U.N./F.A.O. World Food Programme v. M/V Tay

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

___________________________

No. 97-20184
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U.N./F.A.O. WORLD FOOD PROGRAMME,

Plaintiff-Appellant,

VERSUS

M/V TAY, HER ENGINES, TACKLE, ETC.; ET AL.,

Defendants,

M/V TAY, HER ENGINES, TACKLE, ETC.; AFRICAN BULK SERVICES,
INCORPORATED,

Defendants-Appellees.

___________________________________________________

Appeal from the United States District Court
For the Southern District of Texas
___________________________________________________
April 9, 1998

Before DAVIS, JONES, and DENNIS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Following a bench trial, the district court rejected most of

the U.N./F.A.O. World Food Programme’s claims against Defendants

African Bulk Services, Inc. and the M/V TAY for loss and damage to

cargo. We affirm.

I.

The U.N./F.A.O. World Food Programme (“WFP”) is the hunger

relief organization of the United Nations. In August of 1992, WFP

arranged with African Bulk Services, Inc. (“ABS”) for the transport

of cargo to the coast of West Africa. At the time, ABS was the

bareboat charterer and operator of merchant vessels which
specialized in carrying humanitarian food aid to the West African

coast. Previously, ABS had bareboat chartered the M/V TAY from its

owner, Tropical Reef Shipping Ltd., to transport cargo to Africa.

Beginning in September of 1992, the M/V TAY loaded cargo

destined for Africa in the Gulf Coast ports of Houston, Lake

Charles, New Orleans, and Pensacola. This cargo consisted of rice,

beans, corn-soya blend, and vegetable oil that the United States

had donated as part of its world hunger relief efforts. WFP had

arranged with ABS for the transport of this cargo to the ports of

Lobito, Angola and Luanda, Angola. WFP issued non-negotiable liner

waybills covering the shipment. These waybills incorporated by

reference the Carriage of Goods by Sea Act (“COGSA”), 46 App.

U.S.C. §§ 1300-1315. With its shipment of humanitarian aid, the

M/V TAY sailed for the coast of Africa on October 7, 1992.

Around the time the TAY began taking on cargo in the United

States, Angola began experiencing civil unrest associated with the

country’s first multiparty elections, which were being held after

16 years of civil war. This civil unrest escalated to such a point

that it was no longer considered safe to discharge cargo in Angolan

ports. On November 4, 1992, WFP’s Director of Operations in Angola

advised WFP’s headquarters in Rome to stop all shipments to Angola.

He warned WFP’s headquarters that cargo would be looted or

destroyed if discharged in Angolan ports. Two days later, the

Director of Operations recommended that the TAY deviate to a port

in Namibia. ABS, also concerned about the situation in Angola,

alerted WFP to specific clauses in the waybills that entitled ABS,

under the circumstances, to deviate to a safe port outside of

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Angola to discharge the TAY’s cargo. Eventually, ABS agreed to

continue on to Angola if WFP would accept certain terms, including

a “war zone” bonus for the crew, the purchase of special war risk

insurance for the vessel, and demurrage for the additional days

required to discharge at Luanda. WFP accepted ABS’s terms and the

parties agreed that the M/V TAY would discharge WFP’s entire

consignment at Luanda, Angola. After a stop in Freetown, Sierra

Leone to discharge other cargo, the TAY anchored outside of Luanda

on November 29, 1992.

The Luanda Port Administration, an agency of the Republic of

Angola Ministry of Transport, operated the Port of Luanda. The

port had three general cargo terminals with berths large enough to

accommodate the M/V TAY. A different stevedoring company operated

each of these terminals. Thus, the stevedore company assigned to

work a ship’s cargo depended upon the terminal to which the vessel

was assigned. The Luanda Port Administration was vested with the

authority to assign vessels to particular terminals and usually did

so on the basis of the order of the arrival of each vessel.

Approximately five days after the TAY’s arrival outside of the

port, the port administration assigned the vessel to the cargo

terminal operated by Secil Maritima (“Secil”).1 Before berthing,

the port administration required ABS to pay a percentage of the

pilotage, towing, and stevedoring services that would be incurred

by the M/V TAY. The TAY’s crew was warned not to leave the vessel

1
The government of Angola owned 51% of Secil, and a private
Danish company owned the remainder. Coincidentally, Secil Maritima
also served as ABS’s representative in Luanda. ABS had hired Secil
in this capacity prior to the TAY’s arrival in Luanda.

