PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
HAWKSPERE SHIPPING COMPANY,
LIMITED,
Plaintiff-Appellee,
v.
INTAMEX, S.A.; AMALCO, A.G.,
Defendants-Appellants,
and
65 BUNDLES OF SECONDARY
ALUMINUM, GRADE A380.1 AND 32
PIECES OF ALUMINUM ALLOY SOWS, No. 02-1058
GRADE AK5M2, in rem; M/V
ANANGEL FIDELITY, in rem,
Defendants,
v.
INTERNATIONAL COMMODITIES
TRANSPORTATION SERVICES,
INCORPORATED; INTERNATIONAL
COMMODITY TRANSPORTATION
SERVICES, LLC; TONY GILBERT,
Third Party Defendants.
Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Frederic N. Smalkin, District Judge.
(CA-00-2306-S)
Argued: February 24, 2003
Decided: May 27, 2003
Before NIEMEYER, MICHAEL, and KING, Circuit Judges.
2 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
Affirmed by published opinion. Judge King wrote the opinion, in
which Judge Michael joined. Judge Niemeyer wrote separately, con-
curring in part and dissenting in part and concurring in the judgment.
COUNSEL
ARGUED: John Stephen Simms, GREBER & SIMMS, Baltimore,
Maryland, for Appellants. JoAnne Zawitoski, SEMMES, BOWEN &
SEMMES, P.C., Baltimore, Maryland, for Appellee. ON BRIEF:
Stephen S. McCloskey, GREBER & SIMMS, Baltimore, Maryland,
for Appellants. Alexander M. Giles, SEMMES, BOWEN &
SEMMES, P.C., Baltimore, Maryland, for Appellee.
OPINION
KING, Circuit Judge:
On June 9, 2000, a shipment of aluminum that had travelled by sea
from St. Petersburg, Russia, arrived at the Port of Baltimore, Mary-
land. The carrier (i.e., the owner of the ship) asserted a maritime lien
against the cargo, and it subsequently filed in rem and in personam
claims in the District of Maryland, seeking to recover unpaid freight.
The shippers (i.e., the owners of the cargo), in turn, filed a counter-
claim contesting the lien and seeking damages. The district court
granted the carrier’s motions for summary judgment. The shippers
have appealed, and as explained below, we affirm.
I.
Intamex, S.A., and Amalco, A.G. ("Intamex and Amalco" or the
"Shippers"), are international metal traders. Both are incorporated in
Switzerland and both are engaged primarily in the purchase and sale
of aluminum. In the spring of 2000, Intamex and Amalco bought alu-
minum in Russia for sale to American buyers. In order to have the
aluminum transported to the United States, they booked ocean car-
riage aboard the M/V ANANGEL FIDELITY (the "FIDELITY"), a
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 3
vessel owned by Hawkspere Shipping Company, Limited
("Hawkspere"), a Bahamian corporation.
Rather than contact Hawkspere directly to book passage for the
aluminum, Intamex and Amalco instead made the arrangements for
ocean carriage through International Commodities Transport Services
("ICTS"), an Alabama corporation. ICTS is a "cargo consolidator": it
packages shipments bound for a common destination and charters a
vessel to carry the cargo on behalf of various shippers. In the past,
Intamex and Amalco had arranged several shipments using ICTS,
either directly or through their Russian agent, International Transpor-
tation Logistics ("ITL"). Generally, Intamex and Amalco would remit
payment for the ocean freight charges to ICTS in Athens, Alabama.
ICTS would then deduct its commissions and forward the balance to
the carrier. There were occasions, however, when Intamex paid the
ocean freight directly to the carrier, rather than by way of ICTS. It is
undisputed that both Intamex and Amalco were aware that ICTS did
not use its own vessels for shipping, and that it instead brokered the
services of other companies.
On April 28, 2000, ICTS, as charterer, entered into a voyage
charterparty with Hawkspere, as owner, for the services of one of
Hawkspere’s ships, the FIDELITY. A "voyage charterparty" is simply
a contract for the hire of a ship. See William Tetley, Marine Cargo
Claims 10 (3d ed. 1988). The charterparty form employed in this
instance was drafted in New York by the attorneys for ICTS, and it
had been used in each of the approximately eight other charterparties
that ICTS and Hawkspere had executed. In each instance, the form
was modified with different details and rider terms, depending on the
nature of the particular shipment. The terms of the charterparty for
this shipment were negotiated through a Houston company, Argosy
Shipping, and the charter was "fixed," or made, in the United States.
In addition to consolidating the cargo of Intamex and Amalco for the
St. Petersburg to Baltimore voyage, ICTS also arranged for Hawk-
spere’s FIDELITY to carry cargo belonging to two other shippers.
Upon the loading of Intamex’s and Amalco’s aluminum on board
the FIDELITY, Hawkspere’s St. Petersburg agent issued ocean bills
of lading for the cargo on pre-printed forms to Intamex and Amalco,
as shippers. A "bill of lading" is a contract for the carriage of goods
4 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
by sea. See Tetley, Marine Cargo Claims 10 (3d ed. 1988).1 The last
of the bills of lading was issued on May 12, 2000, and all of the bills
were immediately sent to Intamex and Amalco. Once Intamex and
Amalco received the bills of lading, they were aware that the carrier
of their cargo was Hawkspere. Both Intamex and Amalco were also
aware, prior to the shipment at issue, that payment of the ocean
freight charges would ultimately have to be made to Hawkspere, the
carrier of their cargo.
ICTS played no role in the preparation of the bills of lading, as the
bills involved only Hawkspere, as carrier, and Intamex and Amalco,
as shippers. Conversely, Intamex and Amalco were in no way
involved with the Hawkspere-ICTS charterparty. In fact, prior to the
initiation of this admiralty proceeding, neither Intamex nor Amalco
ever saw a copy of the charterparty, nor were they otherwise aware
of its terms. Moreover, neither shipper had any communication what-
soever with Hawkspere prior to the June 2000 arrival of their cargo
in Baltimore.
