Unión y el Fénix Español SA (the plaintiff), an insurance company acting under an assignment of rights, claimed for a shortfall of 4,557 bags of coffee carried from Equatorial Guinea to Alicante, Spain, on board the MV Algarmi. The lawsuit was filed against the defendant carrier, Naviera García Miñaur SA. The first instance Court admitted the claim and ordered the defendant to pay compensation. On appeal, the Court of Appeal (CA) reduced the amount of compensation. The defendant recurred the decision in cassation before the Tribunal Supremo/Supreme Court (SC).

Held: The SC affirmed the CA's decision. The defendant alleged the inapplicability of the Law of the Carriage of Goods by Sea under Bills of Lading of 22 December 1949 (LCGS) which incorporated the Hague Rules into the Spanish legal regime. The defendant argued that it had not been proven that Equatorial Guinea had ratified the Rules (see art 10 of the Hague Rules). Therefore, the Code of Commerce (CCom) was applicable to the claim, and according to art 952.2, the action was barred as the claimant did not submit a protest within the 24 hours following the delivery of the cargo.

The SC stated that Equatorial Guinea was subject to the Hague Rules because that country was under the sovereignty of Spain when the Convention was ratified. There was no evidence that the country had denounced the Convention once it departed from the Spanish protectorate. As the defendant had acknowledged in the proceedings that the LCGS applied to the claim, it was not allowed to contradict its prior position. Hence, article 952.2 CCom did not apply to the case. Article 22 of the LCGS establishes that the omission of notification of the damage within three days after the delivery of the cargo does not create an obstacle to enforcing an action for damage within the one-year time bar (art 3.6 of the Hague Rules). It only creates a presumption favoring the carrier that the cargo was delivered in the condition described in the bill of lading. Nonetheless, this presumption can be rebutted by proper evidence. Furthermore, it was only evidenced that the discharge of the cargo took place on 10 July 1981 and the notification of damage was submitted on 14 July 1981. But that was not enough to conclude that the claimant notified the damage outside the three days because the discharge of the cargo and its delivery to the consignee may not necessarily take place on the same day. The defendant did not prove when the delivery occurred and it could prove that by the presentation of the original bills of lading. The original bills of lading were requested in the proceedings, but the carrier did not provide them.

The carrier also contended that the CA omitted to consider that the bills of lading contained a clause with the expression ‘unknown weight and content’. According to the case law, the carrier alleged, such expression produced an inversion of the burden of proof. The CA held such a clause null and void. The SC stated that such a clause was inapplicable because of the prohibition of clauses exonerating the liability of the carrier (art 3.8 of the Hague Rules). Moreover, this clause contradicted the information contained in the bills of lading which clearly described the number of bags and their weight. The case law invoked by the defendant did not refer to maritime transport under the LCGS, and the burden of proof was fulfilled in this case as the CA made a proper assessment of the pieces of evidence that proved the weight, content and good condition of the cargo when it was loaded.

The defendant also challenged the quantum of compensation. The quantum was set on the basis of the value of the coffee per kg at the port of loading. The defendant requested an application of the limitation of liability, which, according to art 11 of the LCGS, was ESP 5,000 per package (art 4.5 of the Hague Rules). The SC stated that the decisions of the SC had established that the obligation to compensate damages in these claims was not a simple monetary debt, but a debt of value. This construction also seemed to be implied in art 11 of the LCGS, which governs liability for loss of or damage to cargo. It states, first, the obligation of the carrier to compensate the value that the shipper has declared per bag or unit in the bill of lading. Second, if the value was not declared, but the nature of the cargo appears in the bill of lading without any reservation from the carrier, its agent or the master, the compensation must be set according to the value of the cargo at the place of loading. The legislator in 1949 established a maximum limit of ESP 5,000 per package or unit. The theory of a debt of value applied by the SC allowed the Court to consider and take corrective measures to face the effects of monetary depreciation which, in this case, were evident from the substantial devaluation that had occurred from 1949 to 1981, when the cause of claim occurred. The corrective consequences could also have been reached by the simple application of hermeneutics guidelines or criteria for the interpretation of the legal rules laid down in art 3 of the Civil Code. One of those criteria is the social reality of the time in which they are to be applied, and that entails the necessary updating of the values of monetary depreciation of a value fixed in ESP in 1949. Such correction could also be reached by considering the principles governing contractual matters regarding the doctrine of ‘rebus sic stantibus’. It does not mean that the maximum legal limit has ceased to be taken into account. But, assessing the value that ESP 5,000 in 1949 would have in 1981, the quantum of the compensation established by the lower Court falls within that limit. This correction to the value of the package limitation has been applied to this case for the very particular circumstance of the date of occurrence of the damage, as the Brussels Protocol of 21 December 1979, that amended and updated art 4.5 of the Hague Rules and set the value of the maximum limit in line with the current international monetary circumstances, had not entered into force before its ratification by Spain but from 14 February 1984.