2006 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-3-2006

Ferrostaal Inc v. M/V Sea Phoenix

Precedential or Non-Precedential: Precedential

Docket No. 05-1837

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PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 05-1837

 

FERROSTAAL, INC.,

 Appellant

v.

M/V SEA PHOENIX formerly known as M/V EXPRESS

PHOENIX; INTERWAY SHIPPING CO. LTD.; PACIFIC &

ATLANTIC CORP.; TRANS SEA TRANSPORT NV;

DELARO SHIPPING COMPANY LIMITED

 

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

(D.C. Civil No. 03-cv-00164)

District Judge: The Honorable Joseph H. Rodriguez

 

Argued January 17, 2006

 

Before: BARRY, AMBRO and ALDISERT, Circuit Judges

 

(Opinion Filed: May 3, 2006)

 

George R. Zacharkow, Esq. (ARGUED)

Mattioni Limited

399 Market Street

Philadelphia, PA 19106

Counsel for Appellant
2

A. Robert Degen, Esq. (ARGUED)

Fox Rothschild

2000 Market Street, 10th Floor

Philadelphia, PA 19103

Counsel for Appellees Pacific & Atlantic Corp.

and Delaro Shipping Company Limited

Patrick F. Lennon, Esq. (ARGUED)

Tisdale & Lennon

10 Spruce Street

Southport, CT 06890

-ANDFrank P. DeGiulio, Esq.

Palmer, Biezup & Henderson

300 Market Street

Camden, NJ 08102

Counsel for Appellee Trans Sea Transport, etc.

 

OPINION OF THE COURT

 

BARRY, Circuit Judge

Appellant Ferrostaal claims that steel coils belonging to it

were damaged in transit from Tunisia to New Jersey. The

District Court granted partial summary judgment to the

defendants, now appellees, holding that the Carriage of Goods

by Sea Act (“COGSA”), ch. 229, 49 Stat. 1207 (1936), 46

U.S.C. app. §§ 1300-1315, limited their liability to Ferrostaal to

$500 per package. Ferrostaal appeals, arguing that COGSA does

not govern this transaction and that the “fair opportunity”

doctrine precludes enforcement of the $500 limitation. We hold

that the District Court correctly analyzed the choice of law

question and that the fair opportunity doctrine is inconsistent

with COGSA. We will, therefore, affirm.
1

 The Charter Party is a standard New York Produce

Exchange time charter form modified with extensive strikeouts

and an additional seventeen pages of terms. It contains one

clause explicitly incorporating COGSA by reference and another

requiring arbitration of any disputes in London under English

law.

2

 Especially by contrast with the Charter Party, the Bills

of Lading are clear and concise. Their boilerplate terms—a total

of five clauses—fit on the back of the sheet of paper that lists the

cargo manifest and the parties. Clause 1 purports to incorporate

by reference the terms of a charter party “dated as overleaf.” No

such date was provided; no charter party was named. Neither

party argues that the Charter Party should be deemed

incorporated into the Bills of Lading. Clause 5, the “Both-toBlame Collision Clause,” is unenforceable under United States

law. See United States v. Atl. Mut. Ins. Co., 343 U.S. 236, 241

(1952).

3

I. Facts and Procedural History

The Delaro Shipping Company (“Delaro”), of Cyprus,

owned the Sea Phoenix, a Cypriot-flagged cargo ship. By an

agreement (the “Charter Party”) dated November 21, 2002,

Trans Sea Transport, N.V. (“TST”) of the Netherlands Antilles,

chartered the Sea Phoenix for $7,000 a day.1

 The Sea Phoenix

was to be delivered into TST’s control on or about November 24

or 25, 2002, at Porto Marghera, Italy. TST directed the Sea

Phoenix to Bizerte, Tunisia, where, on or about December 15, it

took aboard a shipment of coils of galvanized steel. The shipper

was Tunisacier International S.A., of Tunisia; the shipment was

to be discharged at the Novolog terminal in Philadelphia and

consigned to the order of Ferrostaal Inc., a Delaware corporation

(“Ferrostaal”). The bills of lading (“Bills of Lading”) issued by

TST for the relevant portion of the shipment, written on a

standard form called a CONGENBILL,2

 indicate in the section

labeled “number and kind of packages; description of goods”

that the shipment contained 402 coils, weighing a total of

3,628,480 kilograms. The total cost of the shipment was

$171,861.14. Man Ferrostaal AG, Ferrostaal’s German parent
3

 The complaint also named as defendants the Interway

Shipping Company and the Pacific and Atlantic Corporation.

Interway was dismissed by stipulation on December 10, 2003.

Pacific and Atlantic, the manager of the Sea Phoenix, is a

Liberian company whose principal office is in Greece. It did not

join in the motion for partial summary judgment and is not a

party to this appeal.

4

company, insured the coils, “full risk from warehouse to

warehouse,” through an Italian branch of the global Ace

Insurance Group. The insurance policies indicate a total value

for the coils of roughly $2 million.

The Sea Phoenix unloaded the coils in Gloucester City,

New Jersey, on or about January 13, 2003. Ferrostaal claims

that 280 of the coils had been exposed to seawater, causing them

to rust. It estimates the total damage at $507,892. On January

15, Ferrostaal sued the Sea Phoenix, Delaro, and TST in the

United States District Court for the District of New Jersey.3

 The

complaint alleged that the damage was the result of the

unseaworthiness of the Sea Phoenix, the defendants’ negligence,

or breach of the contract of carriage. 

Delaro and TST moved for partial summary judgment,

claiming that COGSA § 4(5) limited their liability to $500 per

package. That section provides:

“Neither the carrier nor the ship shall in any event

be or become liable for any loss or damage to or in

connection with the transportation of goods in an

amount exceeding $500 per package lawful money

of the United States . . . unless the nature and

value of such goods have been declared by the

shipper before shipment and inserted in the bill of

lading.”

46 U.S.C. app. § 1304(5). They claimed that the Bills of Lading

did not include a declaration of the “nature and value of such

goods” and that, therefore, the $500 limit applied, limiting their

total liability to $140,000. In response, Ferrostaal argued that
5

the Hamburg Rules, a competing set of terms for shipping

agreements with a higher limit, should apply instead. Ferrostaal

also argued that the fair opportunity doctrine rendered the $500

limit unenforceable. Under that doctrine, the $500 limit does not

apply unless the carrier provided the shipper with notice of the

limit and an opportunity to declare a higher value for its goods in

the bill of lading. Ferrostaal claimed that the Bills of Lading

neither mentioned the $500 limit of COGSA § 4(5), nor

contained a space in which the actual value could have been

inserted.