On the FIDELITY’s voyage from St. Petersburg to Baltimore,
Intamex shipped 1767.19 metric tons of cargo, while Amalco shipped
1233.06 metric tons. The Shippers admit that, as a result of this ship-
ment, Intamex owed Hawkspere $54,782.89 in ocean freight, and
Amalco owed $38,224.86, for a total of $93,007.75. On May 16,
2000, Hawkspere sent its invoice to ICTS for all the ICTS-
consolidated cargo carried on the FIDELITY. ICTS, in turn, billed
ITL (Intamex’s and Amalco’s Russian agent) for their cargoes at a
rate that included not only the ocean freight of $31 per metric ton, but
also stevedoring charges and ICTS’s commissions on the cargoes.
ITL then billed Intamex and Amalco, instructing them to remit the
1
It is important to emphasize that the cargo’s shipment involved two
distinct contracts: (1) the charterparty, between Hawkspere, as ship-
owner, and ICTS, as charterer; and (2) the bills of lading, between
Hawkspere, as ocean carrier, and Intamex and Amalco, as shippers.
Because this is a dispute between carrier (Hawkspere) and shippers
(Intamex and Amalco), the bills of lading will be our primary focus. See
Acciai Speciali Terni USA, Inc. v. M/V BERANE, 182 F. Supp. 2d 503,
504-06 (D. Md. 2002) (holding that bill of lading, not charterparty, gov-
erned contract dispute between carrier and shipper).
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 5
bulk of their payments directly to ICTS’s bank in Athens, Alabama,
but also to wire $11,000 to ITL’s Russian bank, apparently in pay-
ment of ITL’s commission.
Instead of paying Hawkspere directly for the ocean freight that they
owed, which Intamex has admitted was an option, Intamex and
Amalco claim to have paid their ocean freight in full to ICTS. Hawk-
spere, though, never received payment. According to the bills of lad-
ing, the ocean freight for the cargo was to have been paid four
business days after signature on the bills of lading covering the cargo.2
The only monies that ICTS ever paid to Hawkspere in connection
with the FIDELITY voyage was a wire transfer of $12,000 made on
May 30, 2000, and that wire transfer did not indicate whose ocean
freight (Intamex, Amalco, or the two other shippers whose cargos
were also consolidated on the FIDELITY) was being paid. In order
to avoid a dispute of material fact on the issue of the sum that the
Shippers still owed, Hawkspere stipulated to a $12,000 credit against
the $93,007.75 total freight charges. It is therefore undisputed that
Hawkspere never received ocean freight due for carriage of Intamex’s
and Amalco’s cargo in the sum of $81,007.75.
The cargo of all shippers was discharged from the FIDELITY on
or about June 9, 2000, at which time Hawkspere exercised its posses-
sory maritime lien against the cargo shipped by Intamex and Amalco
on that vessel.3 After several weeks of negotiations between counsel
2
Bills of lading are typically signed by the carrier or its agent immedi-
ately after the goods that are to be transported are loaded on board. See
The Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1303(7); see
generally 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 10-
11 (3d ed. 2001).
3
A maritime lien is "a privileged claim upon maritime property . . .
arising out of services rendered to or injuries caused by that property."
1 Thomas J. Schoenbaum, Admiralty and Maritime Law § 9-1 (3d ed.
2001). It "attaches simultaneously with the cause of action," and it is a
right against the property in rem. Id.
If a shipper refuses to pay the full freight, the carrier may lawfully
withhold the cargo. See The Bird of Paradise, 72 U.S. (5 Wall.) 545, 554
(1866) ("Ship-owners, unquestionably, as a general rule, have a lien upon
the cargo for the freight, and consequently may retain the goods after the
6 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
for Hawkspere and counsel for Intamex and Amalco, an agreement
was reached whereunder Hawkspere would arrest the cargo shipped
by Intamex and Amalco under bills of lading numbers 214 and 227
(the "Cargo"), and would release the remaining goods.4 Together,
those two bills covered goods (specifically, sixty-five bundles of sec-
ondary aluminum and thirty-two pieces of aluminum alloy sows)
whose value roughly equaled the amount of Hawkspere’s claim
against Intamex and Amalco for unpaid ocean freight.
II.
On July 28, 2000, Hawkspere sued in admiralty and obtained a
warrant to arrest the Cargo, in rem, pursuant to Supplemental Admi-
ralty and Maritime Claims Rule C of the Federal Rules of Civil Proce-
dure ("Supplemental Admiralty Rule C"). The United States Marshal
carried out the arrest. On August 9, 2000, Intamex and Amalco exe-
cuted a letter of security, pursuant to which they placed the sum of
$80,000 into the Registry of the Court, and the court released the
Cargo from arrest. On September 11, 2000, Intamex and Amalco filed
their Verified Answer and Claim to the Cargo, as well as a counter-
claim against Hawkspere for wrongful arrest. On November 21, 2000,
Intamex and Amalco brought a third party complaint against the cargo
consolidator, ICTS, and its principal, Tony Gilbert.
On March 7, 2001, after discovery, Hawkspere moved for leave to
arrival of the ship at the port of destination until the payment is made.");
see also Gilbert Imported Hardwoods, Inc. v. 245 Packages of
Guatambu Squares, 508 F.2d 1116, 1122 (5th Cir. 1975). And in fact, if
it is to preserve its lien, the carrier must withhold the cargo: unlike an
ordinary maritime lien, a vessel owner’s lien on cargo for unpaid freight
is "possessory," i.e., it "continues only so long as the cargo remains in
the owner’s actual or constructive possession." Beverly Hills Nat’l Bank
& Trust Co. v. Campania De Navegacione Almirante S.A., 437 F.2d 301,
304 (9th Cir. 1971).
4
An "arrest" is the formal procedure by which the object of a maritime
lien is brought within the in rem jurisdiction of the admiralty court. See
Nuta v. M/V FOUNTAS FOUR, 753 F. Supp. 352, 353-54 (S.D. Fla.