3
due to the fighting in the city.

Secil began discharging the TAY’s cargo on December 4, 1992.

On the second day of the unloading process, the ship’s captain

suspended the discharge operations for two hours because of damage

and theft by Secil’s stevedores. The ship’s master also filed a

written protest to Secil complaining of the damage. WFP filed a

similar protest. None of these complaints had any effect and the

damage and theft of cargo continued. During the unloading, several

documented clashes occurred between Angolan “police” and Secil

stevedores. Secil finished unloading the TAY on January 5, 1993.

WFP filed suit, alleging that Secil’s stevedores pilfered and

damaged a substantial part of the cargo during discharge. WFP

alleged $298,607.38 in damages. WFP sought recovery against ABS

and Tropical Reef Shipping, Ltd. (the owner of the TAY) in personam

and the M/V TAY in rem. After a bench trial, the court entered

judgment in favor of WFP in the amount of $8,765.20 for cargo

damaged by ABS. However, the court ruled against WFP and in favor

of ABS on the balance of WFP’s claim. The district court found

that delivery of the cargo was completed when the TAY’s cargo

hatches were opened because ABS no longer had control over the

discharge. Relatedly, the district court also concluded that

COGSA’s “q” clause exonerated ABS from any liability. It is from

this final judgment that WFP now appeals.2

II.

2
In the alternative, the district court concluded that even
if ABS were liable for damage that occurred during discharge, WFP
had failed to properly quantify its damages. WFP also contests
this finding. However, because we can resolve this appeal on other
grounds, we need not address the propriety of this ruling.

4
 A.

The primary issue presented on appeal is whether the district

court correctly held that ABS lost control of the unloading of the

TAY’s cargo, and, for that reason, ABS was not responsible for the

actions of the stevedores in damaging the cargo. To consider this

argument, we first briefly review the law of this circuit relating

to the general duty of the carrier to discharge cargo and how this

duty is affected when the carrier involuntarily loses control of

the discharge.

B.

The Carriage of Goods by Sea Act governs “all contracts for

the carriage of goods by sea to or from ports of the United States

and foreign trade,” provided that the contract of carriage is

evidenced by a bill of lading or similar document of title. 46

App. U.S.C. §§ 1301(b), 1312; see also Mendes Junior Int’l. Co. v.

M/V Sokai Maru, 43 F.3d 153, 155 (5th Cir. 1995). COGSA defines

the rights and duties of the parties “from the time when the goods

are loaded on to the time when they are discharged from the ship.”

46 App. U.S.C. § 1301(e). One of the broad obligations imposed

upon the carrier by COGSA is to “properly and carefully load,

handle, stow, carry, keep, care for, and discharge the goods

carried.” 46 App. U.S.C. § 1303(2). But as § 1304 makes clear,

this duty is not absolute; section 1304 provides a number of

exceptions to the above rule. If the carrier can establish one of

these exceptions, it may exonerate itself from liability for loss

or damage to cargo. 46 App. U.S.C. § 1304(2)(a)-(q); see GRANT

GILMORE & CHARLES L. BLACK, JR., THE LAW OF ADMIRALTY §§ 3-28 to 3-37, at

5
155-68 (2d ed. 1975). One of these exceptions provides that

neither the carrier nor the ship shall be responsible for loss or

damage arising or resulting from “[a]ny other cause arising without

the actual fault and privity of the carrier and without the fault

or neglect of the agents or servants of the carrier.” 46 App.

U.S.C. § 1304(2)(q)(“q” clause).

The Harter Act, 46 App. U.S.C. §§ 190-196, obligates the

carrier to provide “proper delivery,” which has been defined to

mean discharge of the cargo upon a fit and customary wharf.

Metropolitan Wholesale Supply, Inc. v. M/V Royal Rainbow, 12 F.3d

58, 61 (5th Cir. 1994).3 However, proper delivery may be modified

by the customs and usage of the port. Tapco Nigeria, Ltd. v. M/V

Westwind, 702 F.2d 1252, 1256 (5th Cir. 1983) (citing Allstate Ins.

