In March 2012 a wholesaler of constructional steel, DBMSC-Steel Trading FZC (DBMSC), bought 608 bundles of sectional steel from ArcelorMittal Commercial Sections SA (ArcelorMittal), a manufacturer of sectional steel. DBMSC used a documentary credit as means of payment and Barclays Bank Plc Dubai was the issuing bank. The price of the sectional steel was USD 1,989,831.13 and according to the invoices the steel had to be 'Material: First choice'. The sectional steel was to be shipped by Thorco Shipping A/S (Thorco) from Spain to the United Arab Emirates (UAE) on the container ship, the Maple Ingrid. However, upon arrival at UAE, DBMSC discovered that the sectional steel had rust coatings. Following this, DBMSC took legal action against Thorco claiming damages for the rusted sectional steel.

Before and in connection with the loading of the goods, the sectional steel was examined in Spain and a survey report was drafted by Bull Sworn Marine Surveyors SL. According to the report, a part of the sectional steel was stored outside without covering or any other protection from the weather. As the bundles of sectional steel were stacked on top each other it was, however, impossible to examine every single one. About the steel’s condition, the survey report said, amongst other things: 'In general the apparent condition of cargo was satisfactory and it was seen that they had been recently produced. The appearance of the cargo regarding rust was generally to a slight degree and rust was found to be only on the surface, therefore all cargo was determined to be rust-stained. The simple fact that the steel was unprotected could lead to the rust condition progressing and changing from one grade to another, as wetting can readily advance the progressive nature of rusting. The cargo was stored in different piles according to measurement.' The particular deficiencies recorded were as follows: 'All bundles were rust-stained. A large number of bundles had one or more strapping band broken and/or slack. A number of bundles had small local nicks.' The degree of rusting was categorised according to different standards, including the American Rust Standard and the British Standard. According to the survey report, the rust was not caused by saltwater contamination. Moreover, the loading took place during sunny and dry weather and the sectional steel was not stored on deck.

The master of the Maple Ingrid issued a letter of authority to a shipping agent, Sobrinos de M Cámara (Cámara). According to this letter, Cámara had authority to issue and sign bills of lading on behalf of the master. However, the bill of lading had to be issued in accordance with the mate’s receipt. Regarding the description of the goods the mate’s receipt said, 'Condition of cargo as per attached P&I surveyor report' and an extract from the survey report was attached. A bill of lading was issued on 28 March 2012 stating that the goods were 'CLEAN SHIPPED ON BOARD'. The bill of lading was signed by Cámara. The goods arrived in UAE at the beginning of May 2012.

The issue was whether Thorco was liable as carrier to DBMSC for damage to the goods.

Held: DBMSC had not proved that the rust coating on the sectional steel constituted damage to the goods. Thorco was thus not liable on DBMSC's claim for damages.

The Court noted that an extensive pre-loading examination of the sectional steel had been carried out, revealing rust on the sectional steel. Thorco had issued a 'clean' bill of lading and did not note anything about the discovered rust despite the information in the survey report and the remarks in the mate’s receipt. The Court found that DBMSC’s bank negotiated the bill of lading in reliance on its content as a part of the bank’s documentary credit obligations. The Court further held that if the rust discovered on arrival constituted damage to the goods, Thorco would be liable pursuant to the Danish Merchant Shipping Act, s 299(3), read with s 275, as Thorco would be precluded from proving the condition of the goods at the time of loading due to their issuing of a 'clean' bill of lading. The Danish Merchant Shipping Act, s 299(3), corresponds with the Hague-Visby Rules, art 3.4, according to which a bill of lading is prima facie evidence of the receipt by the carrier of the goods as therein described. However, proof to the contrary is not admissible when the bill of lading has been transferred to a third party acting in good faith. The Danish Merchant Shipping Act, s 275(1), corresponds with the Hague-Visby Rules, art 4.2.q, according to which the carrier is responsible for loss or damage if the carrier cannot prove that such loss or damage is caused without the fault or neglect either by the carrier or its agents or servants.

The decisive question was thus whether the rust constituted damage to the goods. According to the invoices the steel had to be 'first choice', but they did not say whether the steel had to be rust-free or whether it was only allowed to be rust-coated to a certain extent. According to the survey report the rust coating was superficial and categorised in a way that would normally not have any effect on the sectional steel’s strength, life span or durability. Furthermore, the rust did not have any significant impact on the possible use of the steel. The surveyor had in addition explained that the sectional steel needed to be surface-treated in any event and that the process would not be any different had the steel no superficial rust coating. Additionally, according to the survey report and the surveyor's statement surface rust is common on hot-roll sectional steel and hot-roll steel would begin rusting within only a few hours in the rain. However, the surveyor believed that rust on sectional steel in general would not develop into deep rust during 1.5 months aboard a container ship. The Court therefore concluded that DBMSC had not proved that the rust coating on the sectional steel constituted damage to the goods.