1990).
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 7
amend its complaint to add Intamex and Amalco as in personam
defendants for breach of contract of carriage totaling $93,007.75, and
to increase to $93,007.75 the damages claimed in rem against the Cargo.5
On March 16, 2001, Hawkspere moved for partial summary judgment
against the Cargo in rem under its original complaint and for sum-
mary judgment against Intamex and Amalco on their counterclaim.
On April 2, 2001, Intamex and Amalco filed a cross-motion for sum-
mary judgment on the original complaint and for partial summary
judgment on their counterclaim. In their cross-motion, Intamex and
Amalco alleged for the first time that they were not the owners of the
Cargo at the time of the arrest.
On May 22, 2001, the court issued a Memorandum Opinion and
Order (1) granting Hawkspere’s motion for leave to amend; (2) grant-
ing Hawkspere’s motion for partial summary judgment on its original
complaint against the Cargo, in rem, in the sum of $71,491.43 plus
interest; (3) granting Hawkspere’s motion for summary judgment on
Intamex’s and Amalco’s counterclaim; (4) denying Intamex’s and
Amalco’s cross-motion for summary judgment; and (5) denying
Intamex’s and Amalco’s motion for partial summary judgment on
their counterclaim. Hawkspere Shipping Co. Ltd. v. 65 Bundles of
Secondary Aluminum, Mem. Op. & Order, Civ. No. S 00-2306 (D.
Md. May 22, 2001) (the "Opinion").
On May 23, 2001, Hawkspere filed its first amended complaint,
adding Intamex and Amalco as in personam defendants. Intamex and
Amalco answered the amended complaint on June 28, 2001, and
added another (though virtually identical) counterclaim against
Hawkspere. On August 30, 2001, Hawkspere moved for summary
judgment on its amended complaint against the Cargo in rem and
against Intamex and Amalco in personam, and also moved to strike
Intamex’s and Amalco’s new counterclaim. On September 19, 2001,
Intamex and Amalco filed a cross-motion for summary judgment on
the amended complaint and a motion for partial summary judgment
on their new counterclaim.
5
Hawkspere initially believed that its claim against Intamex and
Amalco was worth $71,491.73. It subsequently revised the figure
upwards to $93,007.75.
8 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
On October 2, 2001, the district court issued a Memorandum Opin-
ion in which it both reiterated the findings contained in its May 22,
2001, Opinion, and determined that Intamex and Amalco were liable
to Hawkspere in personam for the unpaid ocean freight. Accordingly,
the court entered an Order (1) granting Hawkspere summary judg-
ment on the amended complaint in the sum of $81,007.75; (2) grant-
ing Hawkspere’s motion to strike Intamex and Amalco’s new
counterclaim; (3) denying Intamex’s and Amalco’s cross-motion for
summary judgment on the amended complaint; and (4) denying
Intamex’s and Amalco’s motion for partial summary judgment on
their new counterclaim. Hawkspere Shipping Co. Ltd. v. 65 Bundles
of Secondary Aluminum, Mem. Op. & Order, Civ. No. S 00-2306 (D.
Md. Oct. 2, 2001).
On October 16, 2001, Intamex and Amalco moved to alter or
amend the court’s October 2, 2001, order, asking that prejudgment
interest be set at the rate of 5.4%, that separate judgments be entered
against Intamex and Amalco, and that default judgments be entered
against ICTS and Tony Gilbert on the third-party complaint. On Octo-
ber 30, 2001, the court issued an Order superseding that of October
2, 2001. In its Order of October 30, 2001, the court entered judgment
in Hawkspere’s favor on its in rem claim in the sum of $81,007.75,
plus prejudgment interest of 6%. Judgment was also entered in Hawk-
spere’s favor on its in personam claims against Intamex, in the sum
of $47,714, and against Amalco, in the sum of $33,293, both with
prejudgment interest. Hawkspere Shipping Co. Ltd. v. 65 Bundles of
Secondary Aluminum, Mem. Op. & Order, Civ. No. S 00-2306 (D.
Md. Oct. 30, 2001).
On December 31, 2001, the court entered its final order, including
judgment in favor of Intamex and Amalco on their third party claims
against ICTS and Tony Gilbert. Intamex and Amalco filed a timely
notice of appeal on January 7, 2002, and we possess jurisdiction pur-
suant to 28 U.S.C. § 1291.
III.
We review an award of summary judgment de novo, "viewing the
facts and inferences drawn therefrom in the light most favorable to
the non-movant." Spriggs v. Diamond Auto Glass, 242 F.3d 179, 183
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 9
(4th Cir. 2001). Summary judgment is appropriate when there is no
genuine issue of material fact given the parties’ burdens of proof at
trial. See Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247-48 (1986). There is a material dispute of fact when the
fact’s existence or non-existence could lead a jury to different out-
comes. Anderson, 477 U.S. at 248.
IV.
Appellants Intamex and Amalco contend that the district court
erred in four primary respects: First, they assert that the law of
England, and not that of the United States, governs this dispute. On
this point rest the Shippers’ subsidiary contentions that the district
court erred both in deciding that Hawkspere had a right of arrest in
rem, and in dismissing Intamex’s and Amalco’s wrongful arrest coun-
terclaim. Second, Intamex and Amalco contend that the court over-
looked disputes of material fact regarding ICTS’s ostensible agency
for receipt of ocean freight payments on Hawkspere’s behalf. Third,
Intamex and Amalco maintain that the court erred in deciding that
they were estopped from proving that all Cargo had been sold before
arrest. Fourth, and finally, Intamex and Amalco assert that the court
wrongly held them liable, in personam, to Hawkspere, when the
charterparty provided only for direct payments to Hawkspere by
ICTS.
Addressing each in turn, the first question before us is whether the
district court erred in ruling that this controversy is governed by the
law of the United States. We hold that the court properly applied the
law of this country, and thus that it also was correct both in deciding
that Hawkspere had a right of arrest in rem, and in dismissing
Intamex’s and Amalco’s wrongful arrest counterclaim.
