In March 1987, the Arno, flying the flag of Vanuatu, loaded goods in Pisa and La Spezia, Italy, to be carried to Annaba and Algeri, Algeria. The ship was operated by RMS-Rhein Maas + See France (RMS), a department of Sanara Compagnie Générale de Navigation. During the navigation, despite calm seas and good weather conditions, the ship suddenly shifted, sinking in less than half an hour after the crew lowered the lifeboats. After around ten hours, the crew was saved by Italian authorities off Arbatax, Italy.

Caisse Algerienne des Assurances Transport (CAAT), the cargo insurer, compensated its insureds, and then sued Navicelli Navigazione Srl, as the agent of RMS, and Sanara Departments Rhein Maas + See France in the Tribunal of Pisa.

Held: CAAT's claim is upheld.

The Court recalled that the same incident had already been assessed by the Judicial Authority of Paris, the Tribunal of La Spezia, and the Court of Appeal of Genoa. The Judicial Authority of Paris had underscored the sudden unseaworthiness of the ship, which it found constituted an excepted peril under the Hague-Visby Rules, and excluded the carrier’s liability. The Tribunal of La Spezia considered the unknown cause of the incident as an atypical excepted peril not included in the list of the Hague-Visby Rules, with the burden of proof falling on the carrier to show that the damage did not depend on its fault. On the other hand, the Court of Appeal of Genoa had decided that the unknown cause of the sinking did not constitute an excepted peril, and that the carrier's liability for the loss of cargo remained.

The Court highlighted that the Judicial Authority of Paris limited its inquiry to verifying the ship's unseaworthiness. Nonetheless, it considered that the cause of the unseaworthiness exempted the carrier from liability. The Court also recalled art 3.1.a of the Hague-Visby Rules, establishing the obligation of the carrier to exercise due diligence to make the ship seaworthy before and at the beginning of the voyage.

Moreover, the Court noted that the Tribunal of La Spezia failed to show a causal link between the damage and the incident in order to consider the latter an excepted peril under art 4 of the Hague-Visby Rules.

In conclusion, the Court decided that in the case of cargo damage because of an unknown cause, the carrier's liability remains, because proving the fulfilment of its due diligence obligations is insufficient to exempt the carrier from liability. The carrier must demonstrate that the damage was caused by an excepted peril. For these reasons, CAAT was entitled to compensation.