On December 14, 2004, the District Court granted the

motion for partial summary judgment. It found, first, that

COGSA, rather than the Hamburg Rules, applied to the

shipment. Ferrostaal had not shown that Tunisian law required

application of the Hamburg Rules, and the Bills of Lading

indicated an intent to contract into COGSA rather than the

Hamburg Rules. The District Court then applied the fair

opportunity doctrine. Because we have not articulated a fair

opportunity test, the District Court relied on the test adopted by

the Court of Appeals for the Second Circuit, and concluded that

the Bills of Lading provided Ferrostaal with the necessary

opportunity. The Bills of Lading, the District Court found,

provided notice of the $500 limit by unambiguously selecting

COGSA as the governing legal regime. The section of the Bills

of Lading in which the number and weight of the coils were

indicated provided the space in which a higher value could have

been inserted.

At Ferrostaal’s request, the District Court certified for

immediate appeal, pursuant to 28 U.S.C. § 1292(b), the

following issue: “an ocean carrier’s right to invoke [COGSA] in

order to limit recovery of damages without having incorporated

any reference to COGSA or COGSA’s $500 per package

limitation in the Bill of Lading . . . .” App. 2a. We granted

leave to appeal. 
6

II. Jurisdiction and Standard of Review

The District Court had jurisdiction under 28 U.S.C. §

1333(1) as a “civil case of admiralty or maritime jurisdiction.”

We have jurisdiction over this interlocutory appeal under 28

U.S.C. § 1292(b). Our jurisdiction extends to all questions

included in the summary judgment order, not just the particular

issue certified for immediate appeal. Yamaha Motor Corp.,

U.S.A. v. Calhoun, 516 U.S. 199, 204-05 (1996). We review de

novo the District Court’s grant of summary judgment. See Foulk

v. Donjon Marine Co., 144 F.3d 252, 257-58 (3d Cir. 1998). 

Summary judgment is appropriate when “there is no genuine

issue as to any material fact and . . . the moving party is entitled

to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). All

reasonable inferences from the evidence must be granted to the

non-moving party. See Serbin v. Bora Corp., 96 F.3d 66, 69 n.2

(3d Cir. 1996). 

Determinations of the content of foreign law are questions

of law, see Fed. R. Civ. P. 44.1, and our review of them is

plenary. See Grupo Protexa, S.A. v. All Am. Marine Slip, 20

F.3d 1224, 1239 (3d Cir. 1994). “The court, in determining

foreign law, may consider any relevant material 

. . . whether or not submitted by a party . . . .” Fed. R. Civ. P.

44.1. We may consider materials not considered by the District

Court. Grupo Protexa, 20 F.3d at 1239. “This rule provides

courts with broad authority to conduct their own independent

research to determine foreign law but imposes no duty upon

them to do so.” Bel-Ray v. Chemrite Ltd, 181 F.3d 435, 440 (3d

Cir. 1999). The parties, therefore, carry the burden of proving

foreign law; where they do not do so, we “will ordinarily apply

the forum’s law.” Id.

III. COGSA Governs This Transaction

Ferrostaal’s initial argument on appeal is that, for two

reasons, COGSA is not the controlling legal regime and that the

higher liability limit of the Hamburg Rules should apply instead. 

It claims, first, that the Hamburg Rules are the law of Tunisia,

requiring a conflict-of-laws analysis that ultimately results in the

selection of those Rules. Second, it claims that the Bills of
4

 Brussels Convention for the Unification of Certain

Rules of Law Relating to Bills of Lading, Aug. 25, 1924, 51

Stat. 233, 120 L.N.T.S. 155.

5

 Protocol to Amend the Hague Rules, Feb. 23, 1968,

1977 Gr. Brit. T.S. No. 83 (Cmnd. 6944) (entered into force June

23, 1977).

6

 United Nations Convention on the Carriage of Goods by

Sea, Mar. 31, 1978, 17 I..L.M. 608.

7

Lading are ambiguous and should be construed against the

defendants—again, resulting in the selection of the Hamburg

Rules. We disagree.

A. COGSA, the Hamburg Rules, and the CONGENBILL

COGSA is the 1936 United States enactment of the

Hague Rules, the first of two major international conventions to

produce standardized shipping terms. The Hague Rules, drafted

in 1921 and adopted at an international conference in 1924,4

have been enacted by most nations. Section 4(4) of the original

Hague Rules specified a liability limit of £100 instead of $500

and differed from COGSA § 4(5) in several other

inconsequential ways. A later protocol, the Hague-Visby Rules,

adopted in 1968,5

 amended the Hague Rules to set an inflationneutral liability limit. The United States is not a signatory to the

Hague-Visby Rules and has never enacted them. 

The second major international set of shipping terms, the

Hamburg Rules, was intended as a complete replacement for the

Hague Rules.6

 The Hamburg Rules have been enacted by

comparatively few countries. The United States has not enacted

them; Tunisia has. Article 6 of the Hamburg Rules includes the

general limitation-of-liability rules of the Hague Rules, but with

the inflation-neutral mechanism of the Hague-Visby Rules and a

moderately higher limit: 

“The liability of the carrier for loss resulting

from loss of or damage to goods according to the

provisions of article 5 is limited to an amount
7

 The Hamburg Rules use as their unit of account the

Special Drawing Right, whose value is defined in terms of a

basket of currencies.

8

equivalent to 835 units of account[7] per package or

other shipping unit or 2.5 units of account per

kilogramme of gross weight of the goods lost or

damaged, whichever is the higher. . . . By

agreement between the carrier and the shipper,

limits of liability exceeding those provided for in

paragraph 1 may be fixed.”

App. 156-57a. Based on exchange rates as of January 15, 2003,

the Hamburg Rules limited liability to $3.40 per kilogram or

$1,135.89 per package, whichever was higher. This limit is

substantially higher than the limit under the Hague Rules would

be and, indeed, is high enough to cover all of Ferrostaal’s

alleged losses.

Shippers, carriers, and shipowners often attempt to

specify the terms that will govern their contracts. Clause 24 of

the Charter Party provided, in part:

“It is also mutually agreed that this Charter

is subject to all the terms and provisions of and all

the exemptions from liability contained in

[COGSA]. It is further subject to the following

clauses, both of which are to be included in all

bills of lading issued hereunder:

U.S.A. Clause Paramount

This bill of lading shall have

effect subject to [COGSA], which

shall be deemed to be incorporated

herein, and nothing contained herein

shall be deemed a surrender of the

carrier of any of its rights or

immunities or an increase of any of

its responsibilities or liabilities under

said Act.”
9

App. 86a. The Bills of Lading, however, did not contain such a

clause. Instead, they were issued on the popular standard

CONGENBILL form. The CONGENBILL included a “General

Paramount Clause” that read:

“(2) General Paramount Clause. (a) The

Hague Rules . . . as enacted in the country of

shipment, shall apply to this Bill of Lading. When

no such enactment is in force in the country of

shipment, the corresponding legislation of the

country of destination shall apply, but in respect of

shipments to which no such enactments are

compulsorily applicable, the terms of the said

Convention shall apply.