A.
Intamex and Amalco contend that English law governs Hawk-
spere’s rights with respect to the recovery of unpaid ocean freight,
and that, pursuant to English law, there exists no right to assert a mar-
itime lien against cargo, in rem, for unpaid freight. Thus, they main-
tain, because Supplemental Admiralty Rule C authorizes in rem
actions only "[t]o enforce any maritime lien," Fed. R. Civ. P. Supp.
10 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
R. C(1)(A), Hawkspere wrongfully arrested their Cargo and is limited
to seeking an in personam remedy. See Interocean Shipping Co. v.
M/V LYGARIA, 512 F. Supp. 960, 963 (D. Md. 1981) ("Claims other-
wise maritime in nature, but not giving rise to a [maritime] lien, must
be pursued in personam."). Hawkspere, by contrast, insists that this
dispute is governed by United States law, under which it is not limited
to an in personam remedy, but which instead entitles it to seize cargo
to secure payment. See The Bird of Paradise, 72 U.S. (5 Wall.) 545,
554 (1866). Hawkspere contends that, under United States law, it was
entitled to arrest the Cargo.
Intamex and Amalco maintain that English law applies because the
charterparty between Hawkspere and ICTS contained a "Law and
Arbitration" clause, which provided that the charterparty itself was to
be governed by and construed in accordance with English law. Hawk-
spere’s response is two-fold: First, it contends that the choice-of-law
clause in the charterparty is inapplicable since (a) the charterparty is
a contract to which Intamex and Amalco are not parties, and (b) the
charterparty’s terms were not successfully incorporated into the bills
of lading. Second, Hawkspere maintains that, even if successfully
incorporated, the charterparty’s choice of law provisions are ambigu-
ous. Either way, Hawkspere contends, there is no valid contractual
choice of law, and the applicable analysis is that set forth in Lauritzen
v. Larsen, 345 U.S. 571 (1953). Under Lauritzen, according to Hawk-
spere, United States law governs.
B.
"[W]here the parties specify in their contractual agreement which
law will apply, admiralty courts will generally give effect to that
choice." Chan v. Soc’y Expeditions, Inc., 123 F.3d 1287, 1297 (9th
Cir. 1997) (enforcing choice-of-law clause in marine passenger
ticket). "In the absence of a contractual choice-of-law clause, federal
courts sitting in admiralty apply federal maritime choice-of-law prin-
ciples derived from the Supreme Court’s decision in Lauritzen . . .
and its progeny." Id.; see Sundance Cruises Corp. v. The Am. Bureau
of Shipping, 7 F.3d 1077, 1081 (2d Cir. 1993); see also The Bremen
v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (holding that courts
should enforce a choice-of-law clause when it is part of a "freely
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 11
negotiated private international agreement"); Richards v. Lloyd’s of
London, 135 F.3d 1289, 1292-93 (9th Cir. 1998) (same).
The contractual agreement at issue here is that contained in the
bills of lading — the contracts between carrier Hawkspere and ship-
pers Intamex and Amalco for carriage of goods. While the bills them-
selves contain no choice-of-law clause, they do purport to incorporate
"[a]ll terms and conditions, liberties and exceptions of the Charter
Party" — the contract between carrier Hawkspere and cargo consoli-
dator ICTS for hire of a ship. And the charterparty, in turn, states that
it "shall be governed by and construed in accordance with English
law."
Quoting the provisions of the charterparty, Intamex and Amalco
contend that English, not United States, law governs: the charterparty
between Hawkspere and ICTS, they insist, was effectively incorpo-
rated into the bills of lading between Hawkspere and themselves. As
Hawkspere notes, though, the incorporation is imperfect, in that while
the bills of lading state that they are "to be used with charter-parties,"
the spaces provided for insertion of the date of the governing charter-
party are left blank. Hawkspere contends that, absent specific identifi-
cation of the charterparty, its terms are not effectively incorporated
into the bills of lading.
Courts consistently hold that attempts to incorporate a charterparty
into a bill of lading are ineffective when the spaces in the bill that
would have identified the charterparty are left blank.6 See 2A Bene-
dict on Admiralty § 184 at 17-62 (7th ed. 2002) (citing cases). Deci-
sions in which courts have found a proper incorporation are those in
which the charterparty was identified in the bill of lading, at the least,
by date. See, e.g., Steel Warehouse, 141 F.3d at 237. Identification is
particularly important when, as here, there are multiple charter agree-
ments between the same parties simultaneously. See id. In this case,
the date of the charterparty was not included in the bills of lading. In
fact, the bills contained no reference whatsoever to the relevant, April
6
United States maritime law governs the issue of whether a charter-
party has been properly incorporated into a bill of lading. Steel Ware-
house Co., Inc. v. Abalone Shipping Ltd., 141 F.3d 234, 238 (5th Cir.
1998).
12 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
28, 2000, charterparty, and Intamex and Amalco were provided no
effective notice of the charterparty’s terms. Under the circumstances,
we cannot say that there was a successful incorporation of that docu-
ment’s terms. Thus, we agree with Hawkspere that the charterparty
cannot resolve for us the question of whether the law of England or
that of the United States governs this dispute.
C.
Lacking a valid contractual choice of law, we turn to the choice-of-
law analysis provided by the Supreme Court in Lauritzen v. Larsen,
345 U.S. 571 (1953). See Cardinal Shipping v. M/S SEISHO MARU,
744 F.2d 461, 464-66 (5th Cir. 1984) (applying Lauritzen principles
in context of contractually derived maritime lien). Under Lauritzen,
a court must consider seven factors in determining the governing law
for a particular dispute: (1) the place of the wrongful act, if any; (2)
the law of the flag; (3) the domicile of the plaintiff; (4) the domicile
of the shipowner; (5) the place of the contract; (6) the inaccessibility
of a foreign forum; and (7) the law of the forum. 345 U.S. at 583-92.
