The defendant, Maritime Company M, received two containers of rice, canned tuna, and beans from the plaintiff, company AA, to be carried from Iran to Niamey, Niger, through multimodal transportation under a bill of lading. The cargo was carried by sea and discharged in Cotonou, Benin, by the defendant. However, the cargo was not transported to Niger and was auctioned in Benin.

The plaintiff cargo owner claimed for the value of the cargo, freight, associated expenses, damages arising out of the non-delivery, and legal fees.

The defendant argued that as Niger is a landlocked country, the defendant was obliged to perform two transport legs: by sea from Iran to Benin and by road from Benin to Niger. The latter was subject to compliance with customs and transit formalities, including presentation of documents and evidence confirming the goods, such as the original bill of lading, packing list and invoice, which were with the owner of the goods or its forwarder. Despite the defendant's correspondence and follow-ups, the plaintiff delayed in presenting the documents so that the cargo was sold at auction under the local regulations. Therefore, there was no omission on the part of the defendant.

The first instance Court referred the issue to an expert who noted that the bill of lading was issued on 5 November 2005, the cargo was discharged in Cotonou, Benin, on 13 December 2005, but that the freight was paid 79 days after the issuance of the bill of lading on 23 January 2006. The plaintiff's failure to pay the freight and receive the bill of lading for 79 days was the main reason the cargo remained in Benin and customs formalities were not carried out. However, the carrier should, at the time of loading and carriage of the cargo, knowing all the rules and regulations of the destination and transit countries, have demanded all the required documents and evidence from the shipper. As the carrier issued the bill of lading and it was in its possession, the carrier should have loaded and carried the cargo after receiving the freight. The expert apportioned the negligence of the plaintiff and the defendant regarding the non-arrival of the cargo at 20 and 80 per cent respectively. The parties objected to this expert opinion, and the issue was referred to a three-member expert panel.

The expert panel found, according to art 386 of the Commercial Code and art 55(2)(i) of the Maritime Code (based on art 4.2.i of the Hague Rules), that the plaintiff was responsible for paying storage costs and failed to do so, which led to the sale of the cargo at auction. Thus, the plaintiff and the respondent were each liable for half of the damages (equal to IRR 201,904,600).

The first instance Court held that according to art 52 (based on art 1 of the Hague Rules) and 54 (based on art 3 of the Hague Rules) of the Maritime Code, the carrier's liability for delivering goods at the destination free of damage is strict and assumed, but this is the case if the loss of cargo does not result from the act or omission of the shipper or owner of the goods, his agent or representative (art 55 (2)(i) of the Maritime Code (based on art 4.2.i of the Hague Rules)). In this regard, art 386 of the Commercial Code provides that if the cargo is damaged or lost, the carrier will be responsible for its value unless the carrier proves that the destruction or loss resulted either from the characteristics of the cargo itself or from the fault of the shipper or consignee. In this case, according to the report of the expert panel, which was not objected to by the parties, the shipper was 50 per cent liable for the loss of cargo; consequently, invoking arts 1 and 2 of the Civil Liability Statute and arts 198 and 519 of the Civil Procedure Code, the defendant was adjudged to pay for 50 per cent of the primary claim (equal to IRR 201,904,600 as announced by the expert panel) and IRR 12,000,000 for the experts' remuneration and legal fees. The remaining 50 per cent of the primary claim was rejected.

The plaintiff appealed to the Court of Appeal of Tehran Province.

Held: Appeal dismissed.

The Court of Appeal held that the appeal was not sustainable and justified owing to the proof of the plaintiff's omission in payment of the freight in due time. The appealed judgment was correct.