Thyssen, Inc. v. S/S Eurounity
1994 A.M.C. 1638, 21 F.3d 533, 1994 U.S. App. LEXIS 7116 (1994)
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Rule of Law:
A carrier cannot successfully invoke the 'peril of the sea' defense under the Carriage of Goods by Sea Act (COGSA) for cargo damage resulting from a severe but foreseeable storm. If weather conditions, such as high winds and waves, are expected for a particular voyage's location and season, the carrier remains liable for damage caused by the vessel's unseaworthiness.
Facts:
- Thyssen, Inc. and Associated Metals & Minerals Corp. purchased hot rolled steel in Europe for resale and arranged for its shipment from Antwerp, Belgium, to several U.S. ports aboard the S/S Eurounity.
- The vessel's owner, Licetus Shipping, Inc., had entered into a charter party with the charterer, Atlantic Lines S.A., warranting that the vessel was in a 'thoroughly efficient state' and its hatch covers were 'completely watertight.'
- Atlantic Lines issued bills of lading for the steel cargo that included notations such as 'RUST STAINED,' 'PARTLY RUST STAINED,' and 'WET BEFORE SHIPMENT.'
- During its voyage in January 1989, the vessel encountered a severe storm in the North Atlantic, classified as an 'ultra bomb,' which generated Beaufort Scale winds between Force 10 and 11 and waves between 10 and 11.5 meters.
- During the storm, seawater entered the cargo holds through the vessel's cargo hatches, contaminating the steel.
- Upon arrival at the destination ports, the steel was found to be damaged by seawater, forcing Thyssen to sell it to purchasers at a discounted price.
Procedural Posture:
- Thyssen, Inc. and Associated Metals & Minerals Corp. filed an action against S/S Eurounity, Licetus Shipping, Inc., and Atlantic Lines S.A. in the United States District Court for the Southern District of New York.
- The suit was brought under the Carriage of Goods by Sea Act (COGSA) to recover for seawater damage to a steel cargo.
- After a five-day bench trial, the district court entered judgment in favor of the plaintiffs, awarding damages to Thyssen and Associated.
- The district court found that the damage was caused by unseaworthy hatchcovers and rejected the defendants' 'peril of the sea' defense, holding the defendants jointly and severally liable.
- Defendants S/S Eurounity and Licetus Shipping appealed the judgment to the United States Court of Appeals for the Second Circuit.
- Plaintiff Thyssen, Inc. and defendant Atlantic Lines S.A. also filed cross-appeals regarding the calculation of damages and indemnification for attorney's fees, respectively.
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Issue:
Does a severe but foreseeable winter storm in the North Atlantic, featuring Beaufort Force 10-11 winds and waves of 10-11.5 meters, constitute a 'peril of the sea' under COGSA that exonerates a carrier from liability for seawater damage to cargo?
Opinions:
Majority - Miner, J.
No. A severe but foreseeable storm does not constitute a 'peril of the sea' sufficient to exonerate a carrier from liability under COGSA. The court reasoned that the peril of the sea defense applies only to conditions that are 'of an extraordinary nature or arise from irresistible force or overwhelming power' and cannot be guarded against by ordinary skill and prudence. Based on expert testimony from both parties, the court concluded that the weather conditions encountered by the S/S Eurounity, while severe, were foreseeable for the North Atlantic in winter. Because the storm was to be expected, the carrier could not use it as an excuse for the damage, which resulted from the vessel's unseaworthy hatch covers. The court also affirmed that the plaintiffs established a prima facie case, as testimony showed that industry custom understood the 'rust stained' notations on the bills of lading to refer to non-damaging atmospheric rust, meaning the cargo was delivered to the carrier in good condition.
Analysis:
This decision significantly clarifies the high threshold for the 'peril of the sea' defense under COGSA, emphasizing that foreseeability is the paramount factor. It establishes that carriers operating in notoriously treacherous waters, like the North Atlantic in winter, are expected to maintain vessels capable of withstanding predictably severe weather. The ruling makes it more difficult for carriers to escape liability for cargo damage by blaming storms that, while intense, are not truly extraordinary. Furthermore, the court's acceptance of industry custom to interpret notations on a bill of lading provides important guidance for shippers in establishing their prima facie case for cargo damage.
