This case involved damage to roof tiles carried from Fátima to Funchal via the port of Lisbon. The carrier advised that the vessel carrying the tiles, the Madeira Island, was faced with a maritime storm during its voyage and that, as a result, tiles toppled over and were broken. Because the tiles could not be immediately removed from the loading dock in Caniçal, Funchal, the carrier debited the cargo owner with the costs of the port stay amounting to EUR 2,867.94.

The court of first instance held that the carrier was liable for the damage to the tiles during the sea voyage, that the tiles had a total value of EUR 84,047.55, and that the carrier had to pay compensation to the cargo owner. As regards the amount of compensation, pursuant to art 4.5 of the Hague Rules, the court held that since the value of the goods was not declared in the bill of lading, the limitation of the compensation referred to therein should be calculated taking into account account the weight of the goods in accordance with the amendment introduced to art 4.5 by the Visby Protocol of 1968, whereby the weight of the goods referred to in the bill of lading is 27,600 kg, resulting in a total liability limit of EUR 13,766,880.00 (498.80 x 27,600), thus not justifying any limitation on the setting of compensation according to the actual value of the goods, ie EUR 84,047.55.

In the appellate court, pursuant to art 4.5 of the Hague Rules, it was held that the Visby Protocol which introduced the weight criterion for the calculation of the limit on compensation could not be applied by the Portuguese courts, since Portugal had not acceded to it, so that only the criteria referred to in art 4.5 could be applied with the original wording, ie the package or unit. Thus, considering that there were 4 packages of tiles and taking into account the formula mentioned, the amount of compensation was set at EUR 1,995.20 (498.80 x 4).

The cargo owner appealed in cassation to the Supreme Court of Justice.

Held: Cassation appeal denied; judgment under appeal confirmed.

The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, signed in Brussels on 25 August 1924, (the Hague Rules) to which Portugal acceded by letter of 5 December 1931, published in the Government Gazette, I Series, 32.06.02, was made domestic law in Portugal by Decree Law No 37.748, of 50.02.01 and, in the alternative, by the provisions of Decree Law No 352/86, of 21.10. Article 4.5 of that Convention provides: 'Neither 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.' Under Decree Law No 352/86 the limit of liability was set at PTE 12,500, and later, by art 31(1) of Decree Law No 352/86 of 21.10, that value was again set at PTE 100,000, corresponding to EUR 498.80.

The civil liability regime for maritime transport is exceptional in relation to the civil liability regime in general because, in addition to an exemption system of carrier's liability, it imposes an indemnity limit on the carrier, clearly deviating from the function of full reparation of damage. Thus, if any of the grounds excluding the carrier's liability are not proven and, therefore, the carrier has a judgment against it, it may, nevertheless, have a limit to remedy the damage arising from failure to fulfil its obligation. Such a regime is justified as compensation for the stricter liability regime imposed on the carrier, aiming at guaranteeing and providing economic conditions for the viability of the transport companies, not discouraging their entrepreneurial activity, and avoiding 'a situation of unlimited liability, which would have as a consequence the excessive cost of transport services by sea' - Hugo Ramos Alves Limiting Carrier Liability in the 1924 Brussels Convention - thus seeking to balance the risks, interests and position of the parties to the transport contract.

It must therefore be held that, in principle and where the carrier's liability for damage is established, the amount of compensation to be determined by that liability may not exceed the limit provided for by that Convention in the first para of art 4.5 - in principle, because the parties, and in line with the last part of that para, may establish an indemnity obligation the monetary value of which is above the indemnity ceiling provided for in the Convention. For this to apply, however, the shipper has to expressly state, before shipment and by insertion in the bill of lading, the nature and value of the goods. Only by making this statement known to the carrier can the carrier assess all the risks of carriage and realise that the amount of compensation for which it may be liable exceeds the limits set out in art 4.5 of the Hague Rules.

In the present case, there is no statement regarding the price or value of the goods. The bill of lading reads as follows: '4 bundled sheets of tile' - Each 14.04 x 1.00 x 3.2' ('4 atados de chapa de telha' – Cada 14,04 x 1,00 x 3,2'). And so the volume of the goods, in the sense of 'merchandise contained in a package' - Mário Raposo Studies on the New Maritime Law (1999) 336 - is four, so the compensation to which the author is entitled to is EUR 1,995.2 (498.80 x 4), as was well established in the judgment under appeal.

The so-called Hague-Visby Rules, adopted in February 1968, overcome serious shortcomings of the Brussels Convention, including the formula for calculating the limit laid down in art 4.5, by introducing a weight factor as an element for calculating this limit, in addition to packaging or unit. As already mentioned, it was by applying this amendment that the lower court reached the amount found there. But the Visby Protocol containing these Rules has not yet been ratified by Portugal and, therefore, has not been introduced into the Portuguese domestic legal order. Therefore, this amendment cannot be taken into account in the present case for the calculation of the limit in question.