One of the causes of action asserted by Intamex and Amalco is
wrongful arrest of the Cargo; and the arrest of the Cargo clearly
occurred in the United States. The law of the flag is unknown and not
part of the record. The domicile of the plaintiffs, Intamex and
Amalco, is Switzerland. The domicile of the shipowner, Hawkspere,
is the Bahamas. The place of contracting is Russia, where the bills of
lading were signed. And the forum is in the United States, which has
the advantage of convenience at least to Hawkspere. Given, as well,
that ICTS is an American corporation; that the charterparty was
drafted in New York and negotiated through a broker in Houston; that
the goods were shipped to and seized in Baltimore; that Intamex and
Amalco had substantial and ongoing ties with the United States; and
that the only contact with England is a choice-of-law clause in a
charterparty that simultaneously attempts (by way of its USA Para-
mount provision) to select the law of the United States, the district
court did not err in holding that the United States has a stronger con-
nection to this dispute than any other country, and that its law gov-
erns.
D.
Under United States law, a maritime lien arises for freight due from
the cargo owner, The Bird of Paradise, 72 U.S. at 554, and, as
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 13
Intamex and Amalco concede, United States law permits an action in
rem "[t]o enforce any maritime lien," Supp. R. C(1)(A). Because the
district court correctly concluded that this dispute is governed by the
law of the United States, it follows that it was also correct in holding
both that Hawkspere had a right of arrest in rem, and in dismissing
Intamex’s and Amalco’s wrongful arrest counterclaim.
V.
A.
Intamex and Amalco next assert that the district court overlooked
substantial disputes of material fact concerning ICTS’s status as
Hawkspere’s "ostensible" or "apparent" agent. They principally con-
tend that, under English law (which they insist governs the case),
ICTS was Hawkspere’s ostensible agent because "Hawkspere always
looked to ICTS to collect payment for it." Appellants’ Br. at 19.
According to Intamex and Amalco, they "each reasonably believed
that ICTS was acting for Hawkspere and relied on that." Id. at 20.
Unlike United States law, which emphasizes the principal’s overt and
direct representations in cases of apparent authority, English law, they
assert, "looks at the course of dealing, and the position in which the
principal has placed the agent, asking generally, which party was in
the better position of preventing the loss." Appellants’ Br. at 23.
Under this standard, they maintain, ICTS should be viewed as Hawk-
spere’s agent, and the Shippers’ payment to ICTS should discharge
their obligation to pay Hawkspere.
The district court rejected this ostensible agency argument on the
ground that it was maintainable only under English law, which did not
apply. Opinion at 5. The court held that the applicable United States
rule was that, "where a shipper chooses to pay a [cargo consolidator]
who does not remit the payment to the ocean carrier, the shipper
assumes the risk that the [consolidator] might not pay the freight to
the carrier, and the shipper’s duty to pay freight is not discharged,
absent evidence that the [consolidator] was acting as the agent of the
carrier." Id. at 2. The court then noted that agency can be established,
under United States law, only by evidence of overt acts on the part
of the principal that would indicate an agency relationship; the subjec-
tive beliefs of the persons dealing with the alleged agent are thus irrel-
14 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
evant to the inquiry. Id. at 5. Applying this rule of agency, the court
concluded that there was insufficient evidence to create a triable issue
of fact regarding whether ICTS was acting as Hawkspere’s agent
when it accepted payment from Intamex and Amalco. Id. at 4-5.
B.
As the district court properly recognized, were ICTS the agent of
Hawkspere, then Intamex’s and Amalco’s remission of payment to
ICTS would relieve them of liability under the bills of lading. See
Strachan Shipping Co. v. Dresser, Indus., 701 F.2d 483, 486-87 (5th
Cir. 1983). The court, however, concluded that Intamex and Amalco
had failed to proffer the requisite overt acts on the part of the pur-
ported principal, Hawkspere, that would indicate an agency relation-
ship. We agree.
Intamex and Amalco, as the parties asserting the existence of a
principal-agent relationship between Hawkspere and ICTS, have the
burden of proof on this issue. See McLean Contracting Co. v. Water-
man S.S. Corp., 277 F.3d 477, 479 (4th Cir. 2002). Since it appears
to be undisputed that ICTS never had actual authority to act as Hawk-
spere’s collection agent, Intamex and Amalco are presumably con-
tending that we should construe ICTS’s relationship with Hawkspere
as one of apparent agency. To prove apparent agency, they would
need to show that Hawkspere held out ICTS as authorized to act on
its behalf. See Brothers v. Commodity Futures Trading Ass’n, 33 F.3d
405, 410 (4th Cir. 2002).
The evidence of agency that the Shippers proffer is thin, to say the
least. Intamex and Amalco first note that Hawkspere "always looked
to ICTS to collect payment for it." Appellants’ Br. at 19. That Hawk-
spere did so, though, demonstrates nothing more remarkable than the
fact that the fielding of payments was one of the services that ICTS
chose to provide to the shippers for whom it consolidated. Its provi-
sion of that service in no way indicates that it was acting as Hawk-
spere’s collection agent. See Strachan Shipping Co., 701 F.2d at 486
(refusing to infer agency from fact that carrier initially directed its
collection efforts to cargo consolidator). The Shippers next point out
that they both "presented unrefuted testimony, that each reasonably
believed that ICTS was acting for Hawkspere and relied on that."