Co. v. Imparca Lines, 646 F.2d 166, 168 (5th Cir. Unit B May

1981)). As mentioned above, COGSA obligates the carrier to

“properly and carefully load, handle, stow, carry, keep, care for,

and discharge the goods carried.” 46 App. U.S.C. § 1303(2).

Because COGSA and the Harter Act are so similar, one commentator

has noted that it often makes no difference which statute applies.

See 2A BENEDICT ON ADMIRALTY § 14, at 2-10 (7th ed. rev. 1997).

In Tapco Nigeria, Ltd. v. M/V Westwind, 702 F.2d 1252 (5th

3
Notwithstanding other situations in which the Harter Act
may apply, § 1311 of COGSA provides as follows:

Nothing in this chapter shall be construed as superseding
any part of [the Harter Act], or of any other law which
would be applicable in the absence of this chapter,
insofar as they relate to the duties, responsibilities,
and liabilities of the ship or carrier prior to the time
when the goods are loaded on or after the time they are
discharged from the ship.

6
Cir. 1983), and its companion case, All Commodities Supplies, Co.,

Ltd. v. M/V Acritas, 702 F.2d 1260 (5th Cir. 1983), we addressed

the carrier’s obligations to properly deliver and discharge cargo

under COGSA and the Harter Act. In Tapco,4 the carrier delivered

a cargo of rice to Lagos, Nigeria during a period of civil unrest.

Stevedores hired by the Nigerian Port Authority (“NPA”) discharged

the vessel. The NPA was an agency of the Nigerian government and

controlled the loading and discharge of cargo in the Port of Lagos.

The NPA hired all stevedores in the port and paid them according to

NPA-established rates. The carrier had “no control over which

stevedores [were] hired to discharge the vessel” and did not

“participate in any way in the discharge.” Tapco, 702 F.2d at

1254. During the discharge of cargo, the stevedores negligently

damaged some of the cargo and also permitted various persons to

pilfer the rice cargo. The vessel’s chief officer protested the

stevedores’ handling of the cargo, but the protests had no effect.

The chief officer also testified that in this atmosphere of

lawlessness and unrest he feared for his life and decided not to

interfere with the stevedores’ operation of the ship’s gear.

On appeal, we concluded that under the Harter Act the carrier

“properly provided safe delivery to the farthest point that it

could delivery [sic] the goods within the limitations of the law,

custom, and usage of the port.” Id. at 1258. We reasoned that

“the government controlling the port had physically intervened in

the discharge and delivery process” and had “demanded sole control

4
The facts in All Commodities also involved cargo discharge
in Lagos, Nigeria and are essentially identical to those in Tapco.

7
of an operation which otherwise would have been part of the ocean

carrier’s function of discharge and delivery.” Id. at 1256.

Furthermore, we concluded that under COGSA’s “q” clause the carrier

was not responsible for any losses caused by the stevedores during

discharge. Id. at 1259-60. The carrier lacked any control over

the actions of the stevedores and could not be responsible for

their actions. Id. at 1260; see also Metalimport of Romania v.

S.S. Italia, 426 F. Supp. 770 (S.D.N.Y. 1976) (holding carrier not

liable under COGSA for damage to cargo caused by stevedores

controlled by Romanian government and forced upon the carrier by

regulation).

Thus, when the vessel owner loses practical control over the

discharge of the cargo, as it did in Tapco and All Commodities, the

shipowner is no longer responsible for the acts of the stevedore

and the cargo is considered delivered when the ship’s hatches are

opened. See Tapco, 702 F.2d at 1260; All Commodities, 702 F.2d at

1263; see also 2A BENEDICT ON ADMIRALTY § 113, at 11-6 (7th ed. rev.

1997). This lack of practical control is ordinarily associated

with a breakdown of law and order so that the carrier is powerless

to prevent the unlawful or negligent conduct of the stevedores.

United States v. Central Gulf Lines, Inc., 974 F.2d 621 (5th Cir.

