The defendant was obligated to carry a cargo of wire coils from China to Imam Khomeini Port, Iran, on the Iran Ghazi under a bill of lading dated 5 July 2007. The cargo, according to the report of the Port and Maritime Organisation of Iran, was delivered short. Subsequently, the plaintiff, Asia Insurance Company (AIC), paid the cargo owner IRR 132,184,000 as compensation under the cargo insurance.

The plaintiff then brought a subrogated action against the defendant under art 30 of the Insurance Act, demanding IRR 132,184,000 in addition to legal fees and damages for late payment. The defendant, invoking art 55(5) of the Maritime Code (based on art 4.5 of the Hague Rules), pleaded that the plaintiff's claim in proportion to the surplus of '100 pounds sterling' per package should be rejected since the value of the cargo was not stipulated in the bill of lading.

The first instance Court held that, according to art 55(5) of the Maritime Code (based on art 4.5 of the Hague Rules), neither carrier nor ship has liability in respect of loss of or damage to goods exceeding GBP 100 for each package or unit unless the nature and value of such goods, which is the same as the price of the goods, is declared by the shipper prior to the shipment. The defendant was adjudged to pay GBP 100 for each package, totalling GBP 1,200, and legal fees and damages for late payment based on the inflation rate of the Central Bank of Iran from the date of the submission of the statement of claim until the enforcement of the judgment.

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

Held: Appeal allowed.

The Court of Appeal held that the decision of the first instance Court was not rendered in compliance with the relevant legal provisions. This is because the plaintiff's claim in the first instance was for IRR 132,184,000, along with legal fees and damages for late payment. However, the first instance Court ordered payment in pounds sterling, which was not within the statement of claim. Therefore, invoking art 358 of the Civil Procedure Code, the appealed judgment was struck down, and the case was returned to the first instance Court to be decided within the scope of the statement of claim.