The shipping industry began using containers during the 1960s to expedite cargo-handling. Today much of the cargo transported in international liner service is carried aboard container-ships specifically designed to stow containers in their holds and on their decks.
The practice of carrying containers on deck is described in the 1990 book “Ocean Container Transportation an Operational Perspective.” According to the book, “the carrying capacity of the vessel is enhanced when cargo is stored in containers because deck space may be utilized more extensively. Modern containerships often carry containers up to five high on deck, held in position by a combination of corner locking devices and lashings. By utilizing the deck, approximately 30 per cent more cargo can be carried by average containership than if the ship’s holds alone were used.”
Determining “unreasonable deviation”
Recently, the Ninth Circuit Court of Appeals in the M/V Sea-Land Consumer case (1995 AMC 1065) attempted to determine whether an ocean carrier deviated from its contract of carriage by stowing containerized cargo on the deck of a containership without the agreement of the shipper.
In the Sea-Land Consumer case, the shipper and the ocean carrier entered into a bill-of-lading contract for the carriage of containerized cargo from Japan to the United States. The contract did not contain a statement that an option for deck stowage had been exercised. The container fell overboard during the voyage, and the shipper sued in federal district court for the loss. The district court granted summary judgement in the shipper’s favor based upon an unreasonable-deviation theory, and the carrier appealed.
The concept of deviation originally was used in admiralty law to describe the vessel’s wandering from its customary course. The meaning was later expanded to include any variation in the vessel’s operation that increased voyage risks.
Eighty two years after Hadley, Congress enacted the Carriage of Goods by Sea Act (COGSA). The Act provides that every bill of lading evidencing a contract of carriage of goods by sea to or from the United States, in foreign trade, shall be subject to the Act’s provisions.
Unreasonable deviations invalidate bills of lading and strip carriers of defenses, such as the Cogsa (Carriage of Goods by Sea Act) package limitation. A common example of an unreasonable deviation involves unauthorized deck stowage of cargo. This is considered such a fundamental breach that the vessel becomes liable for cargo damage, unless deck stowage was customary in a particular port or trade or was expressly agreed upon. Conversely,, reasonable deviations, such as those intended to save life, carry no penalties.
In the Sea-Land Consumer case, the appeals court’s determination that the shipper was entitled to below-deck stowage where the bill of lading did not specify deck stowage and the carrier failed to present evidence of an agreement or custom permitting deck stowage. The appeals court found that the carrier submitted evidence sufficient to raise an issue of fact so as to defeat summary judgment and mandate a trial.
Case sent back for fact-finding
The carrier also argued that, given the prevalence of containerization, deck stowage should not be considered an unreasonable deviation. It cited Second Circuit legal authority in support of its position. The Second Circuit recognizes that while clean bills of lading imply below-deck stowage, nevertheless, stowage elsewhere will be held an unreasonable deviation only when the ship’s hold is the ordinary and contemplated stowage area.
The Ninth Circuit went on to note that “although we might be inclined to follow the (Second Circuit’s) rationale based upon our own general knowledge of shipping developments over the years, that knowledge is not a substitute of an accurate record before the trial court.”
The case has been remanded to the district court for further fact-finding, and its decision is pending. Meanwhile, it now appears certain that a cargo owner is not entitled to recover for containerized cargo lost overboard on a containership solely on the strength of a clean bill of lading not specifying on-deck stowage.