This was a cargo claim brought by a Spanish company, C SA, against a Portuguese freight forwarder, T SA, for EUR 59,298.74. The plaintiff contracted with the defendant to transport a consignment of chestnuts to Brazil, specifying the conditions under which the goods would be transported, in terms of temperature and humidity. These terms were accepted and the transport took place. Upon arrival of the goods in Brazil, the consignee detected the presence of fungi in almost the entirety of the shipped cargo, with a significant change in the temperature inside the container in relation to that indicated on the bill of lading. After inspection of the goods, it was concluded that 85% of the chestnuts were unsuitable for consumption, and they were destroyed.

The defendant claimed that it only organised the transport, which was actually carried out by Compañia Sud Americana de Vapores (CSAV). The defendant applied for CSAV and Lusitânia Companhia de Seguros SA (Lusitânia), the cargo insurer, to be added to the proceedings. These parties objected to being added to the proceedings. Lusitânia alleged that it had entered into an insurance contract with the defendant which only covered damage to the goods as a result of temperature fluctuations in the event of a breakdown of the refrigeration equipment for 24 hours or more. The inspection of the goods showed that the container's refrigeration equipment was working perfectly, and that the damage to the chestnuts was possibly caused by another break in the cold chain. CSAV alleged that it only carried out the transport, and that its call agent, Universal Marítima Portugal U Lda (Universal), handled the details regarding the consignment, namely, the confirmation of the temperature setting of the container, so if this was not properly regulated, the responsibility lay with Universal, and not with CSAV.

The Court of first instance largely found in favour of the plaintiff, ordering the defendant to pay EUR 50,480, representing the unpaid contract price of the chestnuts. The defendant appealed to the Court of Appeal.

Held: Appeal dismissed.

Upon shipment, the goods came from the plaintiff's refrigerator, were inspected by the Spanish health authorities, and were found to be in good condition, 'free from quarantine pests and other harmful pests and considered to conform to the phytosanitary provisions of the importing country'. They were found to be packaged properly, this being essential for the conservation of their good condition; and, as the plaintiff stipulated and the defendant agreed to ensure, the parties agreed that the ambient temperature in the transport container would be 0^o C after this, as stipulated in the bill of lading.

As held in the first instance judgment, the defendant oversaw all the services inherent to the execution of the transport of the goods requested by the plaintiff on its behalf, binding itself to ensure and guarantee that the transport company that it chose for the task met the specific conditions agreed regarding the temperature of the refrigerated container. This obligation, which the defendant did not fulfil, led to the goods being subjected to a temperature during the voyage which was higher than the appropriate temperature, consequently causing their loss. As stipulated in the combined provisions of arts 798, 799, and 487.2 of the Civil Code, the liability arising from the defective performance of a performance obligation is based, in principle, on the debtor's fault; which fault, on the one hand, is presumed and, on the other hand, must be assessed in the abstract, by the diligence of a paterfamilias in the face of the specific circumstances of each case. The defendant was not able to rebut this presumption, and is therefore responsible for compensating the plaintiff's loss.

The Court of first instance ordered the defendant to pay the full price of the goods that the plaintiff did not receive from the buyer – EUR 50,480 - and default interest. The defendant argues that the compensation due should be set at EUR 42,908 - corresponding to 85% of the lost goods, as proved.

The International Convention for the Unification of Certain Rules Regarding Bills of Lading 1924 (the Hague Rules), to which Portugal acceded in 1931, was made domestic law by DL No 37748, of 01.02.1950 and, alternatively, by the provisions of Decree No 352/86, of 21.10. This regime includes a limitation of liability, in deviation from the general regime, namely, imposing an indemnity limit on compensation for damage, as established in art 4.5 of that Convention, which 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.

In domestic law, that monetary value was updated by art 31 of DL No 352/86, and then converted to EUR 498.80 per package or unit in accordance with art 25 of DL No 323/2001, of 17 December. In this case, the compensation set at EUR 50,480 is below the aforementioned liability limit, and the unit value and number of bags of the transported goods are not disputed.

However, the appellant objects to the obligation to compensate the total value of the goods, claiming that only 85% of the cargo was lost. This argument is not correct. Specifically, the plaintiff sent the goods for sale to a third party buyer (La Violetera), who agreed to pay the total price of EUR 50,480.00, as stated in the bill of lading and the invoice issued, but that value was not received as a result of the damage found on the goods upon arrival. This is the value which corresponds to the plaintiff's loss, as property damage arising from the defendant's failure to transport the goods under the agreed temperature conditions, causing the damage and subsequently its rejection by the buyer.

In addition, if it is true, as alleged, that the buyer disposed of all of the chestnuts, destroying them in their entirety, this did not constitute a defence in favour of the defendant, who accepted the plaintiff's legitimacy in the demand for compensation for its loss. Looking at it from another perspective, although the inspection report shows the loss of 85% of the goods, the defendant was unable to prove that the remaining 15% of the chestnuts maintained the conditions of integrity for the purpose for which they were intended, or proof of the market value of the surplus goods, (eg if they were used for animal feed) from which, in the circumstances determined, the plaintiff definitely did not benefit. In any event, in the case of these chestnuts, where their primary purpose was human consumption, and where it was proven that they presented with 'constant and severe mould in 100%', there is no reason to subtract part of the cargo as a result. The defendant's argument is rejected, and the compensation ordered by the Court of first instance is maintained.