This case involved the misdelivery of the plaintiff's cargo of pine wood carried from Portugal to England by the defendants and delivered to the consignee without production of the relevant bills of lading, which were held by an English bank pending payment by the consignee. The plaintiff sought damages of GBP 151,409.71. The defendants argued that the action was time-barred in accordance with the provisions of art 20.1 of the Hamburg Rules, by virtue of art 2 of DL 352/86, 21.10, since the period of two years after receipt of the goods had elapsed.

The court of first instance held for the plaintiff. The defendants appealed. On appeal, the Court of Appeal in Lisbon confirmed the first instance decision. The defendants appealed again in cassation to the Supreme Court of Justice.

Held: The appeal is rejected and the contested decision upheld in its entirety.

The present action is not subject to the time bar in art 3.6 of the Hague Rules. That time bar relates only to cases of loss of or damage to the goods during transport. Indeed, such a conclusion is unequivocally derived from a systematic reading of arts 3 and 4 of the Hague Rules, since both the first provision - which relates to the shipowner's obligations - and the second provision - which refers to the exclusions of its liability - concern damage to the goods carried and not liabilities arising from the faulty fulfilment of the sea freight contract.

And the same is true of the provisions of art 27.2 of DL 352/86, which extend this term to two years, in the context in which it applies: it refers to the loss of or damage to the goods, as seen from the liability regime defined in arts 27.1 and 7.2. Moreover, this provision applies in the case of international transport to which the Hague Rules do not apply, as in situations excluded by art 1.c (transport of live animals and transport of goods on deck, as specified therein), and also in domestic transport, to which the Hague Rules do not apply as such.

It is therefore the loss and damage of the goods transported by sea that that limitation period refers to, and not the carrier's liability for a breach of the contract of carriage formalised by a bill of lading, as is the case here.​ Such a breach of contract only prescribes after the ordinary term of 20 years, referred to in art 309 CC.​