(b) Trades where Hague-Visby Rules apply. 

In trades where [the Hague-Visby Rules] apply

compulsorily, the provisions of the respective

legislation shall apply to this Bill of Lading.”

App. 114a.

Article 10 of the original Hague Rules specified that they

applied “to all bills of lading issued in any of the contracting

States.” App. 209a. COGSA went further, making itself

applicable to “[e]very bill of lading or similar document of title

which is evidence of a contract for the carriage of goods by sea

to or from ports of the United States, in foreign trade . . . .” 46

U.S.C. app. § 1300. Therefore, by its own terms, COGSA

applies to this shipment. The Bills of Lading state that the coils

were to be discharged in the United States, and they were. The

Hamburg Rules are even broader. They state that they apply

whenever the port of loading or the port of discharge is in a

contracting state (as in COGSA), whenever the bill of lading is

issued in one (as in the Hague Rules), or when the bill of lading

provides that they are applicable. 
10

B. Ferrostaal Has Not Established Tunisian Law

Ferrostaal argues that proper consideration of Tunisian

law requires application of the Hamburg Rules instead of

COGSA. Ferrostaal, however, has not demonstrated that the

Hamburg Rules are the law of Tunisia. The only record

evidence on the scope of Tunisian shipping law provided by

Ferrostaal is the text of the Hamburg Rules and a list of nations,

including Tunisia, that have enacted them into law. Ferrostaal

did not provide expert testimony, the text of the actual

enactment, Tunisian court decisions, excerpts from treatises, or

any other authoritative sources. We cannot tell whether Tunisia

enacted the Hamburg Rules with significant modifications,

whether it has amended its laws since 1980, whether Tunisian

law would provide the defendants with other relevant defenses,

or even whether Tunisia would consider its own law applicable

to this shipment. We do not have and cannot readily obtain the

information we would need to make supportable findings about

Tunisian law. See Fed.R.Civ. P. 44.1 advisory committee’s note

(“[T]he court is free to insist on a complete presentation [of

foreign law] by counsel.”).

Ferrostaal had the burden of establishing Tunisian law

and showing that it differs from United States law. See BelRay,181 F.3d at 440. It did not carry that burden. Under these

circumstances, we assume that Tunisian law is the same as

United States law, i.e., COGSA. In light of this assumption, we

reject Ferrostaal’s suggestion that because COGSA and the

Hamburg Rules present a “false conflict” of laws, comity

requires that we apply Tunisian law. The necessary predicate to

this argument—knowing what Tunisian law says—has not been

satisfied.

C. The Bills of Lading Do Not Select the Hamburg Rules

Ferrostaal’s argument that the Bills of Lading should be

read to select the Hamburg Rules is also unconvincing. COGSA

permits a carrier “to surrender in whole or in part all or any of

his rights and immunities or to increase any of his

responsibilities and liabilities under this chapter, provided such

surrender or increase shall be embodied in the bill of lading
11

issued to the shipper.” 46 U.S.C. app. § 1305. Thus, to the

extent that the Bills of Lading “embody” a choice to adopt the

Hamburg Rules, COGSA will not stand in the way of provisions

more favorable to the shipper, such as the higher limit of

liability. See also id. § 1304(5); Ilva U.S.A. Inc. v. M/V Botic,

No. 92-717, 1992 U.S. Dist LEXIS 16663, at *8 (E.D. Pa. Oct.

7, 1992) (selecting Hague-Visby Rules).

 The CONGENBILL Bills of Lading used for this

shipment, however, do not embody such a choice. The General

Paramount Clause begins by selecting the “Hague Rules . . . as

enacted in the country of shipment.” App. 114a. Since Tunisia

has not enacted the Hague Rules, this selection does not apply. 

Where it does not, next in order of consideration is “the

corresponding legislation of the country of destination.” Id. 

That, of course, is COGSA—the United States legislation

enacting the Hague Rules. See St. Paul Fire and Marine Ins. Co.

v. Thypin Steel Co., No.95 Civ. 4439, 1999 U.S. Dist LEXIS

3418, at *8 –11 (S.D.N.Y. Mar. 23, 1999), vacated in part on

other grounds, 1999 U.S. Dist. LEXIS 12888, 1999 A.M.C.

2752 (S.D.N.Y. Aug. 23, 1999) (reaching similar result in

interpreting CONGENBILL General Paramount Clause).

Ferrostaal argues that the mere fact that the Bills of

Lading do not exclude the Hamburg Rules creates an ambiguity. 

Ordinary principles of contract drafting impose no requirement

that a choice of law clause explicitly exclude the law of

jurisdictions other than the one selected. See, e.g.,

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 cmt. a

(1971) (“[E]ven when the contract does not refer to any state, the

forum may nevertheless be able to conclude from its provisions

that the parties did wish to have the law of a particular state

applied.”). The use of a provision selecting the Hague Rules is

better understood as a decision not to select the Hamburg Rules

than as a decision to make an ambiguous selection. If, as

Ferrostaal now suggests, the parties had forgotten about the

Hamburg Rules, it could hardly have been their intent to select

them. Similarly, no ambiguity is created by referring to the

Hague Rules rather than to a particular local enactment of them,

such as COGSA. See Indem. Ins. Co. of N. Am. v. Hanjin

Shipping Co., 348 F.3d 628, 634 (7th Cir. 2003); Nippon Fire &
8

 It is usually asserted that the shipper may then rebut this

showing with evidence of its own to show that it was not offered

such an opportunity. See, e.g., Kukje Hwajae Ins. Co. v. M/V

Hyundai Liberty, 408 F.3d 1250, 1255 (9th Cir. 2005). We are not

aware of any case in which the shipper successfully carried its

12

Marine Ins. Co. v. M.V. Tourcoing, 167 F.3d 99, 102 (2d Cir.

1999). 

It makes no difference that the Hamburg Rules purport to

apply to every shipment from a contracting state and that they

purport to void any deviation from them. Even if it had been

demonstrated that the Hamburg Rules were the law of Tunisia,

their self-stated compulsory application would not be relevant to

our interpretation of the terms of the Bills of Lading even if it

might have been relevant in a Tunisian court. It is similarly

irrelevant that the Hamburg Rules were first adopted after the

CONGENBILL form was drafted. The contract between

Tunisacier and TST (of which Ferrostaal is a beneficiary) was

executed well after the adoption of the Hamburg Rules. 

