The respondent carrier undertook the transport of a refrigerated container of fresh haddock for Grandi hf from Hafnarfjörður, Iceland, to Immingham, UK, under a bill of lading on the following terms:

CRLU 123403-0, 1X40/FT HC FLC/FCL reefer cont STC 55 small ships fresh haddock. Carrying temperature to be maintained at 0 - +3°C. Shippers load count and stow vessel not resp for outturn DDU Hull.

The Arnarnesið left port on 15 April 2005. The intention was to discharge the container in Immingham and from there to drive it to the consignee in Hull. The haddock was planned to go to market in Hull in the first half of the week of 17-23 April 2005. However, the ship did not call at Immingham, but instead sailed to Vlissingen in the Netherlands, where the container was landed on 23 April. From there, the container was transported by lorry to Hull. There were delays in transporting the container to Hull. The container was delivered to the consignee in Hull on 26 April 2005, almost 11 days after the ship left Iceland. This delay led to a drop in the market value of the fish.

The appellant insurer paid Grandi hf ISK 2,608,271 under its cargo policy and sought recourse from the respondent.

The Reykjanes District Court held in favour of the respondent carrier. The Court found that the bill of lading did not indicate that the respondent promised to deliver the goods by a specific date. According to data from the Icelandic Fisheries Agency, the fish was landed on 15 April 2005. The Arnarnesið therefore could not leave port until later that day. A vessel departing on Friday afternoon at the earliest will not arrive at Immingham in sufficient time for the fish to reach the market in the first half of the following week. The shipper therefore took a risk when deciding to send the cargo out on Friday 15 April, as it only had one day to run to get the fish to market in Hull during the week of 17-23 April. The inspection report of McAusland & Turner Ltd was deficient, which reduced its value as evidence. It was incorrectly dated and stated the weight of the cargo incorrectly. The Court therefore concluded that the appellant's damage could not be attributed to the fault of the respondent carrier or its employees: art 68.1 of the Shipping Act/Siglingalög No 34/1985 (the Act) [cp art 4.3 of the Hague-Visby Rules]. In addition, the extent of the damage was unproven.

The insurer appealed to the Supreme Court.

Held: Appeal allowed.

The respondent carrier has not stated how long the voyage was supposed to take. It can be inferred from the case file that it should have taken a maximum of five days. Accordingly, the ship should have arrived at the port no later than Wednesday, 20 April 2005. The respondent states that the ship's voyage was delayed en route due to weather conditions and that the master therefore decided to skip Immingham port. The respondent has not submitted evidence of the reasons for this decision. By deciding to skip this port of call, it will be assumed that the respondent is liable, in its legal relations with the shipper, pursuant to art 68.1 of the Shipping Act No. 34/1985 for damage to the cargo that is attributable to the delays in the shipment that resulted from this decision.

According to art 68.1 of the Act, the carrier is liable for damage to cargo while it is in its custody on board a ship or on land, unless it can be assumed that neither it, nor any person for whom it is responsible, is at fault for the damage. According to art 68.2, the carrier is not liable if it can demonstrate that the damage arises from reasons listed in paras a-p [cp art 4.2 of the Hague-Visby Rules]. The defendant has referred to paras i [act or omission of the shipper or owner of the goods, his agent or representative], m [wastage in bulk or weight or any other loss or damage arising from inherent defect, quality or vice of the goods], and n [insufficiency of packing]. There is no evidence in the case to support its argument on this point, and these defenses will therefore be rejected.

The respondent has further argued that it exempted itself from liability for the shipper's damage by a provision in the bill of lading. According to art 118.1 of the Act, it is not permitted to negotiate exemption from liability under art 68 [cp art 3.8 of the Hague-Visby Rules]. For this reason alone, the respondent's plea will be rejected.

Based on the above, the appellant demonstrated that the fish was damaged for reasons for which the respondent is responsible, and there was no valid contractual exemption from the respondent's liability.