This was an appeal from the judgment of the Izmir 5th Commercial Court of the first instance (13 June 2016, 2015/503-2016/699).

The plaintiff insurer paid its insured, Dokuma Ticaret AŞ, under its insurance policy, and sought to collect EUR 19,745,81, plus interest, from the defendant, arguing that the defendant was liable as carrier for a total damage of cargo during its transportation from Turkey to Poland. In particular, when the containers were opened at the arrival port, it was determined that water leakage had occurred. As a result, the goods were a total loss.

The defendant argued that the courts of London, UK, had jurisdiction; that the applicable law was English law according to the provisions of the relevant bills of lading; and that the notice of claim was not made within the time limit. The defendant argued that it was not clear at which stage of the transportation the damage occurred, and the bill of lading was also claused 'FCL', which meant 'full container load'. This could be understood to mean that no obligation rested upon the defendant as carrier in respect of the full container loaded onto the vessel under the care and custody of the shipper. The defendant further argued that the survey report showed that the water might have been leaked into the container before loading. Moreover, the survey report was issued without inspecting the container, and no damage inscription had been registered on the bills of lading during operations at the loading or discharging ports. Finally, the defendant claimed that the damage had not arisen from any act or omission of the defendant; and requested the dismissal of the lawsuit both in terms of jurisdiction and on the merits.

The Court of first instance observed that the goods subject to the maritime transport were stuffed, sealed, and delivered to the defendant carrier by the insured, with the 'FCL' clause indicating that the defendant carrier supplied the container. The Court referred to art 1141 of the Turkish Commercial Code (the TCC) [which is based on art 3.1 of the Hague Rules and art 3.1 of the Hague-Visby Rules - although Türkiye is only a State Party to the Hague Rules, the TCC incorporates a set of rules that purport to adopt elements of the Hague-Visby and Hamburg Rules] which provides that:

1. The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to:

(a) Make the ship seaworthy;

(b) Properly man, equip and supply the ship;

(c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage, and preservation.

With reference to this article, the Court reached a conclusion that the container is part of the 'allonge [ie extension] of the ship’s hold’. Thus the claim is subject to art 1141 of the TCC which states that the carrier is under an obligation to render a ship available for the sea conditions, voyage, and cargo; and the carrier is responsible for damages stemming from the initial unavailability of the ship for the voyage, sea conditions, or the cargo. In this case, the Court found that the container could be deemed as defective, which fell under the scope of cargoworthiness. As a consequence, the defendant carrier should be liable for loss or damage to the goods, including the costs involved in the delay of delivery of the goods, and loss or damage to the goods based on the initial unavailability of the ship for cargo in accordance with the abovementioned article.

The Court further found that art 1141 of the TCC imposes an unlimited liability on the carrier. The defendant carrier was thus liable for compensating the actual value of the damage, which was determined at EUR 17,950,74.

Both parties appealed to the Supreme Court of Appeal.

Held: Appeal dismissed.

The Supreme Court of Appeal upholds the first instance judgment for the plaintiff insurer to be compensated in the sum of EUR 17,950,74 by the defendant carrier.