In September 2015, Novarroz - Produtos Alimentares SA (Novarroz) bought 254,740 kg of steamed rice packed in 10 'Jumbo Bags' from Jay Baba Bakreswar Rice Mill Ltd on FOB Port of Kolkata terms. Novarroz commissioned Navegação e Logística Lda (NL), a freight forwarder, to transport the Jumbo Bags in 10 20-foot containers from India to Portugal (Leixões). NL in turn contracted with Mediterranean Shipping Co SA (MSC) to carry the goods on its vessel Kai Ping V. On arrival in November 2015, the rice in five containers was found to have suffered damage resulting from contact with water. Novarroz claimed from its insurer, Seguradoras Unidas SA (the appellant), who was subrogated into Novarroz's rights.

In the Court below, the appellant claimed EUR 20,627.11 jointly from MSC and NL. The Court absolved MSC of liability and ordered NL to pay the appellant EUR 2,494. The appellant appealed.

The appellant argued that MSC, as an entity that was responsible for damage to the goods during the period in which they were in its custody and care, should also be ordered to pay compensation for the damage to the goods as a non-contractual liability (art 483 ff of the Civil Code). Under the Hague Rules, in addition to the contractual carrier, the shipowner and the actual carrier (persons who perform some of the duties provided for in the Convention: see arts 1.b, 2, 3 and 4 of the Convention) must be jointly and severally liable to cargo interests, under penalty of jeopardising the minimum protection regime imposed by the Convention: see art 3.8 of the Convention. The appellant admitted, however, that MSC was entitled to limit its liability to EUR 498.80 per package or unit, applicable under the combined provisions of arts 4.5 and 9 of the Convention, art 1 § 1 of DL nº 37748 1/2, and arts 24º nº1 and 31º nº1 of DL nº 352/86 10/21.

The appellant further argued that NL was not entitled to limit its liability, as it had not invoked the exception of limitation of liability in art 4.5 of the Convention in its pleadings. The Court was not entitled to apply the exception on its own cognisance. Therefore, NL must be ordered to pay the appellant the amount corresponding to the total damage caused to the goods (after deducting the salvage value) of EUR 18,816.30. In the alternative, taking into account the literal wording of art 4.5 of the Convention, the framework conferred by other international Conventions (in particular the Visby Protocol of 1968), and the provisions of art 24 nº 1 of DL nº 322/86 21/10, the volumes or units to be taken into account for the purpose of limiting the carrier's liability are those listed in the bill of lading, and not the cargo volumes or units that refer to lost or damaged goods. In the present case, 10 bags x EUR 498.80 would amount to a total amount of EUR 4,988, which is what should have been awarded if limitation of liability were available to NL.

MSC argued that the appellant's submission on non-contractual liability was a totally new issue, never before raised in the process, and invoked for the first time in the context of its appeal, and should therefore not be considered in review. In any event, MSC could never be held liable on an extra-contractual basis, since the material relationship at issue was subsumed exclusively within the contractual relations established between the parties. The civil liability of the respondents must necessarily be assessed under the rules of contractual civil liability. Regardless of the aforementioned, in this case there would never be any possibility of making MSC civilly liable for an unlawful action, since all the requirements for that purpose, as provided for in art 483 of the Civil Code, have not been demonstrated. Contrary to what happens in the field of contractual liability, there is no presumption of fault on the part of the carrier in this context, with the appellant being solely responsible for invoking and demonstrating the existence of an unlawful and blameworthy action, as well as the respective appropriate causal link - which had not happened here. Under arts 4.5 and 9 of the Hague Rules, the liability of the sea carrier is limited to EUR 498.80 (PTE 100,000) per package or unit. In this case, MSC received 10 20-foot containers for transportation, with the shipper declaring that each container contained one Jumbo Bag with steamed rice, for a total of 10 bags, so the responsibility the carrier would always be limited to EUR 2,494 (EUR 498.80 x five damaged containers), as the Court below recognised.

Held: Appeal dismissed as unfounded, contested decision confirmed.

