The Italian company Café do Brasil SpA (CB) bought 2,875 sacks of coffee weighing 172,500 kg from the Brazilian shipper Atlantis Exportadora Importadora Ltda (AEI). The coffee was stowed in 10 containers loaded onto the Karos, which was owned by the carrier Niver Lines (NL). The contract of carriage of the coffee from Santos, Brazil, to Naples, Italy, was documented by a bill of lading issued by NL to AEI stating the weight of the cargo.

At the port of Naples, Fariello e Luise Srl (FL) received the containers in its terminal. The containers were later moved to Magazzini Tirreni. Once they were opened, it was found that 552 sacks were missing, representing 33,396 kg. CB sued the cargo insurer, Riunione Adriatica di Sicurtà; the carrier's agent, Flli Cosulich SpA (FC); FL; AEI, and others in the Tribunal of Naples claiming compensation.

FC argued that neither the Hague nor the Hague-Visby Rules applied to the case. The Hague-Visby Rules replaced the Hague Rules through the ratification by Italy of the Hague-Visby Rules, which entered into force in Italy in 1985. Moreover, the Hague-Visby Rules were not relevant as the criteria of art 10 of the Hague-Visby Rules were not satisfied; and, in any case, the Rules could govern the relationship between the parties as a matter of a contract, and not by force of law. Besides, several reservations were included in the bill of lading. Finally, in the view of FC, English law regulated all the elements not covered by the Rules.

Held: The claim is upheld.

The Hague-Visby Rules did not abrogate the Hague Rules.

The Court recalled art 10 of the Hague Rules concerning the scope and the application of the Hague Rules to all bills of lading issued in a contracting State. The rule provided for the territorial application of the Hague Rules and rendered the Hague Rules mandatory in the contracting States, preventing the application of different domestic norms.

Art 5 of the Hague-Visby Rules increased the scope of the Rules. The former art 10 of the Hague Rules became art 10.a of the Hague-Visby Rules. Art 10.b of the Hague-Visby Rules provides that the Rules apply to every bill of lading relating to the carriage of goods between ports in two different States if the carriage is from a port in a contracting State.

Moreover, art 10.c of the Hague-Visby Rules establishes that the Rules apply if the contract contained in, or evidenced by, the bill of lading provides that the Rules or legislation of any State giving effect to them is to govern the contract, whatever may be the nationality of the ship, the carrier, the shipper, the consignee, or any other interested person (the paramount clause). Thereby, the parties can agree to apply the Hague-Visby Rules even where the bill of lading has been issued in non-contracting States or the ship sailed from a port in a non-contracting State. The Court also stressed that art 10.c of the Hague-Visby Rules makes the Rules applicable not as a matter of a contract, but by force of law. Art 10.c solved the issue of the parties' gaming the relationship between Convention norms and domestic law (so-called 'splitting'). The paramount clause implies that the Rules have a prior application before any other norm. The Court emphasised how paramount clauses are recognised by Italian law, that the bill of lading issued by NL included a paramount clause, and that any disputes arising from the bill of lading are to be settled under English law. The Court also noted that English law was not relevant in this case.

Furthermore, the Court recalled art 3.3 of the Hague-Visby Rules. The bill of lading represents the document that the carrier must, on the shipper's request, issue to the latter, showing according to art 3.3.b either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper. When the carrier has serious grounds to believe that the indications of the shipper are not correct, or when it cannot verify their correctness, it will not have to declare those indications in the bill of lading. In this case, the carrier will include reservations.

The bill of lading without reservations constitutes a presumption 'until proof to the contrary' of the discharge by the carrier of the goods described. According to art 3.4 of the Hague-Visby Rules, such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as described. Proof to the contrary shall not be admissible when the bill of lading has been transferred to a third party acting in good faith.

Furthermore, art 3.5 of the Hague-Visby Rules sets out that the shipper shall be deemed to have guaranteed to the carrier the accuracy at the time of shipment of the marks, number, quantity, and weight, as furnished by it, and the shipper shall indemnify the carrier against all loss, damages and expenses arising or resulting from inaccuracies in such particulars. The right of the carrier to such indemnity shall in no way limit his responsibility and liability under the contract of carriage to any person other than the shipper.

The Court recalled art 4.5.c of the Hague-Visby Rules, establishing:

Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for this paragraph as far as these packages or units are concerned. Except as aforesaid such article of transport shall be considered the package or unit.

The Court argued that the container may be considered a package or unit according to the Hague-Visby Rules. When the carrier loads onto the ship the containers given by the shipper already closed ('full container load', FCL), it must indicate in the bill of lading only the number and the weight of those containers.

The carrier can always check the inside of the container, which could contain dangerous and noxious substances. In the case of FCL, verifications may not occur. The Court recalled art 3.3.a of the Hague-Visby Rules. The carrier, master, or agent of the carrier shall issue to the shipper the bill of lading showing the leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts.

The Court stated that the container stowed before loading, sealed and not opened by the carrier constitutes a package. If the bill of lading enumerates the containers and specifies the number of units or the quantity of the goods, those goods are under 'less than container load' (LCL) conditions.

The Court took the view that the contract of carriage was concluded under LCL conditions, with the bill of lading enumerating the number of containers, the coffee's gross and net weight, and the number of sacks of coffee. CB, being the consignee, was entitled to receive exactly the quantity of goods described and, thereby, must be compensated under art 3.4 of the Hague-Visby Rules.

Concerning reservations, the Court noted that those included by NL were too general according to art 3.3 of the Hague-Visby Rules. The carrier’s agent did not produce any evidence of doubts expressed by NL as to the correctness of the description of the goods provided by the shipper.

In conclusion, the Court recalled two functions of the bill of lading: evidence of the contract, and a document of title. Between the carrier and the shipper, the bill of lading is evidence of the contract. If the relationship extends to third parties, the bill of lading is also a document of title.

The Court also noted that the carrier invoked no excepted peril to exempt its liability under art 4 of the Hague-Visby Rules.