Pedro Juan Soto and his wife Carmen Lugo Fillipi (the plaintiffs), hired Fernando Roqué Transportes Internacionales SA (Fernando Roque) to carry a trunk with personal belongings from Zaragoza, Spain, to San Juan, Puerto Rico. On 12 June 1976, Fernando Roque shipped the trunk in Barcelona, Spain, on the Amersfoort. The ship arrived at San Juan on 26 July 1976, and the trunk was discharged by the agent of the ship, Caribe Shipping Co Inc (the defendant), who alleged it had mailed a notification of the arrival to Mr Soto. After five days, the trunk had not been collected, and following Customs rules, it was sent to a warehouse, which caught fire 24 days later, destroying the trunk.

The plaintiffs filed a lawsuit on 20 April 1977 in the State Court alleging that it was never notified of the arrival. The first instance Court admitted the claim, stating that the defendant failed to notify the arrival of the goods properly. The defendant filed a motion of summary judgment for lack of jurisdiction of the Court, as the subject matter of the case was governed by the federal Carriage of Goods by Sea Act (COGSA) and, subsidiarily, that it had no liability for the loss. The Court reconsidered the decision and dismissed the claim. The Court considered that the cause of the loss was the fire, a fortuitous event, and not the fact that the trunk was sent to the warehouse. The plaintiffs recurred the decision for revision before the Tribunal Supremo/Supreme Court (SC), alleging error in determining that the defendant’s liability.

Held: The SC reversed the decision.

The SC stated that according to the case law, the courts of Puerto Rico had concurrent jurisdiction on the merits of the claim (see Archilla v Smyth Worldwide Movers (1977) 106 DPR 538 (CMI763)). The Harter Act and COGSA were both applicable in Puerto Rico and relevant to this decision. The scope of the Harter Act is broad and governs the rights and duties of the parties before the loading of the goods, and after their discharge and storing, until delivery is made. Congress adopted COGSA based on the Hague Rules, but COGSA only applies to foreign trade, although it allows the parties to agree to its application for local carriage as well. COGSA has a limited scope as it governs the rights and obligations of the parties within the maritime leg, which is from the loading of the cargo until its discharge at the port (art 1.e of the Hague Rules). The carrier and its agent cannot by contract exclude their liability for damages resulting from negligence in the loading, custody, and delivery of the cargo (art 3.8 of the Hague Rules). However, it has been recognised that the parties can agree in the bill of lading the extension of defences and limitation of liabilities stated in the COGSA to stevedores and agents, commonly known as Himalaya clause (art 6 of the Hague Rules). This clause, nevertheless, cannot establish an absolute immunity, and the carrier and agents cannot contractually immunise themselves for their own negligent acts.

In this case, COGSA does not apply because the loss occurred after the cargo was discharged. Furthermore, the bill of lading did not indicate an incorporation of COGSA to govern the parties' rights and duties after the discharge of the cargo. Therefore, to determine the carrier’s liability, it had to be decided whether it performed a proper delivery of the cargo according to the Harter Act. The case law on the Harter Act made a distinction between actual and constructive delivery. Actual delivery occurs when there is a complete transfer of the possession and control of the goods from the vessel to the consignee or its agent. Constructive delivery means that the goods are discharged from the ship onto an appropriate wharf, and the consignee receives a due and reasonable notification and has a reasonable opportunity to remove the goods and to put them under proper care and custody. The defendant alleged that, although it was not obligated to do so, it had sent a notification by regular mail. The plaintiffs contended that they never received it. The first instance Court held in its first decision that there was no evidence that the defendant had diligently notified the arrival, and this statement was not varied, but confirmed, in the judgment deciding the reconsideration. The lower Court overturned its decision only based on the fire as the direct cause of the damage, but did not consider the legal doctrines of actual and constructive delivery. Therefore, the SC concluded that in this case there was no actual nor constructive delivery. The plaintiffs did not acquire physical possession or control of the goods or receive a notification that the cargo had arrived, so that they had a reasonable opportunity to collect it. Until proper delivery takes place, the Harter Act makes the carrier responsible for damages resulting from the loss.