On 26 February 1989 the River Gurara suffered an engine breakdown while on a voyage from Africa to Europe. It was left stranded on the coast of Portugal and subsequently broke up with a loss of life and total loss of cargo.

Nigerian National Shipping Line Ltd (the shipowner/carrier/appellant) relied on art 4.5 of the Hague Rules and cl 9(B) of the bills of lading to limit its liability to GBP 100 per container. Clause 9(B) deemed a container to be a package if the container had 'not been packed or filled by or on behalf of' the carrier. The containers were described to contain a specified number of 'bales' or 'parcels' or 'bags' or 'bundles' or 'crates' or 'cartons' or 'pallets' qualified with the letters 'stc'.

The consignees (the respondents) contested the applicability of cl 9(B). They submitted that cl 9(B) should be rendered null and void and of no effect due to art 3.8 of the Hague Rules and that the meaning of 'package or unit' in art 4.5 of the Rules refers to the items inside the containers.

The Court below found in favour of the respondents. The shipowner appealed. The issue in this appeal was therefore whether the word 'package' in art 4.5 of the Hague Rules refers to the containers or the individual items within them.

Held: Appeal and application to appeal to the House of Lords dismissed.

The word 'package' in art 4.5 of the Hague Rules refers to the parcels of cargo stored inside the containers and the appropriate liability limit should be calculated accordingly. A huge metal container stuffed with goods collected in individual packages could not naturally be described as a package.

The determination of what constituted 'packages' did not depend upon the agreement reflected in the description of the cargo on the face of the bill of lading. This position was echoed by decisions of the courts of the United States, Canada, Australia, France, Holland, Italy and Sweden.

It was also not apparent that an object of the Hague Rules was to ensure that a shipowner was able to verify the extent of its liability. Articles 3.3-3.5 of the Hague Rules envisage circumstances in which the carrier would not be able to verify the number of packages shipped:

• The carrier might not have reasonable means of checking the 'number of packages or pieces, or the quantity or the weight' before carriage, in which case it was under no obligation to record these matters on the bill of lading (art 3.3);
• An unqualified description of the goods in the bill of lading did not constitute a binding agreement between the shipper and the carrier that the goods had been shipped as stated, but merely prima facie evidence of that fact (art 3.4); and
• In this case, the description was qualified by the letters 'stc', which meant 'said to contain'. This 'said to contain' had the same meaning as 'contents unknown' or 'weight, number, quantity unknown'. The onus was on the respondents to show, by extrinsic evidence, what cargo was loaded aboard the River Gurara and lost with the ship. The liability limit will similarly be calculated on the basis of extrinsic evidence. The particulars of cargo will follow the extrinsic evidence instead of the description in the bill of lading. If the carrier was exposed to a greater limit than it should have been, it could claim for a breach of warranty against the shipper (art 3.5).

Given that this was the case, art 3.8 of the Hague Rules rendered cl 9(B) of the bill of lading ineffective.