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 15
Appellants’ Br. at 20. Under United States law, however, the Ship-
pers’ subjective beliefs are irrelevant to the inquiry; only evidence of
Hawkspere’s conduct can prove agency. See Overnight Transp. Co.
v. NLRB, 140 F.3d 259, 266-67 (D.C. Cir. 1998) (holding that agency
is provable only by principal’s conduct, and not by subjective beliefs
of those dealing with alleged agent); Auvil v. Grafton Homes, 92 F.3d
226, 230 (4th Cir. 1996) ("An agent’s authority must be conferred by
some manifestation by the principal that the agent is authorized to act
on the principal’s behalf." (emphasis in original)). Finally, Intamex
and Amalco observe that the evidence indicated that Hawkspere paid
ICTS no commission on the freight that ICTS collected for Hawk-
spere. Appellants’ Br. at 20. This fact, though, cuts directly against
agency, since it indicates that Hawkspere and ICTS lacked any formal
relationship at all. On this record, the court was correct to conclude
that there was no triable issue of fact as to whether ICTS acted as an
actual or apparent agent for Hawkspere when it accepted payment
from Intamex and Amalco.
VI.
Given that ICTS was not Hawkspere’s agent, it remains only to be
determined whether there exists any other basis on which the Shippers
might be excused from their liability to pay Hawkspere the freight
that is due under the bills of lading. In this respect, it is worth noting
that no party to this dispute has done other than what it was expected
to do: Hawkspere carried the goods, and Intamex and Amalco ten-
dered payment of freight. The trouble arises from the fact that the
Shippers sent their payments not to Hawkspere directly, but rather by
way of the consolidator, ICTS, who apparently then failed to forward
the money on to its intended destination. Thus, the question: should
Intamex and Amalco have to pay twice, or should Hawkspere instead
receive no payment at all?
There exists a split among the circuits on the question of which
party, the shipper or the carrier, bears the risk that the cargo consoli-
dator might, as here, fail to forward the freight payment to the carrier.
Under the semi-strict "assumption of risk" view — the view taken by
the district court — a shipper remains liable to a carrier, regardless
of the shipper’s payment to a cargo consolidator like ICTS, unless the
carrier intentionally released the shipper from its duty to pay under
16 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
the bill of lading. See Nat’l Shipping Co. of Saudi Arabia v. Omni
Lines, 106 F.3d 1544, 1546-47 (11th Cir. 1997) (adopting rule of
"semi-strict liability for shippers," such that "unless the carrier intends
to release the shipper from its duty to pay under the bill of lading, the
shipper remains liable to the carrier, irrespective of the shipper’s pay-
ment to a [cargo consolidator]"); Strachan Shipping Co., 701 F.2d at
489-90 (holding that shipper is relieved of liability only if it can dem-
onstrate that carrier actually released it); Sea Land Serv. v. Amstar
Corp., 690 F. Supp. 246 (S.D.N.Y. 1988). Taking this approach, only
if the carrier has released the shipper from liability under the bills of
lading is the shipper discharged from his duty to pay the carrier by
remitting payment to the consolidator; otherwise, the shipper, by
choosing not to pay the carrier directly, assumes the risk that the con-
solidator might fail to forward the freight payment on to the carrier.
Under an alternative, "equitable estoppel" view, when a shipper
pays freight to a consolidator and the consolidator subsequently fails
to forward the payment on to the carrier, the shipper does not remain
liable to the carrier, so long as the circumstances indicate that the car-
rier led the shipper to believe that payment to the cargo consolidator
would discharge the debt.7 See Olson Distrib. Sys. v. Glasurit Am.,
850 F.2d 295 (6th Cir. 1988) (holding doctrine of equitable estoppel
barred carrier’s claim against shipper for payment of freight bills,
after carrier’s documents and dilatory conduct led shipper to believe
that carrier was receiving freight payments from cargo consolidator);
Inman Freight Sys., Inc. v. Olin Corp., 807 F.2d 117, 121 (8th Cir.
1986) (holding that carrier may be estopped from collecting freight
charges from shipper who paid freight to consolidator in reliance on
carrier’s representation that such payment would discharge shipper’s
bill of lading obligation); Mediterranean Shipping Co. v. Elof Han-
7
There are various forms that such representations might take. In a
typical case, a carrier might issue bills of lading marked "freight pre-
paid," when it has in fact received no payment. The shipper might in turn
rely on this notation to mean that the consolidator had paid the carrier
and had thereby discharged freight liability under the bills of lading.
Were the shipper, acting on this belief, to pay the consolidator directly,
and were the consolidator to fail to remit the payment to the carrier, then
under the estoppel view, the carrier would be precluded from recovering
freight payment from the shipper.
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 17
son, Inc., 693 F. Supp. 80, 84 (S.D.N.Y. 1988) (holding that carrier
is estopped from collecting freight charges from shipper when shipper
had paid consolidator in reliance on carrier’s misrepresentation that
it had already received its payment from consolidator, and shipper
would thus otherwise be unjustifiably liable for double payment).
Thus, under the approach taken by the Sixth and Eighth Circuits, a
shipper need not demonstrate that the carrier actually released it from
its duty of payment in order to escape liability; rather, the shipper
needs merely to show that the carrier’s actions would have led a rea-
sonable shipper in his position to believe itself to be released.
This issue appears to be one of first impression in this circuit, and
we here adopt the assumption of risk approach. Shippers such as
Intamex and Amalco can always avoid the loss by simply paying their
carrier directly. When, as here, they choose not to do so, it is they
who appropriately bear the risk that such a choice creates. As the
Eleventh Circuit explained, "the bill of lading is a contract between
the shipper and the carrier and the carrier has a contractual right to
expect payment pursuant to that bill. Should the shipper wish to avoid
liability for double payment, it must take precaution to deal with a
reputable [cargo consolidator] or contract with the carrier to secure its
release." Nat’l Shipping Co., 106 F.3d at 1547. The Eleventh Circuit
also quoted with approval the reasoning of the Fifth Circuit:
[W]e think that our result comports with economic reality.
A [cargo consolidator] provides a service. He sells his
expertise and experience in booking and preparing cargo for
shipment. He depends upon the fees paid by both shipper
and carrier. He has few assets, and he books amounts of
cargo far exceeding his net worth. Carriers must expect pay-
ment will come from the shipper, although it may pass
through the forwarder’s hands. While the carrier may extend
credit to the forwarder, there is no economically rational
motive for the carrier to release the shipper. The more par-
ties that are liable, the greater the assurance for the carrier
that he will be paid.
