The Superior Pescadores carried machinery and equipment from Antwerp, Belgium to Balhalf, Yemen for the construction of a liquid natural gas facility. The cargo shifted during the voyage and was significantly damaged, causing a loss of more than USD 3.6 million.

The bills of lading issued for the cargo contained a paramount clause in the following terms:

The Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply, but in respect of shipments to which no such enactments are compulsorily applicable, the terms of the said Convention shall apply.

It was recognised by the claimants that the Hague-Visby Rules were compulsorily applicable to the bills because the carriage was from a contracting state (art 10 of the Hague-Visby Rules and their implementation via s 1(2) of the Carriage of Goods by Sea Act 1971 (UK)).

The formulas for calculating the relevant limits of liability are different in the Hague Rules and the Hague-Visby Rules. In some cases, the Hague Rules would have yielded a higher amount for the claimants. The Hague-Visby Rules allow the parties to the bill of lading to agree on a higher limit than provided by its own rules (art 4.5.g). The claimants argued that the clause above refers to the Hague Rules for the purposes of establishing the relevant limits of liability.

Thus, the questions arose: 1) Should the clause above be interpreted as applying to the Hague Rules or the Hague-Visby Rules? 2) If the clause above refers to the Hague Rules, can it be construed as a provision for a higher limitation amount (when it is actually higher) as allowed by the Hague-Visby Rules? 3) Whether the Hague limit of GBP 100 gold per package or unit has to be converted into relevant currency when the cargo was delivered or on the date of the judgment.

Males J held at first instance that the wording of the paramount clause referred to the Hague Rules. However, he also held that this was an ineffective incorporation of the Hague Rules and it could be read as the incorporation of the liability limits of the Hague Rules where those are higher than the Hague-Visby Rules limits. The judge considered obiter that the date for converting the Hague Rules gold value into national currency is the date of delivery or the date when the goods ought to have been delivered.

Held: where a bill of lading is issued incorporating the Hague Rules 'as enacted in the country of shipment' and the country of shipment has enacted the Hague-Visby Rules, the bill of lading should be considered to be subject to the Hague-Visby Rules and not the Hague Rules. Answering the second and third questions was not considered necessary. It followed that the Hague-Visby limits were to apply. Longmore LJ agreed obiter with Males J on the time for converting the Hague Rules limit to national currency.