In its defence, NL did not invoke the limitation of liability of the maritime carrier referred to in art 4.5 of the Hague Rules. In fact, NL based its defence on the argument that 'the damage to the goods did not derive from the maritime transport contract signed with [MSC], but simply by the land transport and cargo contract signed with Jay Baba Bakreswar Rice Mill Ltd'. Nonetheless, the contested decision found NL liable to the appellant, and fixed the measure of its indemnity obligation by appealing to art 4.5 of the Convention, thus limiting its responsibility. However, this responsibility is governed by the special regime established by the Convention and, in particular, the limits of liability established there. In maritime law, contrary to the rule of civil liability based on the Civil Code, the liability of the carrier for non-compliance with the contract is always limited to a predefined amount in law. The Convention, in addition to defining its own causes for exemption from liability, sets an indemnity limit, contrary to the general rule of full compensation for damage. Only if the parties declare otherwise, is this limit exceeded. To this extent, and in accordance with art 4.5 of the Convention, '[n]either the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connexion with goods in an amount exceeding 100 pounds sterling per package or unit, or the equivalent of that sum in other currency unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading'. This is the rule that DL 352/86, of 21 October, did not change, except for the amount established in art 1 § 1 of Decree-Law no 37748 (PTE 12,500) which was found to be manifestly out of date, and which was updated as follows:

Article 31 (Legal limitation of liability)

1 - The amount referred to in § 1 of article 1 is set at 100000 $ 00 of Decree-Law no. 37748, of 1 February 1950.

2 - If the bill of lading does not contain the list referred to in paragraph 1 of article 24 of this decree, as it does not appear in the cargo declaration referred to in article 4, each container, pallet or other similar element is considered, for the purpose of legal limitation of liability, as a single volume or unit of cargo.

3 - The legal limitation of liability applies to the master and the other persons used by the carrier for the performance of the contract.

The regime established by art 4.5 of the Convention is a mandatory rule, the application of which does not depend on pleadings by the interested parties. To this extent, the contested decision investigated the matter alleged by the appellant, applying the relevant legal framework and, through it, applying the limitations set out in the maritime cargo transport regime. This application does not depend on any claim from the party. Thus the contested decision did no more than apply the legal rules mandated by the facts, which are applicable by the Court regardless of the appellant's claim.

As to the extra-contractual liability of MSC, there is no basis for excluding the application of the general rules of civil liability in non-contractual matters due to the unlawful action of a perpetrator of damage. If the carrier, with intent or mere fault, violated the general duty of custody, maintenance and care of the goods it transported, it is liable for the damage it has caused. Thus, regardless of any contractual relationship between the parties (which, in this case, did not exist), liability may arise from an unlawful action by the carrier under art 483 of the Civil Code. However, in this case it was not proven - or even alleged - that MSC had violated any diligence rule. As there was no underlying contract concluded between the appellant's insured Novarroz and MSC, fault cannot be presumed in the general terms of contractual responsibility, and the appellant also does not benefit from any presumption of fault that could arise from the proof that, for example, the maritime transport in which the accident occurred was a dangerous activity under the terms and for the purposes of art 493(2) of the Civil Code.

As to the quantum of NL's liability, the appellant argues that the nature and value of the goods were communicated to NL (or its local agent), and if NL did not include the declaration of the nature and value of the goods in the relevant bill, this was imputable to NL, so that NL could not benefit from the limit of liability because the presumption under art 3.4 of the Hague Rules did not apply. In this case, it was documented that each of the containers used to pack the goods in question carried a bag, and it was found that damage of the goods transported occurred in five of the 10 containers (and, consequently, in five bags). It seems inevitable on an application of the conventional legal limitation of the respondent's liability that it be specifically limited to EUR 2,494. The limit of reimbursement is to be measured by the 'loss or damage to or in connexion with goods' as expressly stated in art 4.5 of the Convention, and not by the value of all the goods transported, regardless of whether or not they were damaged. As a rule, once the amount of damage has been determined, it is necessary to assess whether the amount of damage recognised by the Convention exceeds the limit of compensation provided for by art 4.5, which will be the maximum amount of compensation due.

The appellant also asks the Court to consider the Visby Protocol of 1968 as an element of interpretation, in the sense that it should be considered that the volumes or units to be taken into account for the purpose of limiting the carrier's liability are those listed in the bill of lading and not the volumes or cargo units that refer to lost or damaged goods. The Protocol of 1968 (the Hague-Visby Rules) also provides that '[n]either the carrier nor the ship shall be entitled to the benefit of the limitation of liability provided for in this paragraph if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result'. However, Portugal has not acceded to this Protocol, which, therefore, does not apply to the situation under review.