Id. (quoting Strachan Shipping Co., 701 F.2d at 490). We find this
reasoning persuasive and conclude that, where a shipper chooses to
remit payment by way of a cargo consolidator, rather than directly to
18 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
the ocean carrier, the shipper assumes the risk that the consolidator
might not forward the freight payment to the carrier. The shipper’s
duty to pay freight is not discharged, absent evidence that the carrier
has actually released the shipper from its duty to pay under the bill
of lading. Because Intamex and Amalco have offered no evidence that
Hawkspere in fact released them from liability, the district court was
correct to hold the Shippers remained liable for the ocean freight
charges.
VII.
Shippers Intamex and Amalco next contend that the district court
erred in applying equitable estoppel to bar them from denying owner-
ship of the Cargo. The Shippers asserted below that, even if United
States law applies, there was no valid maritime lien, since they had
sold the Cargo before Hawkspere’s lien attached. The court rejected
this contention, holding that the Shippers were estopped from denying
ownership, since they had previously claimed the Cargo. Accord-
ingly, the court denied both the Shippers’ cross-motion for summary
judgment on Hawkspere’s in rem claims, and their motion for partial
summary judgment on their counterclaim for wrongful arrest.
The Shippers contend that the court erred in failing to make a spe-
cific finding that Hawkspere relied to its detriment on any misrepre-
sentation by Intamex and Amalco as to the ownership of the Cargo.
See Carneiro Da Cunha v. Standard Fire Ins. Co., 129 F.3d 581, 587
(11th Cir. 1997) (stating that detrimental reliance on misrepresenta-
tion is required element of equitable estoppel under federal common
law); Marine Transp. Servs. v. Python High Performance Marine
Corp., 16 F.3d 1133, 1139 & n.8 (11th Cir. 1994) (same, and noting
that federal common law of estoppel applies in cases arising under
admiralty jurisdiction). They assert that it was Hawkspere’s obliga-
tion to inquire into the ownership of the Cargo before asserting its
lien, rather than Intamex’s and Amalco’s obligation to disclose their
lack of ownership. Appellants’ Br. at 26-29.
Hawkspere responds that it was the obligation of the Shippers to
disclose their alleged non-ownership. Hawkspere claims that it relied
to its detriment on the Shippers’ de facto misrepresentation of owner-
ship in litigation strategy and discovery, when it proceeded on the
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 19
assumption that there was no issue regarding ownership. Intamex and
Amalco, Hawkspere contends, engaged in misconduct when they
failed to disclose their lack of ownership, and they should not be per-
mitted to benefit from that misconduct.
Under the doctrine of equitable estoppel, a party is precluded from
asserting rights he otherwise would have had against another when his
own conduct renders assertion of those rights contrary to equity. Int’l
Paper Co. v. Schwabedissen Maschinen, 206 F.3d 411, 417-18 (4th
Cir. 2000). Here, Hawkspere asserted its possessory maritime lien on
June 9, 2000, and it obtained a warrant for the Cargo’s arrest on July
28, 2000. Until they filed their cross-motion for summary judgment
on April 2, 2001, Intamex and Amalco failed to disclose that the
Cargo carried under bills of lading 214 and 227 allegedly was sold to
third parties prior to the notice of lien. By that point, they had
bypassed multiple opportunities to inform Hawkspere (and, later, the
court) of the purported change in ownership, including: (1) in
response to Hawkspere’s June 2000 written notice of the claimed lien;
(2) during their several weeks of negotiation with Hawkspere over
which cargo would be arrested; (3) in a post-arrest judicial proceeding
that they could have requested (but did not request) under Supplemen-
tal Admiralty Rule E(4) to contest the validity of the arrest; (4) in
their September 2000 Answer, Counterclaim, and Claim to the Cargo;
and (5) throughout the extended discovery proceedings. Despite these
numerous opportunities, the Shippers said nothing about a defense of
non-ownership. In fact, they remained silent even though Supplemen-
tal Admiralty Rule C(6), applicable at all relevant times, specifically
required them to state, in their Claim to the Cargo, the specific inter-
est in the Cargo "by which the claimant demands restitution." Further-
more, on August 9, 2000, counsel for Intamex and Amalco issued a
letter of security to Hawkspere in which they stated "[i]n consider-
ation for your releasing to our clients Intamex and Amalco or their
designates, certain Intamex and Amalco cargo" (emphasis added).
And it was Intamex and Amalco who posted the security for the
Cargo’s release.
The Shippers had a duty under Supplemental Admiralty Rule C to
disclose the alleged non-ownership of the Cargo. Their silence on the
point thus effectively constituted a material misrepresentation. See
Edell & Assoc., P.C. v. Law Office of Peter Angelos, 264 F.3d 424,
20 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
440 (4th Cir. 2001) (holding that silence can constitute misrepresenta-
tion when there is duty to speak). Furthermore, the statement in their
August 9, 2000, letter to Hawkspere amounts to an affirmative mis-
representation. Finally, the Shippers undoubtedly slept on their right
to assert non-ownership by failing for so long, and despite so many
opportunities, to assert that defense; they have proffered no exculpa-
tory explanation for their failure (in fact, Intamex and Amalco admit
that they "knew all along that they had sold the [C]argo," Appellants’
Br. at 26). Lacking any reason to believe that ownership was in ques-
tion, Hawkspere was entitled to and did proceed in this litigation on
the assumption that the Cargo remained the property of the Shippers.
In light of Intamex’s and Amalco’s misrepresentations and their dila-
tory assertion of non-ownership, the court did not err in applying
equitable estoppel when the Shippers eventually sought, in their
cross-motion for summary judgment, to assert non-ownership.
VIII.
