Recent Development by Amy S. Parigi
Sabah Shipyard Sdn. Bhd. (Sabah) purchased a gas turbine to use in constructing a power generator for the National Power Corporation of the Philippines (NAPOCOR). It then contracted with Industrial Maritime Carriers (Bahamas), Inc. (IMB), through its agent, Intermarine Inc. (Intermarine), to transport the turbine to Sabah's facilities in Labuan, Malaysia. The bill of lading governing the contract of carriage stated that the M/V HARBEL TAPPER would carry the cargo to Singapore, with an on-carrier delivering the cargo to Labuan. On its arrival in Singapore, the turbine was discharged to a small barge, the ASIA MARINER, to await transshipment. During the night, the ASIA MARINER began taking on water, and the turbine slid into the harbor. Although a successful salvage operation recovered the turbine, Sabah could not use it to complete the power generator for NAPOCOR.
Sabah brought suit against IMB, Intermarine, and the owner of the M/V HARBEL TAPPER, L&C III Ltd. (L&C), in the United States District Court for the Southern District of Texas. The suit arose under general maritime law and the Carriage of Goods by Sea Act (COGSA). The district court found IMB and Intermarine liable as freight forwarders because they had placed the cargo on an unseaworthy barge. In the alternative, the district court found them liable as carriers under the Harter Act because they had discharged the turbine to an unseaworthy barge. After finding IMB and Intermarine liable, the court refused to apply COGSA's $500-per-package or -per-unit limit on liability. The court held that COGSA's limitation did not apply to freight forwarders and, if the defendants were liable as carriers under the Harter Act, that COGSA's limitation of liability could not contractually limit their liability. The district court went on to hold that, even if COGSA could contractually apply to contracts of carriage governed by the Harter Act, a carrier could not invoke COGSA's limitation of liability when it failed to exercise due diligence to provide a seaworthy ship. The defendants appealed the district court's $9 million judgment against them. The United States Court of Appeals for the Fifth Circuit reversed and held that the lower court had erred in refusing to apply COGSA's $500-per-package or -per-unit limit on liability when calculating damages. Sabah Shipyard Sdn. Bhd. v. M/V Harbel Tapper, 178 F.3d 400, 410, 2000 AMC 163, 174 (5th Cir. 1999).
About the Author
Amy S. Parigi.
Citation
75 Tul. L. Rev. 811 (2001)