This was an appeal from the judgment of the 1st Civil Court of first instance (19 November 2015, 2015/199-2015/546).

The plaintiff claimed that phosphoric acid insured in a cargo insurance policy on behalf of the insured, AB Gida, was purchased on a CFR basis from a firm named Helm AG. The plaintiff further claimed that the goods were found to be deficient at the port of arrival when they were discharged from the MV MT JO Betula after their transportation from Richards Bay in South Africa to the discharge port in Türkiye. In particular, the plaintiff insurer sought to collect USD 563,575 from the defendant carrier, arguing that it was determined and recorded during the delivery of the goods to the insured consignee that there was short delivery. The defendant carrier was liable for the loss under art 1178 of the Turkish Commercial Code (the TCC) [which is based on art 3.2 of the Hague Rules, art 3.2 of the Hague-Visby Rules, and art 4.2 of the Hamburg Rules - although Türkiye is only a State Party to the Hague Rules, the TCC incorporates a set of rules which purport to adopt elements of the Hague-Visby Rules and the Hamburg Rules].

The defendant carrier argued that there was an arbitration clause in the charterparty and that there was a reference to the charterparty in the bill of lading that was held by the insured. Therefore, the insured, as the holder of the bill of lading, was bound by the arbitration clause provided in the charterparty. Therefore, the case should be dismissed.

The Court of first instance observed that although the plaintiff claimed that the charterparty was not presented to the insured, since there was a reference in the bill of lading to the charterparty, the provision of a copy of the charterparty to the insured was not required. Thus, the Court held the plaintiff was bound by the arbitration clause in art 15 of the charterparty and dismissed the case due to the existence of the arbitration agreement and lack of jurisdiction to hear the case.

The plaintiff appealed to the Supreme Court of Appeal.

Held: The appeal is admissible. The judgment of the first instance Court is reversed in favour of the plaintiff on the grounds below.

The Supreme Court of Appeal affirmed that the merits of the case are based on a recourse action for the collection of money paid by the plaintiff insurer due to the goods that were found to be deficient at the port of arrival. The Court observed that the bill of lading dated 21 March 2014 stated that it was issued under a charterparty dated 8 March 2011. The Court referred to art 15 of the charterparty, which provides that:

General average and arbitration shall take place in London. Any dispute that arises during the execution of the freight contract shall be resolved in London. English law shall be applied to these matters.

The Court referred to art 1237 of the TCC, which provides that:

(1) The bill of lading governs the legal relationship between the carrier (shipowner) and the holder of the bill of lading.

(2) The provisions of the contract of carriage govern the relationship between the carrier (shipowner) and the charterer.

(3) Where there is a reference in the bill of lading to a voyage charterparty, a copy of that charterparty, being a contract of carriage, shall be presented in the event of endorsement of the bill of lading to a new holder. In such case, the provisions set forth in the charterparty may be pursued against the holder of the bill of lading, where the nature of such provisions allows. [This provision is based on arts 2.3 and 22.2 of the Hamburg Rules - although Türkiye is only a State Party to the Hague Rules, the TCC incorporates a set of rules which purport to adopt elements of the Hamburg Rules].

The Supreme Court observed that the Court of first instance's judgment should have determined the application of art 1237 of the TCC to the merits of the case. The first instance judgment should thus be dismissed based on the lack of examination of the aforementioned provision.