Lastly, Intamex and Amalco contend that the district court erred
when it held, contrary to the charterparty, that they owed Hawkspere
direct payments, in personam, under the bills of lading. They point
out that the bills of lading provide that "All terms and conditions, lib-
erties of the Charter Party, dated as overleaf, including the Law and
Arbitration Clause, are herewith incorporated"; and the charterparty
states that a charterer will be responsible for freight charges "only to
such extent as the [carrier] ha[s] been unable to obtain payment
thereof by exercising the lien on the [C]argo." The Shippers interpret
this clause to mean that, under the charterparty (as incorporated into
the bills of lading), Hawkspere’s only remedy against Intamex and
Amalco is in rem.
However, as explained in Part IV.B, supra, the bills of lading did
not in fact successfully incorporate the terms of the charterparty; and
the bills of lading, as contracts that obligate the Shippers directly to
Hawkspere, clearly support an in personam action. See 2 Thomas J.
Schoenbaum, Admiralty and Maritime Law § 10-11 (3d ed. 2001)
(explaining that a bill of lading is a "memorandum of the contract . . .
concluded between the carrier and the shipper" (emphasis added)).
Under the provisions of Supplemental Admiralty Rule C, such an in
personam action is properly combined with a suit in rem. Fed. R. Civ.
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 21
P. Supp. R. C(1) ("[A] party who may proceed in rem may also, or
in the alternative, proceed in personam against any person who may
be liable."). Thus, the court was correct in determining that Hawk-
spere was entitled to pursue the Shippers in personam for payment of
freight.
IX.
For the foregoing reasons, the judgment of the district court is
affirmed.
AFFIRMED
NIEMEYER, Circuit Judge, concurring in part and dissenting in part
and concurring in the judgment:
I am pleased to concur in the opinion ably presented by Judge
King, with the single exception of Part IV.B and that portion of Part
VIII that relies on Part IV.B.
The bills of lading in this case state that freight is payable at "as
per charter party." They also provide on the front, "for conditions of
carriage see overleaf." On the overleaf, each bill of lading provides
in the first paragraph: "All terms and conditions, liberties and excep-
tions of the Charter Party, dated as overleaf, including the Law and
Arbitration Clause, are herewith incorporated." It is true, as Judge
King points out, that when referring to the charter party on the front,
the bills of lading provide no date. While the omission might be mate-
rial when multiple charter parties could be involved, in this case, the
bills of lading are all dated May 2000 and each refers explicitly to
transportation on the vessel "ANANGEL FIDELITY." Because there
was only one charter party for the ANANGEL FIDELITY — that
dated April 28, 2000 between Hawkspere and ICTS — the particular
charter party that is incorporated has not been cast in doubt by the
omission of the date. I would add that the bills of lading used by the
parties in this case were form bills of lading that were designated for
use with charter parties. For all of these reasons, I would conclude,
contrary to what the majority concludes in Part IV.B, that the bills of
lading in this case effectively incorporated the terms and conditions
of the charter party between Hawkspere and ICTS.
22 HAWKSPERE SHIPPING CO. v. INTAMEX, S.A.
The charter party so incorporated provides that Hawkspere "shall
have a lien on the cargo for freight." But it also includes a provision
that it "shall be governed by and construed in accordance with
English Law." Although English law recognizes maritime liens in
cargo for freight payments, it makes no provision for an in rem pro-
ceeding initiated by an arrest of the cargo.
Even though the charter party in this case is governed by English
law and I would hold that the charter party’s terms are incorporated
into the applicable bills of lading, it is not totally clear that English
law would also govern the other terms of the bills of lading, apart
from those incorporated by the charter party, because the English-law
proviso is applicable only to the terms of the charter party. While this
might at first be thought to be a fine distinction, such a distinction is
fortified by the inclusion in the charter party of a provision that
expressly applies American law to some extent. The charter party
states:
Voywar Clause 1950, New Both-to-Blame collision Clause,
P&I Bunkering clause, USA Paramount and New Jason
Clause to be incorporated in the [charter party] and to be
inserted in all Bills of Lading issued hereunder.
Quite apart from the need for an explanation about the substance of
each clause referred to in shorthand, there is also the grammatical
question of whether "USA Paramount" is a clause different and dis-
tinct from "New Jason Clause" or whether "USA Paramount" modi-
fies "New Jason Clause." Regardless of the answer to that question,
American law clearly governs some aspect of the charter party and
bills of lading. In the face of this ambiguity in the charter party, I
would find it appropriate to resolve the ambiguity, as did the majority
in Part IV.C, by the application of Lauritzen v. Larsen, 345 U.S. 571
(1953), and I would reach the same result.
In addition to that analysis, to enforce the lien against the cargo,
I would apply American procedural law, even if English law were to
apply substantively. While English law recognizes the enforcement of
maritime liens in cargo for the payment of freight, it does not provide
the procedural mechanism for the arrest of the cargo and the entry of
in rem judgment against the cargo. Thus, if this concededly legal mar-
HAWKSPERE SHIPPING CO. v. INTAMEX, S.A. 23
itime lien were being enforced in England, an in rem judgment would
not be available. But because the action was commenced in the
United States, the procedure of the forum should be applied in enforc-
ing the lien. American procedure specifically provides — in the Sup-
plemental Rules for Certain Admiralty and Maritime Claims — for
the enforcement of maritime liens through in rem actions. See Fed. R.
Civ. P. Supp. R. C(1)(a). In sum, as an alternative, I do not believe
that the procedural devices employed under American law to enforce
maritime liens would be inconsistent with the substantive provisions
of English law that recognize the lien but leave enforcement to a dif-
ferent process.
Even with these two alternative approaches for enforcement of the
district court’s in rem judgment, the district court in this case also
entered an in personam judgment against the defendants for the
unpaid freight, and that judgment does not depend on the district
court’s in rem jurisdiction. An in personam judgment based on the
summary judgment procedure is not asserted by any party to violate
English law, substantive or procedural. Accordingly, it would be
enforceable for that reason alone.
At bottom, I agree with the majority and would affirm the judg-
ment of the district court, reaching that position through a different
course of analysis.