Pescapuerta SA (the plaintiff) claimed for damage to a cargo of frozen fish and seafood carried onboard the MV Atlantic from Islas Malvinas to Vigo, Spain. The lawsuit was filed against Atlantic Navigation International Corp (Atlantic), the shipowner, Lavinia Corp (Lavinia), the time charterer, and Suflenor SA.

The first instance Court admitted the claim and ordered Atlantic and Lavinia to pay compensation jointly. The judgment was partially reversed on appeal, condemning Lavinia to pay compensation solely and exonerating the other two defendants. The Court of Appeal (CA) stated that the cause of the damage was improper stowage for which only Lavinia was responsible and that there was no evidence of defective machinery, system or refrigeration devices. The CA also refused to apply limitation of liability according to the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976), because art 2 does not include contractual obligations.

The plaintiff recurred this decision in cassation before the Tribunal Supremo/Supreme Court (SC) alleging that the CA failed in its assessment of the cause of the damage. The plaintiff argued that the damage occurred not only because of the defective stowage of the cargo performed by Lavinia, but also due to unseaworthiness of the vessel. The plaintiff also argued that the master was responsible for the defective stowage as he observed and disagreed with it, but did not correct it. Hence, the CA ignored art 7 of the Law on Carriage of Goods by Sea of 22 December 1949 (LCGS 1949), which makes the shipowner liable for the acts of the master.

Held: The SC reversed the decision. The SC stated that the master did not comply with its obligation of practising careful vigilance of the stowage process set in the Code of Commerce (CCom). According to the CCom, the master is responsible to the shipowner, and this before all contractual third parties for all damages on the cargo resulting from the master’s negligence. The same rule is also contained in art 7 of the LCGS 1949 applicable by analogy to this case. The LCGS 1949 introduced the Hague Rules into the Spanish legal system with some modifications. Spain also ratified the Protocols of 1968 and 1979. None of these Protocols modified art 7. Therefore, considering the negligence of the master as a direct employee of the shipowner, Atlantic must be held jointly liable. The SC stated that a prior declaration of the master’s liability is not necessary. Because the master must respond to the shipowner without prejudice, it is the latter who must face liability for the damages before the plaintiff. The contract of affreightment under the time charter modality was irrelevant, because that only affects the relation between the parties in that contract, and the connection between the shipowner and the master does not disappear. Therefore, the decision was reversed, and Atlantic and Lavinia must pay the compensation jointly.