Finally, Ferrostaal’s argument that the phrases “such

enactment” and “shall apply” in the General Paramount Clause

fail to exclude the Hamburg Rules is wholly without merit. 

“Such enactment,” in the second sentence of the Clause, refers

back to the “[Hague Rules] as enacted” in the first sentence. The

Hamburg Rules explicitly require any contracting state to

denounce the Hague Rules, so the “[Hague Rules] as enacted”

cannot refer to the Hamburg Rules. Saying that one body of law

“shall apply” logically excludes all others.

IV. The Fair Opportunity Doctrine is Inconsistent with

COGSA

Ferrostaal’s other claim on appeal is that the fair

opportunity doctrine precludes enforcement of the $500 limit. In

general, in those Courts of Appeals that apply the doctrine, the

carrier may not enforce the limit unless it presents a prima facie

case that it offered the shipper a fair opportunity to avoid the

limit by declaring a higher value.8

 The contents of that showing
burden at the second step.

9

 See Nippon Fire & Marine Ins., 167 F.3d at 10 (2d Cir.

1999); Caterpillar Overseas, S.A. v. Marine Transp. Inc., 900

F.2d 714, 719 (4th Cir. 1990); Sabah Shipyard SDN BHD. v.

M/V Harbel Tapper, 178 F.3d 400, 404 (5th Cir. 1999); Acwoo

Int’l Steel Corp., v. Toko Kaiun Kaish, Ltd., 840 F.2d 1284,

1288-89 (6th Cir. 1988); Gamma-10 Plastics v. Am. President

Lines, 32 F.3d 1244, 1251-54 (8th Cir. 1994); Kukje Hwajae Ins.

Co., 408 F.3d at 1255 (9th Cir. 2005); Fireman’s Fund Ins. Co.

v. Tropical Shipping & Constr. Co., 254 F.3d 987, 996 (11th Cir.

2001).

10 See Senator Linie GMBH & Co. KG v. Sunway Line,

Inc., 291 F.3d 14, 155 n.9 (2d Cir. 2002); Henley Drilling Co. v.

William H. McGee, 36 F.3d 143, 146 n.5 (1st Cir. 1994);

Carman Tool & Abrasives, Inc. v. Evergreen Lines, 871 F.2d

897, 899-900 (9th Cir. 1989); Alex Kozinski, The Fourth Annual

Frankel Lecture: The Relevance of Legal Scholarship to the

13

vary from Court to Court. The majority of Courts of Appeals

require that the carrier provide the shipper with notice of the

$500 limit and the declared value procedure. In the Ninth

Circuit, for example, the carrier must include the text of COGSA

§ 4(5) or similar language in the bill of lading itself. See Kukje

Hwajae Ins. Co. v. M/V Hyundai Liberty, 408 F.3d 1250, 1255

(9th Cir. 2005). Other Courts of Appeals focus on the carrier’s

willingness to offer a choice of different rates for different

declared values. See, e.g., Brown & Root, Inc. v. M/V

Peisander, 638 F.2d 415, 424 (5th Cir.1981) (finding fair

opportunity where the carrier’s published tariff offered a 5% ad

valorem rate for excess declared value). Occasionally, the

presence or absence of a space on the bill of lading in which a

declared value could have been (but in fact was not) inserted is

considered evidence of the presence or absence of a fair

opportunity. See Nippon Fire & Marine Ins. v. M.V.

Tourcoing,167 F.3d 99, 101 (treating space for declaring excess

value as evidence of notice and opportunity). In all, seven of our

sister Courts of Appeals have adopted some version of the

doctrine and it remains good law today in all seven.9

 It has also

been the subject of mounting skepticism.10 We have not, until
Judiciary and Legal Community: Who Gives a Hoot About Legal

Scholarship?, 37 HOUS. L. REV. 295, 296-97 (2000); Michael F.

Sturley, The Fair Opportunity Requirement Under COGSA

Section 4(5): A Case Study in the Misinterpretation of the

Carriage of Goods by Sea Act (pts. 1&2), 19 J. MAR. L. &

COMM. 1, 157 (1988).

11 In our sole COGSA § 4(5) case, SPM Corp. v. M/V

Ming Moon, 965 F.2d 1297 (3d Cir. 1992), we proceeded

immediately to an analysis of the bill of lading to determine

whether the parties intended to contract for a higher limit of

liability. See id. at 1301-02. Finding an ambiguity created by the

interaction of a clause incorporating COGSA and one stating,

“Compensation shall not exceed US $2,-per kilogram,” we held

that they had. Id. In that context, it was unnecessary for us to

reach the issue of the fair opportunity doctrine itself.

14

now, had an opportunity to decide which version of the doctrine,

if any, to apply.11

Under similar circumstances, the Court of Appeals for the

First Circuit was able to resolve the case before it without ruling

on the scope of the fair opportunity doctrine:

“In light of our conclusion that the bill of lading

met whatever ‘fair opportunity’ notice

requirements are imposed by other circuits, we

refrain from embracing the ‘fair opportunity’

doctrine itself, in any form. We take this course

because the parties themselves have assumed, from

the outset, that a COGSA-related ‘fair opportunity’

doctrine would apply. Thus, we leave for another

day, and a proper adversarial setting, what we

perceive to be a problematic question.”

Henley, 36 F.3d at 146 n.5. The bill of lading at issue in Henley

contained both a clause paramount explicitly selecting COGSA

and a valuation clause limiting liability to $500 per package

unless the shipper declared a higher value and paid a higher rate

“as required by the applicable tariff.” Id. at 146. Such provisions
15

would have satisfied any extant version of the doctrine.

We do not have similar freedom here. The Bills of

Lading would fail the fair opportunity test of at least one other

Court of Appeals. See Pan Am. World Airways, Inc. v. Calif.

Stevedore & Ballast Co., 559 F2d 1173 (9th Cir. 1977). The bill

of lading in Pan Am. contained a clause paramount that

incorporated COGSA by reference, but did not specifically note

the opportunity to declare a higher value. The Ninth Circuit

rejected the argument that “an experienced shipper should be

deemed to have knowledge of an opportunity to secure an

alternative freight rate, and higher carrier liability, by reason of

his knowledge of COGSA, 46 U.S.C. § 1304(5), made

applicable by a ‘Paramount Clause’ in the bill of lading, where

such opportunity does not present itself on the face of the bill of

lading.” Id. at 1177. Here, where the Bills of Lading referred to

COGSA only under the name of the “Hague Rules,” and were

silent on the option to declare a higher value, the Ninth Circuit’s

standard for fair opportunity would not be satisfied. We will,

therefore, consider whether and to what extent the fair

opportunity doctrine should be the law of this Circuit.

