This case involved several claims filed against the appellant, Atlantic Navigation International Corp, a Panamanian company, owner of the vessel Atlantic, flagged in Panama. The plaintiff time-chartered its vessel to Lavinia Corp on the Baltime 1939 form. In 1987 the Atlantic loaded cephalopods and frozen fish for transport from the Malvinas Islands to Vigo from various fishing vessels. On unloading in Vigo, considerable damage to the cargo was discovered due to defrosting. The owners of some of the fishing vessels, including the respondent, Pescapuerta SA, owner of the Pescapuerta Tercero, filed claims against the appellant and Lavinia Corp in the Vigo Court for their losses. The claims were successful.

The appellant did not plead limitation of liability under the LLMC 1976. The Court understood the LLMC 1976 to be applicable to the appellant as a Panamanian company, but that the right to limit liability had to be raised as an exception to liability when defending itself against the claims.​ The appellant appealed to the Provincial Court of Pontevedra. The Provincial Court upheld the ruling of the court of first instance. The appellant appealed to the Supreme Court.

Held: Appeal upheld. The appellant has the right to limit its liability in accordance with the LLMC 1976 to the amount of 348,863 SDRs, as defined by the International Monetary Fund, whose conversion into ESP will be effected in accordance with the official exchange rate in effect on the date on which the limitation fund is constituted, the payment is made, or a security equivalent to the payment is established.

The LLMC 1976 has been ratified by Spain and published in the State Official Bulletin. It is undoubtedly a source of Spanish law, in accordance with the provisions of art 1.5 of the Civil Code and art 96 of the Constitution. Under the provisions of art 1.1 of the LLMC 1976, shipowners and salvors, as defined, may limit their liability arising from the claims listed in art 2, subject to the provisions of the Convention. If any claims set out in art 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail itself of the limitation of liability provided for in the Convention (art 1.4). And insurers have the right of limitation to the same extent as the insured.

There is no doubt that the claims that gave rise to this litigation are those contemplated in the Convention; and any doubt that could exist about the applicability in Spain of the Convention to the appellant is dissipated by reading the text of art 15 of the Convention, which, when determining its scope of application, establishes:

This Convention shall apply whenever any person referred to in Article 1 seeks to limit his liability before the Court of a State Party or seeks to procure the release of a ship or other property or the discharge of any security given within the jurisdiction of any such State. Nevertheless, each State Party may exclude wholly or partially from the application of this Convention any person referred to in Article 1 who at the time when the rules of this Convention are invoked before the Courts of that State does not have his habitual residence in a State Party or does not have his principal place of business in a State Party or any ship in relation to which the right of limitation is invoked or whose release is sought and which does not at the time specified above fly the flag of a State Party.

Spain did not make use at the time of this power to exclude, so the Convention is applicable to the Panamanian vessel and the company of the same nationality that owns it.

The LLMC 1976 grants the persons responsible for the damage the power to limit their liability and the right to lift liens on the ship or other goods and the return of security. The limitation of liability is based on the gross tonnage of the ships. Here, the relevant tonnage is 1,590 tons, so the amount of liability will be that resulting from applying the provisions of art 6 of the LLMC 1976, and the parties accept that this amounts to 348,863 SDRs to 152 ESP of counter-value, which gives an approximate total of 53,027,176 ESP, with the fluctuations that have occurred until the date of constitution of the fund.

Limitation of liability can be invoked even if a fund has not been constituted (art 10.1), unless a State Party has provided in its national law that, where an action is brought in its courts to enforce a claim subject to limitation, a person liable may only invoke the right to limit liability if a limitation fund has been constituted or is constituted when the right to limit liability is invoked. The Spanish State has not limited the invocation, nor has it dictated any rules on procedural matters, despite the fact that art 10.3 of the Convention establishes that procedural issues which may arise in the application of the provisions of art 10 shall be settled in accordance with the national law of the State Party in which the action is initiated. The fund, then, is a kind of separate patrimony that is assigned to the payment of liabilities in proportion to the claimants (art 12), and together with these effects of a substantive nature, it also has as procedural effects, such as barring further actions or releasing vessels from arrest (art 15 [sic: art 13]).

The appellant's argument that it is entitled to limit its liability under the LLMC 1976 must succeed. The appellant has the right to limitation of liability and there is no procedural norm that requires that this right should have been exercised by way of exception. The Convention does not set a time to enforce limitation of liability, does not require that a fund be previously established, attributes to the States Party the procedural regulation of the constitution of the fund and only establishes that, when limitation of liability is successfully invoked, all the creditors will charge in proportion to their respective quotas, calculated according to the established valuations. This means that, as long as it is not expressly regulated, there will be no rule other than that of allowing limitation to be invoked when the obligor considers that it should do so, always before the liability judgments have been executed.