Austral International SA (the plaintiff) claimed for damage to a cargo of frozen prawns and shrimps carried in five containers on the MV S.E.A.S Eiffe, from Frotaleza, Brazil, to Valencia, Spain. The cargo required a temperature of -18°C. The plaintiff contracted Sagemar Levante SA (the defendant) to undertake customs procedures at the destination, and, particularly, to assure that the containers were plugged into electric power to maintain the appropriate temperature. The defendant did not perform this obligation, and the cargo remained without refrigeration for several days, causing its total loss.

The defendant alleged, among other defences, that the claim was time-barred (caducada). The first instance Court declared the claim was time-barred (prescrita) based on the provisions of the Code of Commerce(CCom). On appeal, the Court of Appeal affirmed the decision but based on the Law on Carriage of Goods by Sea of 22 December 1949 (LCGS 1949) that introduced the Hague Rules into the Spanish legal system with some modifications. Article 22 of the LCGS 1949 (art 3.6 of the Hague Rules) establishes a one-year time limitation. The plaintiff alleged that a criminal proceeding filed against the defendant for the same damage had interrupted the time limitation. The Court of Appeal held that the criminal proceedings did not produce that effect because it was a regime of expiration (caducidad) which does not admit interruption. The plaintiff recurred this decision in cassation before the Tribunal Supremo/Supreme Court (SC). The plaintiff alleged that the CCom must govern the time-bar because the claim was for the execution of an obligation after the containers were discharged from the vessel. Furthermore, it argued that the LCGS 1949 did not apply to this claim because according to art 24, this law is only applicable to carriages between States that have ratified the Hague Rules, and Brazil had not ratified it.

Held: The SC reversed the decision. The SC stated that in order to determine the scope of application of the Hague Rules, one must have regard to art 10, as amended by the Protocol of 1968 that was introduced in the national legal system when Spain ratified the Protocol of 21 December 1979 (Hague-Visby Rules and SDR Protocol). The SC stated that the Court of Appeal had failed to consider that the claim was not against the carrier, nor was it based on a breach of the contract of carriage. The contract of carriage, according to art 1.e of the Hague/Hague-Visby Rules, ‘covers the period from the time when the goods are loaded on to the time they are discharged from the ship’. This claim was based on a different contract entered into the owner of the cargo and an independent contractor. The defendant assumed the obligation to take care of the merchandise once discharged at the port of Valencia, and, in particular, to plug the containers into the electric power. Therefore, the applicable regime to this claim is that contained in the CCom, as the first instance Court stated. Under this regime, interruption of the time limitation is possible, and it was timely interrupted by the criminal proceedings filed by the plaintiff against the defendants for the same damage. Hence, the SC ordered the defendant to pay compensation in full.