A. Common Law Carrier Liability Doctrine Has Been

Superseded by COGSA

Some courts have treated the fair opportunity doctrine as

a matter of common law. See, e.g., Gen. Elec. Co. v. MV

Nedlloyd, 817 F.2d 1022, 1028 (2d Cir. 1987). We, therefore,

examine the history of carrier liability to determine whether

common law precepts are applicable. We conclude that the

enactment of COGSA rendered the question wholly statutory.

At common law in the late 19th century, a carrier could

not limit its liability for damage caused by its own negligence. 

See, e.g., Bank of Ky. v. Adams Express Co., 93 U.S. 174, 181

(1876) (rail); Liverpool & Great W. Steam Co. v. Phoenix Ins.

Co., 129 U.S. 397, 439 (1889) (sea). The Supreme Court

recognized an exception to this principle in Hart v. Pennsylvania

Railroad Co., 112 U.S. 331 (1884), in which it held that a

shipper would be estopped from claiming that the goods were

worth more than a valuation agreed upon in the bill of lading. 
16

The Court reasoned that the carrier would have charged a higher

rate if it had assumed liability against a greater valuation. 

“Agreed valuation” clauses, therefore, became a legal fiction by

which a carrier could overcome the default rule that it would be

liable for damage caused by its negligence. The logic was

contractual. The carrier had the burden of overcoming the

default of full liability by proving the contract; the shipper then

had the burden of demonstrating why the contract should not

control. See Frederick Leyland & Co. v. Hornblower, 256 F.

289, 291-92 (1st Cir. 1919) (citing cases).

In addition to pleading standard contractual defenses, the

shipper could show that it had not actually had the option to

declare a higher value. In The Kensington, 183 U.S. 263, 272-

73 (1902), for example, the Supreme Court considered a 250-

franc limit printed on a steamer ticket not signed by the plaintiff. 

It found that “no such right was allowed,” id. at 273, in part

because the terms under which the carrier allowed a higher value

to be declared constituted “illegal conditions,” id. at 276. 

Congress institutionalized this arrangement for railway carriage

in several amendments to the Interstate Commerce Act: the

Carmack Amendment, 34 Stat. 584 (1906), and the Cummins

Amendment, 38 Stat. 1196, 1196-97 (1915), amended by 39 Stat.

441, 441-42 (1916). The amended Interstate Commerce Act

enforced agreed valuations “declared in writing by the shipper or

agreed upon in writing as the release value of the property” if

and only if the Interstate Commerce Commission had authorized

the carrier to set rates dependent on the value declared. See Am.

Ry. Express Co. v. Lindenburg, 260 U.S. 584, 591-92 (1921). 

Although the Harter Act, 27 Stat. 445 (1893), prohibited

provisions in bills of lading for oceanic carriage that purported to

relieve a carrier from liability for its negligence, courts

continued to enforce agreed valuation clauses in bills of lading. 

See, e.g., The Caledonier, 31 F.2d 257, 259 (2d Cir. 1929).

Section 4(5) of COGSA, enacted in 1936, changed this

baseline in two ways. First, it made the first $500 of damage

completely nondisclaimable. Second, it limited the carrier’s

liability to $500 “unless the nature and value of such goods have

been declared by the shipper before shipment and inserted in the

bill of lading.” 46 U.S.C. App. § 1304(5). Thus, COGSA
12 COGSA also followed a general policy of exempting

the shipper from liability for damages resulting from certain

causes—such as negligent navigation—while prohibiting the

shipper from avoiding liability for damage stemming from

others—such as a negligent failure to make the ship seaworthy.

See 46 U.S.C. App. §§ 1303–1304. 

17

reversed the default rule for cases in which no value was

declared; a “declared” value by which a shipper could demand

full liability protection replaced an “agreed” value by which a

carrier could exonerate itself. The $500 minimum is pro-shipper

compensation for this change, part of the basic compromise

between shippers and carriers at the heart of the Hague Rules

and of COGSA. See 2A MICHAEL F. STURLEY, BENEDICT ON

ADMIRALTY § 15 (2005).12

Section 4(5) now specifies the law of valuation clauses. 

It sets a default value of $500 for cases in which the bill of

lading is silent. It negates any contractual attempts to reduce

that liability limit, and provides two mechanisms—a valuation or

an explicit contractual term—by which the parties can increase

the liability limit. These provisions together provide for all

possible cases. In so legislating, Congress has used its authority

to displace the common law regime, leaving no room for the

operation of common law doctrines on the liability of oceanic

carriers for their negligence. Accordingly, pre-COGSA cases do

not provide authority for the fair opportunity doctrine.

B. Supreme Court Precedent Does Not Mandate the Fair

Opportunity Doctrine

We are bound to apply decisions of the Supreme Court of

the United States. We, therefore, turn to those decisions

construing COGSA and those upon which the fair opportunity

doctrine is claimed to rest. The phrase “fair opportunity” comes

from a passage in a railroad case postdating COGSA, New York,

New Haven, & Hartford Railroad Co. v. Nothnagle, 346 U.S.

128 (1953). Mrs. Nothnagle gave her suitcase to a redcap and

never saw it again. The Supreme Court refused to enforce

against her a liability limit declared only in the rate the railroad
13 Neither do the cases cited by the Court suggest that it

does. The Ansaldo San Giorgio I is the only admiralty case of

the four; it predates COGSA. Watson Brothers is the only postCOGSA case of the four; it is an Interstate Commerce Act case.

18

had filed with the ICC. The basis for the holding was that the

railroad had failed to comply with the provision of the Interstate

Commerce Act requiring a “value declared in writing by the

shipper or agreed upon in writing,” because the railroad had not

given Mrs. Nothnagle so much as a baggage check. Id. at 135. 

The Court continued:

“But only by granting its customers a fair

opportunity to choose between higher or lower

liability by paying a correspondingly greater or

lesser charge can a carrier lawfully limit recovery

to an amount less than the actual loss sustained. 

Boston & Maine R. Co. v. Piper, 246 U.S. 439,

444-445 (1918); Union Pacific R. Co. v. Burke,

255 U.S. 317, 321-323 (1921); cf. The Ansaldo

San Giorgio I v. Rheinstrom Bros. Co., 294 U.S.

494, 497-498 (1935). Binding respondent by a

limitation which she had no reasonable

opportunity to discover would effectively deprive

her of the requisite choice. Ibid.; cf. Watson Bros.

Transp. Co. v. Feinberg Co., 193 F.2d 283, 286

(1951).”