1992), makes it clear that the carrier’s lack of control over the

stevedore is the critical factor. In Central Gulf, the owner of

cargo brought suit against the carrier, Central Gulf Lines, for

damage to famine relief cargo. The carrier argued, inter alia,

that it should be exonerated from liability under COGSA’s “q”

clause because it had relinquished control of the cargo to port

8
authorities. We rejected this argument because the record evidence

demonstrated that Central Gulf exercised significant control and

direction over the unloading of the cargo. Id. at 629. Thus,

Central Gulf had not “relinquish[ed] full control and

responsibility to port authorities” and was not entitled to

exoneration from liability. Id.

With this background, we now turn to the issues presented in

this appeal.

C.

The primary issue presented to us is whether the district

court correctly concluded that ABS lost control over the discharge

of WFP’s cargo so that the Tapco and All Commodities cases control

the resolution of this appeal.

WFP argues first that the government of Angola did not

intervene in the discharge of the TAY, and, therefore, that Tapco

and All Commodities are inapplicable. We find ample evidence to

support the district court’s contrary factual finding. The

uncontroverted evidence established that the Angolan government

operated the Port of Angola through the Luanda Port Administration.

The Dock Regulations and Port Tariffs vested control of the

discharge process in the port administration.5 The Luanda Port

5
Article 2 provided as follows:

The commercial exploration of the ports inside their
defined limits may only be effected by the ports
administration personnel, thus all and any private,
individual or collective activity, that is related to the
handling of goods, loading and unloading of vessels and
all and any operations related to the commercial
utilization of the ports being prohibited, inside those
limits,

9
Administration assigned vessels to particular terminals which were

operated by designated stevedores. Pursuant to these regulations

the Luanda Port Administration assigned the TAY to its berth. This

assignment meant that Secil Maritima, an entity owned 51% by the

Angolan government, was the stevedore designated to unload the TAY.

The evidence supports the district court’s finding that ABS had no

influence over the selection of the terminal or the stevedore.6

The district court therefore did not err in finding that the

government of Angola, through custom, regulation, and usage of the

port, had intervened in the discharge and delivery process. The

government of Angola appointed and controlled the stevedores that

discharged the TAY’s cargo. The government also set the rates

which the stevedores could charge for services and issued the

invoices for the stevedoring services incurred during the TAY’s

discharge. The district court was entitled to find that ABS, like

the vessel owners in Tapco and All Commodities, (1) had no control

1. All work in the port shall be exclusively
performed by port administration personnel against
payment of the charges established.

2. It shall be granted, however, that where due to
the work load or by authorization given in each case by
the dock foreman, work may be performed by personnel and
material pertaining to the interested parties or even
third parties by payment of the charges established in
the port tariffs for such purposes.
6
While both parties concede that in certain instances the
port authority could be swayed, at the direction of the carrier or
its agent, to assign a particular vessel to a particular terminal,
the evidence in this case indicates that ABS played no role in
determining where the TAY would berth. Contrary to WFP’s
assertions that ABS may have influenced the TAY’s assignment, the
district court found that “the vessel had no control over the
selection of the stevedore.” This finding is supported by the
record and is not clearly erroneous.

10
over the selection of the stevedores who would discharge the vessel

and (2) lost control over the discharge of the cargo. The district

court was therefore entitled to concluded that the cargo was

delivered when the ship opened the hatches.

Furthermore, the district court did not err in concluding that

ABS established the necessary facts to prevail under COGSA’s “q”

clause for the majority of WFP’s claim. The district court did not

err in finding that damage to the cargo caused by the stevedores

occurred when the cargo was no longer in ABS’s control and was

without the actual fault, privity, or neglect of ABS or its agents.

See Tapco, 702 F.2d at 1260; see also BENEDICT ON ADMIRALTY, supra, at

§ 113. Contrary to WFP’s assertion that ABS had several means to

control the discharge operations, the district court found that the

“vessel lost all control over discharge operations.” Once again,

ample evidence supports the district court’s finding in this

respect. The TAY’s crew complained daily of the damage and theft

of cargo by the stevedores. The TAY’s chief officer testified at

trial that the stevedores ignored his directions and complaints and

laughed at him. The chief officer complained verbally and in

writing to Secil’s supervisors about the stevedores’ conduct, but

these complaints fell on deaf ears.

