The plaintiff, a Brazilian company, filed a claim against the defendant carrier seeking compensation for damages resulting from the complete deterioration of a large batch of Portuguese wine to be imported from Portugal to Brazil for introduction and marketing in the Brazilian market. According to the plaintiff's instructions, the wine was to be kept at a temperature of +12° C, but the defendant kept it at -20° C in the container in which it was awaiting shipment, which made the wine totally useless for commercialisation. The plaintiff sought damages for: a) the total loss of the wine; b) export, exchange and import expenses; c) loss of commercialisation profits in Brazil; d) expenses incurred for the sale of the wine; e) the plaintiff's loss of reputation and goodwill; f) expenses for the deregistration and cessation of the company's activity.

The court of first instance partially upheld the plaintiff's claims, ordering the defendant to compensate the plaintiff for the damages referred to in a) and b), but disallowing the other claims. The plaintiff appealed and the Lisbon Court of Appeal overturned the first instance judgment, ordering additional damages under c), d) and e) and partially allowing f). The defendant appealed to the Supreme Court of Justice.

Held: Judgment under appeal largely upheld, except for damages equivalent to EUR 2,321.53 relating to marketing expenses, which are disallowed.

After discussing issues of causation and remoteness, the Court considered the defendant carrier's argument that, in terms of the Hague Rules and the legal framework for the carriage of goods by sea arising from Decree Law No 352/86 of 21 October, only loss and damage to the goods themselves are indemnifiable, thus excluding the other heads of damages that did not affect the wine itself.

The text of the Convention - arts 1-8 of which were introduced into national law by Decree Law 37748 of 1 February 1950 - does not explicitly state that the carrier's liability is limited to damage directly caused to the goods. Some of its provisions even suggest the contrary, when referring to 'loss or damage to or in connexion with goods' (art 4.5, first para), 'loss or damage to, or in connexion with, goods' (art 4.5, para 4), and 'loss or damage to, or in connexion with, the custody and care and handling of goods' (art 7).

In any case, the Hague Rules do not apply in this case. Article 1.c of the Convention refers to goods carried on a ship and art 1.e of the Convention provides that 'carriage of goods' covers 'the period from the time when the goods are loaded on to the time they are discharged from the ship'. Thus, everything points to the inapplicability of the Convention to the disputed situation in which there has never been any talk of loading or unloading a ship. The wines were delivered in Almeirim and then sent by land at the wrong temperature to Lisbon without any maritime transport being involved.

Also, by Decree Law No 352/86 of 21 October, there is nothing as to the alleged restriction of damage to goods that could exclude compensation for lost profits and other damage proved in this action. For the purposes of the same Decree Law, the goods are considered to be loaded at the moment when, in the port of loading, they cross the ship's rail and to be unloaded when, at the port of discharge, they again cross the ship's rail (art 23(1)). None of this happened in the case in question.