Id. at 135-36 (emphasis added).

There is little resembling the modern fair opportunity

doctrine in Nothnagle. First, Nothnagle was a railway case; the

Court gave no indication that the doctrine extended beyond

railway carriage.13 Second, even in the context of railway

carriage, the new phrases “fair opportunity to choose” and

“reasonable opportunity to discover” were dicta. The railroad

had failed to comply with an express statutory condition; the

discussion of “fair opportunity” is best read as explaining the

rationale behind the Interstate Commerce Act’s requirement of a

writing. Third, the decision upheld the rights of an individual
19

passenger who never saw a bill of lading, not a commercial

shipper presented with one. The first sentence of the decision

emphasizes that the “case concerns . . . a passenger’s baggage

loss.” Id. at 129.

The Supreme Court has heard three COGSA cases

colorably relevant to this case. All three of those cases

concerned third-party issues. The first, United States v. Atlantic

Mutual Insurance Co., 343 U.S. 236 (1952), involved a “both-toblame” clause in the bill of lading. Both-to-blame clauses

provide that when a ship collides with another and both vessels

are negligent, the shipper is required to indemnify the carrier for

liability to the other ship out of its own recovery from the other

ship. The Court held such clauses invalid. Id. at 241. The Court

did not regard the issue as one having to do with COGSA § 4(5);

instead, it saw it as one of the interaction of common law strict

liability for carriers and COGSA § 4(2), which exonerates

carriers from liability to shippers arising out of their own

negligent navigation (rather than negligent handling). In the

absence of a specific command from COGSA allowing such

clauses, the Court continued to apply the common law rule

prohibiting carriers from contracting out of their own

negligence. Id. at 239-40. Atlantic Mutual is inapposite here

because COGSA § 4(5) specifies a rule governing liability

limits, thereby displacing the common law rule.

Two later cases, Robert C. Herd & Co. v. Krawill

Machinery Corp., 359 U.S. 297 (1959), and Norfolk Southern

Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (2004), dealt with

the liability of stevedores for damage to goods. Herd held that §

4(5) did not of its own force limit stevedores’ liability, because

COGSA § 4(5) protected only “the carrier [and] the ship.” Herd,

359 U.S. at 301-02 (quoting 46 U.S.C. app. § 1304(5)). The

Court appeared to assume that COGSA § 4(5) and “parallel

provisions of the bill of lading” were independent routes to reach

the $500 limit. It repeatedly referred to both, and to the

intentions both of Congress and the parties to the bill of lading. 

After Herd, carriers have often inserted “Himalaya clauses” in

their bills of lading to extend COGSA’s $500 limit to apply to

stevedores and other agents. 
14 Tessler Brothers is, after Nothnagle and Hart, the

principal claimed source of authority for the fair opportunity

20

Kirby involved a pure, “simple question of contract 

interpretation,” Kirby, 543 U.S. at 30, in construing two

Himalaya clauses. It had this to say about § 4(5) (in its recitation

of facts):

“In negotiating the ICC bill, Kirby had the

opportunity to declare the full value of the

machinery and to have ICC assume liability for

that value. Cf. New York, N. H. & H. R. Co. v.

Nothnagle, 346 U.S. 128, 135, 97 L. Ed. 1500, 73

S. Ct. 986 (1953) (a carrier must provide a shipper

with a fair opportunity to declare value). Instead,

and as is common in the industry, see Sturley,

Carriage of Goods by Sea, 31 J. Mar. L. & Com.

241, 244 (2000), Kirby accepted a contractual

liability limitation for ICC below the machinery’s

true value, resulting, presumably, in lower

shipping rates.”

Id. at 19. While this passage refers to the fair opportunity

doctrine, we do not read it to hold that the fair opportunity

doctrine is binding law. The reference to “a fair opportunity”

appears only in a parenthetical summarizing the holding of

Nothnagle, which was not a COGSA case. The proposition for

which it is cited is an uncontroversial statement of facts that

assumes, without further inquiry, that a fair opportunity existed. 

The cited law review article is fiercely critical of the fair

opportunity doctrine. We do not read a tangential reference in a

Supreme Court decision as enacting, sub silentio, a doctrine as

significant as the fair opportunity doctrine.

Although other Courts of Appeals have read Nothnagle

somewhat differently than we do, they have not identified any

further independent authority for the fair opportunity doctrine. 

The first decision applying the “fair opportunity” language to

COGSA was Tessler Bros. (B.C.) v. Italpacific Line, 494 F.2d

438 (9th Cir. 1974).14 There, a shipper sued a stevedore and,
doctrine. Tessler Brothers and its interpretation of Nothnagle are

regularly also cited whenever Nothnagle itself is discussed. The

fair opportunity doctrine in the Courts of Appeals has flowed

from Tessler Brothers. See Gen. Elec. Co. v. MV Nedlloyd, 817

F.2d 1022, 1028-29 (2d Cir. 1987) (citing Nothnagle, Hart, and a

Ninth Circuit case); Cincinnati Milacron, Ltd.v. M/V/ American

Legend, 784 F.2d 1161 (4th Cir. 1986) at 1163-64 (citing

Nothnagle and Tessler Brothers), at 1166 (Phillips, J.,

dissenting) (citing a Ninth Circuit case), rev’d on other grounds

en banc, 804 F.2d 837 (4th Cir. 1986); Brown & Root, Inc. v.

M/V Peisander, 648 F.2d 415, 420 n.11, 423-24 (5th Cir. 1981)

(citing Tessler Brothers); Acwoo Int’l Steel Corp. v. Toko Kaiun

Kaish, Ltd., 840 F.2d 1284, 1288 (6th Cir. 1988) (citing

Cincinnati Milacron); Gamma-10 Plastics v. Am. President

Lines, 32 F.3d 1244, 1251-54 (8th Cir. 1994) (citing Ninth

Circuit and Fourth Circuit cases).

21

citing Herd and Atlantic Mutual, argued that Himalaya clauses

were forbidden by COGSA. The Ninth Circuit rejected that

argument by distinguishing both-to-blame clauses from

Himalaya clauses. 

In a subsidiary argument, the shipper claimed that it was

not offered a choice of rates and that, therefore, the $500 limit

was not even available to the carrier, let alone to a stevedore. 

The Ninth Circuit could have rejected this argument without

reference to “fair opportunity,” because COGSA does not

purport to require a choice of rates. Instead, it accepted the

premise that the carrier must offer a choice of rates:

“A significant restriction on a carrier’s right

to limit liability to an amount less than the actual

loss sustained is that the carrier must give the

shipper ‘a fair opportunity to choose between

higher or lower liability by paying a

correspondingly greater or lesser charge. . . .’ . . 

