d Cir 1928) (construing the Harter Act)).

The plaintiffs' argument in favour of LASH barges to be allowed to float on the waterways of the world without a flag and not being subjected to standards such as COGSA is rejected. If the plaintiffs' argument was accepted, LASH barges would be subject to general maritime law and would be unconditionally liable for damage to cargo except for exceptions preceding the Harter Act (46 USC ss 190-96). This would defeat the primary purpose of COGSA, which is to protect carriers engaged in foreign trade to and from the United States against such all-encompassing liability, while protecting the shippers' interest by assuring that due care is exercised in making the ship seaworthy and care is taken in stowing the cargo. The barge transport phase of the LASH system is as much a part of the whole system of foreign shipment as the ocean phase of the journey, and the carrier should have the same statutory duties and exemptions during both stages of transport.

Being aware of US cabotage laws (46 USC s 883), the Court noted that the plaintiffs' argument also posed a legally significant question on cabotage and requested parties to submit briefs on the pertinent German law. Based on these briefs, the Court found that, in the absence of an exception granted by the Federal Water and Shipping Administration (Wasser-und Schiffahrtsdirektion), German law prohibits a foreign vessel from transporting goods from one port to another for delivery within Germany. Only when such domestic transport is merely a leg of a journey which is to terminate in a foreign port is such intrastate transportation from one German port to another allowed. Thus the conclusion must be that the LASH Barge transportation from Brake and Bremmer to Bremerhaven was intended to be a component part of the larger enterprise of foreign transport to the United States. Otherwise, the lawfulness of such carriage would have been doubtful.

The holding in this case is in accord with other decisions involving related problems that vessels which are part of a common maritime enterprise should be viewed as one vessel in the eyes of the law. One such case was Sacramento Navigation Co v Salz 273 US 326 (1927), which involved transportation onboard a barge propelled by a tug. The tug negligently caused the barge to collide with an anchored vessel, causing total destruction of the cargo. In construing s 3 of the Harter Act (very similar to s 1304 of COGSA in language and operation), the issue was framed as 'whether the barge alone or the combination of tug and barge was the "vessel transporting" the cargo, within the meaning of the Harter Act' (Sacramento 327-328). The Court in Sacramento concluded that the barge and the tug constituted one vessel in the eyes of the law and held that the barge would not be liable for damage to the cargo caused by negligence of the towing vessel. Likewise, courts construing the Shipowners' Limited Liability Act (46 USC ss 181-89) have held that when vessels are engaged in a common transportation enterprise they should often be considered one vessel for limitation purposes: Short v The Columbia 73 F 226 (9th Cir 1896); Standard Dredging Co v Kristiansen 67 F 2d 548 (2d Cir 1933); In re Drill Barge No 2 454 F 2d 408 (5th Cir 1972); Brown & Root Marine Operators Inc v Zapata Off-shore Co 377 F 2d 724 (5th Cir 1967).

The carriage in this case was not transportation by a foreign vessel from one German port to another because such carriage is generally prohibited by German law. Rather, it was but the first leg of a shipment in foreign trade which was to terminate in a port of the United States.

The Court declined to affirm the alternative ground found by the first instance Court that the barge flotilla was unseaworthy, as the facts placed before the Court were not complete. The first instance Court did not examine the case with respect to the COGSA s 1304(2)(a) error-in-navigation defence. The Court also declined to analyse issues of, among other things, seaworthiness and its shifting burden of proof. Therefore, the case must be remanded to the first instance Court for initial factual and legal determination. The first instance Court will be unfettered in its factual findings except for the Court's legal holding on the application of COGSA to the LASH Barge and the legal availability of all COGSA defences and rights, including s 1304(2)(a).