This was an appeal from the judgment of the Ankara 1st Commercial Court of First Instance (2011/382-2011/541).

The plaintiff insurer claimed that goods which it had insured were damaged during their transportation, and that this damage occurred after the consignment had been loaded onto the ship: see art 1.e of the Hague-Visby Rules. The plaintiff paid its insured under the policy and sought to collect TRY 13,850,00, plus interest, from the defendant.

In the Court of first instance, the defendant requested that the lawsuit be dismissed. Although the goods were damaged, at that time they were in the care and custody of the performing carrier, not the defendant acting as contracting carrier. The defendant also argued that the plaintiff insurer had made an ex gratia payment to its insured, due to the subject claim being outside the scope of the cargo insurance policy coverage terms.

The Court of first instance found that the defendant acted as the contracting carrier in respect of the shipment, and therefore the defendant was liable for damage to goods belonging to the insured carried on the vessel owned by the performing carrier. The Court held that the defendant's liability was limited to TRY 12,586.36 calculated on the basis of an exchange rate of 1 SDR = TRY 2,8081 on the judgment date.

The defendant appealed to the Supreme Court of Appeal.

Held: The appeal is admissible. There shall be judgment for the defendant on the limitation issue. The judgment of the Court of the first instance is reversed in favour of the defendant. The defendant must compensate the plaintiff in the sum of TRY 9,360.38, corresponding to 666.67 SDRs x 5 packages converted to TRY.

The Supreme Court of Appeal found that the case was based on a recourse action arising out of a cargo insurance policy. The Hague-Visby Rules should have been applied to the case, in terms of which liability is limited to 666.67 SDRs per package. The damaged part of the consignment comprised five packages, and the limitation amount calculated under the Hague-Visby Rules (666.67 SDRs x 5 packages) should have been based on the SDR exchange rate on the date of the Court of first instance's judgment. The Supreme Court further observed that, while calculating the limitation of liability of the liable carrier, the Court of the first instance based the final limitation of liability on 3,333.35 SDRs x 5 packages which is not in accordance with the Hague-Visby Rules: see art 1186.1 of the Turkish Commercial Code [which is based on 4.5.a of the Hague-Visby Rules] [although Türkiye is only a State Party to the Hague Rules, the TCC incorporates a set of rules that purport to adopt elements of the Hague-Visby Rules].