. Nothnagle . . . ; Sommer Corp. v. Panama

Canal Co., 475 F.2d 292, 298 (5th Cir. 1973), and

cases cited therein.”
15 Neither does Sommer, cited in Tessler Brothers. 

Sommer concerned damage incurred after unloading, to which

COGSA was not directly applicable. Sommer, 475 F.2d at 295.

Under the complex circumstances of the case, the shipper’s

failure to pay a $6.88 handling charge attributable to excess

value, but not calculated by the carrier until months later, did not

allow the carrier to claim the benefit of the $500 contractual

liability limit.

The fair opportunity doctrine arises only in a brief

discussion of issues the decision does not affect. It cites

Nothnagle, id. at 298, but a statement two sentences later is flatly

inconsistent with the notice-oriented versions of the doctrine:

“Nor does [the Court’s conclusion] remotely suggest that Canal

Company either waived the various provisions or was estopped

to assert them merely because shipper-consignee was unaware of

them.” Id.

The other “cases cited therein” (all from the Courts of

Appeals) on the fair opportunity issue consist of two cases under

the Interstate Commerce Act, Sorensen-Christian Industries, Inc.

v. Railway Express Agency, Inc., 434 F.2d 867, 868-69 (4th Cir.

1970), and Chandler v. Aero Mayflower Transit Co., 374 F.2d

129, 132 n.2 (4th Cir. 1967), and two cases in which the carrier

was held to have breached an express promise to provide

insurance, Hamilton v. Stillwell Van & Storage Co., 343 F.2d

453, 454 (3d Cir. 1965) (landborne carriage), and Rhoades, Inc.

v. United Air Lines, Inc., 340 F.2d 481, 486 (3d Cir. 1965)

(airborne carriage). None of these cases found a fair opportunity

doctrine in COGSA.

22

Id. at 443-44. The quoted passage from Nothnagle refers to the

Interstate Commerce Act’s validly-filed-tariff provision. Tessler

Brothers offers no further explanation why this feature of

statutory railroad law should apply to COGSA.15 The decision

then examines the bill of lading, which contained both a clause

with “substantially the same provisions limiting liability as

[COGSA] § 4(5)” and a clause paramount selecting COGSA:

“[The shipper] contends that there is no evidence

that the shipper was offered a choice of rates, one

with the limitation and another without it. The
23

provisions in the bill of lading and COGSA are

prima facie evidence of the opportunity to avoid

the limitation, however, and it is [the shipper’s]

burden to prove that such an opportunity did not in

fact exist. Petition of Istbrandtsen Co., 201 F.2d

281, 285 (2d Cir. 1953). [The shipper] did not

carry this burden.”

Id. The prima facie burden of proof on the carrier is borrowed

from Petition of Istbrandtsen, which does not analyze COGSA §

4(5) itself and cites as authority only Hart and other cases

predating COGSA.

A later Ninth Circuit case, Pan American World Airways,

Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1177

(9th Cir. 1977), appears to be the source of the understanding

that COGSA requires not merely that the carrier be willing to

accept a higher declared valuation (possibly by charging a higher

rate) but must also give the shipper specific notice of the $500

limit and the declared value option:

“Rather, we reject appellant's argument that an

experienced shipper should be deemed to have

knowledge of an opportunity to secure an

alternative freight rate, and higher carrier liability,

by reason of his knowledge of COGSA, 46 U.S.C.

§ 1304(5), made applicable by a ‘Paramount

Clause’ in the bill of lading, where such

opportunity does not present itself on the face of

the bill of lading. The bill of lading is usually a

boilerplate form drafted by the carrier, and

presented for acceptance as a matter of routine

business practice to a relatively low-level shipper

employee. We feel that imputing such knowledge

of COGSA applicability and provisions to such an

employee is an assumption that may well go

beyond the bounds of commercial realism.”

Id. Notably absent from this ringing vindication of the right of

shippers to avoid standard terms in contracts entered into by

their employees acting within the routine scope of their
24

employment is any citation to authority, relevant or otherwise.

In summary, our survey of precedent reveals no basis to

conclude that the carrier must offer a choice of rates or provide

the shipper with notice of the $500 limit. Nor can we find a

basis for placing the initial burden of proof on the carrier.

C. The Fair Opportunity Doctrine is Not Consistent with the

Text of COGSA § 4(5)

Because we have determined that the fair opportunity

doctrine is not compelled by precedent, we must make our own

determination of whether the text of COGSA § 4(5) is

susceptible of a reading in which the fair opportunity doctrine

appears:

“Neither the carrier nor the ship shall in any

event be or become liable for any loss or damage

to or in connection with the transportation of goods

in an amount exceeding $500 per package lawful

money of the United States, or in case of goods not

shipped in packages, per customary freight unit, or

the equivalent of that sum in other currency, unless

the nature and value of such goods have been

declared by the shipper before shipment and

inserted in the bill of lading. This declaration, if

embodied in the bill of lading, shall be prima facie

evidence, but shall not be conclusive on the carrier.

By agreement between the carrier, master,

or agent of the carrier, and the shipper another

maximum amount than that mentioned in this

paragraph may be fixed: Provided, That such

maximum shall not be less than the figure above

named. In no event shall the carrier be liable for

more than the amount of damage actually

sustained.

Neither the carrier nor the ship shall be

responsible in any event for loss or damage to or in

connection with the transportation of the goods if

the nature or value thereof has been knowingly and

fraudulently misstated by the shipper in the bill of
25

lading.”

46 U.S.C. app. § 1304(5).

This passage cannot be read to permit, much less to

require, the fair opportunity doctrine. Its first sentence

unambiguously places on the shipper the responsibility to

declare a higher value for its goods if it wishes to avoid the $500

limit: “Neither the carrier nor the ship shall in any event be or

become liable for any loss or damage to . . . goods in an

amount exceeding $500 per package . . . unless the nature and

value of such goods have been declared by the shipper before

shipment and inserted in the bill of lading.” (emphasis added). 

This language does not mention notice or the format of a bill of

lading, and does not refer to higher rates for additional declared

value. 

The enforceability of the $500 limit is made conditional

only upon the shipper’s failure to declare a higher value. “By

agreement between the carrier, master, or agent of the carrier,

and the shipper another maximum amount than that mentioned in

this paragraph may be fixed . . . .” This provision emphasizes

that the “agreement” of the shipper and carrier is required to

vary the limitation from $500. Similarly, because a bill of lading

is issued by the carrier, no declaration of value could be

“inserted” in it without the carrier’s consent, yet the fair

opportunity doctrine requires the carrier to show, in effect, that it

would consent to any declaration made by the shipper. It would

pervert the meaning of these phrases to read them as requiring

the carrier to take affirmative steps to enforce the $500

limitation. We find it more natural to read them at face value. 

