The plaintiff is an Angolan company that purchased equipment and vehicles in Portugal for its commercial activities in Angola. The defendant is a freight forwarder and transport operator. The goods purchased by the plaintiff were shipped to Luanda, Angola, following delivery of the goods by the defendant to a carrier. The shipment was considerably delayed as a result of the failure of the main engine of the vessel on which the goods were carried, with the vessel being detained for repairs on two occasions off the Moroccan coast. The plaintiff had to rent replacement equipment and vehicles to cover the large volume of contracts that had been awarded to it. By hiring these vehicles and equipment, the plaintiff prevented most of its staff (about 130 employees) from being inactive, prevented many delays in the completion of the contracted works and avoided having to pay compensation for non-compliance with the deadline set for the works awarded to it.

The plaintiff sued the defendant for the damage arising from the delayed shipment. The defendant argued that the plaintiff's right of action had expired under art 3.6 of the Brussels Convention (the Hague Rules), applicable in Portugal pursuant to art 15(2) of Decree Law No 255/99, 7.7, since the goods were due to be delivered in Luanda on 9 October 2006 and the lawsuit was filed well beyond the one-year period referred to in the Hague Rules. The defendant noted that all the goods were actually delivered before 7 January 2007, so that the plaintiff's right of action would have expired since the action was brought on 14 January 2008. The defendant also argued in the alternative that the sum sought by the plaintiff exceeded the limit of the defendant's liability under art 4.5 of the Brussels Convention, fixing it at a maximum of GBP 4,200, and that the alleged delay in the delivery of the goods was due to the state of inability of the transporting vessel, thus fulfilling the provisions of arts 4.1 and 4.2 of the Brussels Convention. The plaintiff responded that the expiry date referred to in art 3.6 of the Brussels Convention refers only to cases of loss and damage of the goods during transport and does not cover liability for defective performance of the contract, so the plaintiff's right is subject to a 20-year limitation period. It further argued that the compensation limit referred to in art 4.5 of the Brussels Convention does not apply to situations - such as in this case - of defective performance of the agreed transport service (delay in delivery of goods) between the parties.

The court of first instance held in favour of the defendant and held that the plaintiff, as a bad faith litigant, was to be fined. The plaintiff appealed to the Court of Appeal.

Held: Appeal upheld in part: a) the judgment under appeal is confirmed with respect to the finding in favour of the defendant; and b) the contested judgment is repealed in so far as in it condemned the plaintiff to pay a fine as a litigator in bad faith.

The parties entered into an international maritime transport contract pursuant to which the defendant was obliged to transport - by itself or through third parties - certain goods of the plaintiff between two ports located in different countries in return for payment of freight. The bill of lading was issued in Portugal and was therefore subject to the Hague Rules. It is proven that at some point in the voyage, when off the Moroccan coast, the ship suffered two successive malfunctions of the main machine. It is stated in the judgment that the ship had performed normally and there were no reports of any anomalies or deficiencies during its call at the port of Leixões. Repairing ship failures is always a tricky task, as marine engines use their own parts and technologies and always require the intervention of highly skilled labour that is rarely on board. In addition, the parts or components of the ship propellors always weigh several tons, which means that their transport requires the use of heavy and time-consuming vehicles for their movement.

In these circumstances, it seems indisputable that the failure of the vessel was not marked by any lack of diligence of the shipowner and that the engine repair time was perfectly compatible with the vicissitudes that have always been associated with the search for, and assembly of, marine engine components in ports outside the traditional logistics circuits (Europe, North America and Southeast Asia). Therefore, as the provision in art 4.1 of the Brussels Convention is fulfilled, the defendant cannot be held liable for damages arising from the delay in delivery of the goods entrusted to it for transport and the judgment in favour of the defendant must be upheld.