The TAY’s chief officer also testified that he was “scared” of

the political situation in Luanda and voiced his concerns daily to

a WFP representative on board the TAY. The crew heard constant

gunfire from the battles between warring factions in the city of

Luanda. Given the circumstances and the unrest in Luanda, the

district court did not err in finding that the TAY’s crew did all

11
that it could reasonably have done to protect the cargo.

WFP also argues that the TAY’s crew had alternative means to

control the Secil stevedores. WFP’s representative in Luanda,

Robert Sanchez, was on board the TAY at various times during the

discharge. He testified at the trial that the crew could have

exercised control over the stevedores by “intimidating” them with

shows of force. Ordinarily, approximately 150 stevedores were

aboard the TAY. Given the circumstances, the district court was

fully justified in concluding that this tactic would not have been

successful and that the crew was not required to follow this

advice. WFP also argues that the crew could have shut off power to

the ship’s winches, closed the cargo hatches, and left the terminal

until the situation was rectified. We answered a similar argument

in Tapco: “[S]uch a contention ignores both the vessel’s duty to

deliver the cargo and the rule . . . that foreign law--here, the

obligation to release the cargo to the stevedores chosen and

employed by the Nigerian government--modifies the common law

elements of proper delivery.” Tapco, 702 F.2d at 1259. Also, the

record evidence does not reveal that WFP’s representative on board

the TAY asked ABS to abandon the discharge effort.

D.

WFP raises a number of other arguments which we have

considered and now reject. First, WFP argues that the agreement

between ABS and WFP was a private contract of carriage under which

the risk of proper unloading was allocated to ABS, thus superseding

COGSA’s general requirements. However, the evidence does not

support this contention. The TAY routinely carried other

12
commercial and relief aid cargo for numerous shippers. In fact, on

the voyage in question the TAY was carrying cargo belonging to the

Catholic Relief Service, in addition to WFP’s cargo. Therefore,

the agreement between ABS and WFP was a common contract of carriage

governed by COGSA. See 2A BENEDICT ON ADMIRALTY § 23, at 3-3 (7th ed.

rev. 1997).

WFP argues next that Clause 7 of the liner waybills, which

provided that loading, discharge, and delivery of the cargo were to

be arranged by ABS, allocated all risks of loss in unloading to

ABS. The district court rejected this argument, stating that the

clause did not mean that ABS assumed “unconditionally all risks

related to discharge operations.” We agree. Clause 7 simply

directed that WFP would arrange and pay for the stevedoring

services at the port of discharge; it did not place any extra

burden or risk on ABS above the carrier’s general duties under

COGSA and the Harter Act.

Finally, WFP argues that ABS assumed all risks of cargo loss

occurring during unloading in Luanda because WFP received

additional consideration for agreeing to discharge the cargo in

Luanda. This “consideration” consisted of war risk insurance for

the vessel, demurrage for any additional days required to discharge

at Luanda, and a “war zone” bonus for the crew. The district court

rejected this argument, finding that this contractual agreement

only shifted the risk of loss from war to ABS and did not cover the

risk of loss from damage or theft. We agree with the district

court’s conclusion. The renegotiated terms involved additional

expenses associated with the TAY’s call at Luanda. The war risk

13
insurance only covered risks of loss to the vessel itself. The

demurrage payment and the war zone bonus were costs related to

delays that the TAY could have experienced in calling at Luanda.

By requesting these payments, ABS did not agree to assume all risks

associated with the discharge of the cargo.

E.

The district court did award WFP $8,765.20 for the loss of

cargo damaged by the collapse of a cargo stow in the vessel’s

number 2 hold. This apparently occurred sometime during the

voyage, before the discharge operation began. Neither party

challenges this award.

III.

For the above reasons, we conclude that the district court did

not err in finding that the TAY lost control over the discharge

operation once the cargo hatches were opened and that delivery was

completed at that point. It follows that ABS properly delivered

the cargo to the farthest practicable point and is not liable for

any damage or loss caused thereto by the government-controlled

stevedores. Based on the district court’s finding that ABS could

not exercise any practical control over the discharge process, the

district court correctly concluded that ABS was not responsible for

the actions of the stevedores under COGSA. For the reasons stated

above, we AFFIRM the district court’s judgment in all respects.

AFFIRMED.

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