The carrier will not be liable in excess of $500 per package

unless it has acknowledged a higher value or agreed to a higher

limit.

We are also unable to locate in § 4(5) any basis for

placing an initial burden of proof of a fair opportunity on the

carrier. Before COGSA, when the carrier could rely only on the

bill of lading, it was appropriate to require the carrier to bear the

initial burden of showing a fair opportunity. The carrier was by

default liable for all damage caused by its negligence and could
26

reduce its liability only by showing a valid agreed valuation

clause. But COGSA, as governing law, relieves the carrier from

liability beyond $500; the carrier, by producing a bill of lading,

has easily satisfied its burden of showing that the case falls

within COGSA. From then on, any burden (of production or

persuasion) should fall on the shipper, whose task is to show that

“the nature and value of such goods have been declared by the

shipper before shipment and inserted in the bill of lading.” 46

U.S.C. App. 1304(5). The ultimate issue is not the opportunity

to declare but the declaration itself. Section 4(5) is not

“evidence of the opportunity to avoid the limitation,” as Tessler

Brothers., 494 F.2d at 443, would have it. Section 4(5) is the

limitation. It is therefore incorrect to speak of the carrier

presenting “prima facie evidence” of the opportunity, because

COGSA places no burden of production on the carrier in the first

place. 

Finally, we observe that Congress included an explicit

notice provision in an analogous context in the Interstate

Commerce Act. COGSA should not be read as though it

contained an implied notice provision.

D. The Fair Opportunity Doctrine is Not Consistent with the

Policies of COGSA § 4(5)

We find support for our conclusion that a fair opportunity

doctrine does not come within COGSA § 4(5) from the policies

embodied in that section. First, COGSA § 4(5) does not require

that the shipper have paid a higher rate to enjoy the benefits of

having declared a higher value, thus implying that the fair

opportunity doctrine’s occasional concern with a choice of rates

is misplaced. Second, the fair opportunity doctrine’s solicitude

for the unsophisticated shipper is misplaced in commercial

legislation such as COGSA. The typical disclosure requirement

is intended to warn of a departure from a legal default, protects

unsophisticated parties, and applies where the parties have

unequal bargaining power. COGSA’s $500 limit is itself the

default, most shippers COGSA reaches are commercially
16 Ferrostaal is no exception. See, e.g., Ferrostaal, Inc. v.

M/V Sea Baisen, 2005 AMC 482 (S.D.N.Y. 2004); Ferrostaal,

Inc. v. M/V Tupungato, 2004 AMC 2498, (S.D.N.Y. 2004);

Ferrostaal Inc. v. M/V Yvonne, 10 F. Supp. 2d 610 (E.D. La.

1998).

17 We note that Ferrostaal chose to insure the cargo at

issue in this case.

27

sophisticated and used to dealing with COGSA,16 and the market

for oceanic carriage of goods is competitive, giving shippers

substantial freedom to choose among hundreds of international

shipping concerns. Under the scheme of COGSA § 4(5), the

shipper already has an effective remedy for not being allowed to

declare a higher value: it can take its business elsewhere.

Third, COGSA anticipates that shippers will often acquire

marine insurance through third parties. The typical policy of

marine insurance covers many risks for which the carrier would

not be liable under COGSA, such as damage arising out of

negligent navigation, deviations to save life or property, or nonnegligent handling of the cargo. See GRANT GILMORE &.

CHARLES L. BLACK, THE LAW OF ADMIRALTY §§ 2-9, 2-10 (2D

ED. 1975); 46 U.S.C. app. § 1304(2)-(4). Insurance through

third-party maritime insurers is usually cheaper and more

convenient than insurance by the carrier and prudent shippers

will insure their cargo regardless of the allocation of liability for

negligent damage.17 The fair opportunity doctrine, in seeking to

vindicate the rights of shippers, confers a windfall on subrogated

insurers.

Fourth, COGSA is the enactment by the United States of

an international convention adopted to create international

uniformity and simplicity. Its text almost exactly tracks the text

of the Hague Rules. One significant goal of the Hague Rules

was to free bills of lading from highly particularized statements

of rights under particular national laws. See Michael F. Sturley,

The Fair Opportunity Requirement Under COGSA Section 4(5):

A Case Study in the Misinterpretation of the Carriage of Goods

by Sea Act, Part II, 19 J. MAR. L. & COMMERCE 157, 175 (1988). 
28

The liability limit was a compromise between carrying and

shipping interests, id. at 184-85, intended to be applied

uniformly around the world. The drafters of the Hague Rules

would not have anticipated the fair opportunity doctrine. Id. at

174-77. Even other common law countries do not have a fair

opportunity doctrine; Canada has explicitly rejected one. Id. at

166-69. Shipping was and is a highly international business, as

the diverse nationality of the parties in this case suggests. The

fair opportunity doctrine imposes extra costs on shippers and

carriers who deal with the United States market, particularly

when it strikes down terms in bills of lading drafted to avoid

citing a multitude of national laws.

We conclude that the fair opportunity doctrine does not

comport with the principles of COGSA § 4(5) any more than it

comports with the text of that section.

V. Conclusion

The fair opportunity doctrine is not to be found in the text

of COGSA. Whatever the merits of the common law regime

imposing liability on the carrier by default, COGSA reversed

that default. Looking for a “fair opportunity” means ignoring

COGSA in favor of the very regime COGSA overrode. The

statute is not neutral as between carriers and shippers on this

point; the burden is on the shipper to declare a greater value. 

Nor is the fair opportunity doctrine to be found in caselaw that

binds us.

We hold that the fair opportunity doctrine has no place in

the application of COGSA; we apply COGSA § 4(5) as written. 

Ordinarily, the $500 limit is available to the carrier. The shipper

bears the burden of establishing that it has “declared” “the nature

and value of such goods . . . and inserted [the declaration] in

the bill of lading.” 46 U.S.C. app. § 1304(5). The carrier

remains free to present evidence that the declared value

overstated the true value, but the shipper is estopped from

claiming that it has suffered a loss in excess of the value it

declared. See id.

We agree with the District Court that COGSA governs
29

the transaction at issue here. A straightforward application of

COGSA’s text, therefore, resolves this case. Ferrostaal did not

declare a higher value and have that value inserted in the Bills of

Lading. As a result, its recovery is limited to $500 per package.

It is unnecessary to reach the question, answered by the District

Court in the affirmative, of whether Ferrostaal had a “fair

opportunity” on the facts of this case. 

We will affirm the judgment of the District Court.