This was an appeal from a judgment of the 43rd Istanbul Regional Court of Appeal (2020/1262-2023/231) and the 17th Commercial Court of First Instance (2016/473-2019/372).

The plaintiff, the owner of the Sound of Sea, entered into an agreement with the defendant, Likit Kimya, for the transportation of 4,118,875 mt of sulfuric acid from Italy to Ceyhan Yumurtalık, Türkiye. Upon arrival at the loading port, an inspection by Bureau Veritas found no issues that would affect the cargo. The shipment proceeded, and upon arrival at Yumurtalık, the defendant refused to accept the cargo, claiming that it was damaged and demanded compensation of USD 150,000. To resolve the issue and allow the vessel to continue its next voyage, the plaintiff entered into a settlement agreement with the defendant on 30 September 2015. The plaintiff agreed to pay damages, and in return, the cargo was discharged. However, the plaintiff was unable to recover USD 119,447.38 in freight charges. Later, the plaintiff discovered that the damage was minor, with an expert report stating that the cargo had only 1-2% deterioration, and the loss in value was between 10-20%. The plaintiff argued that they had been misled by the defendant into signing the settlement, as it became known that the defendant had sold the cargo. The plaintiff asked the Court to annul the settlement agreement, establish the actual damages, and recover the USD 119,447.38 in freight charges with interest.

The defendant responded by arguing that the one-year statute of limitations in art 39 of the Turkish Code of Obligations (TCC No 6098), had expired, and therefore, the case should be dismissed on these grounds. The defendant denied any fraud in the settlement process, stating that the bill of lading, signed by the plaintiff's master, confirmed that the cargo was loaded in good condition, but was found damaged upon arrival at the discharge port. The defendant also referenced a report from the Ceyhan 1st Civil Court of First Instance, which confirmed that the cargo was damaged. However, the report indicated that clean sulfuric acid was already present in the tank where the samples were taken, and the damaged cargo was mixed with the clean sulfuric acid, which affected the results. The defendant contended that the cargo was indeed damaged during transportation. The defendant argued that the plaintiff knew about the damage and voluntarily signed the settlement agreement after commercial negotiations. In the settlement agreement, the plaintiff admitted that previous residues in the tank caused the chemical reaction that led to the cargo’s deterioration. Thus, the defendant asserted that the plaintiff's claim of being misled into signing the settlement was baseless. Further, the defendant explained that it had sold the damaged cargo at a reduced price after undergoing filtration processes, which prevented further losses. The defendant emphasised that the plaintiff could have tested the cargo for damage before signing the settlement but failed to do so. As a prudent trader, the plaintiff should have fulfilled its duty to investigate the situation before agreeing to the settlement. For these reasons, the defendant sought the dismissal of the case due to the expiration of the statute of limitations and the lack of any fraud.

The Court of First Instance focused on whether the plaintiff's consent was compromised during the signing of the settlement agreement. It noted that fraud, as defined by law, involves active or passive behaviour that leads the other party to believe something false. The Court ruled that if the party was in a position to discover the truth without additional information, fraud could not be claimed. The Court also referred to reports from Vitsan, a company hired by the defendant, and further expert evaluations. These reports indicated that the damage to the cargo was caused by improper cleaning of the ship's tanks prior to loading. The reports showed that the cargo, when tested before unloading, contained black particles and discoloration. The plaintiff was aware of this issue through reports submitted during the trial. The Court noted that as a prudent shipowner, the plaintiff should have acted accordingly, knowing the risks associated with improper cleaning. Therefore, it concluded that the settlement agreement was valid and binding and rejected the plaintiff's claims for freight charges based on alleged fraud. The plaintiff's case for annulment of the settlement agreement was dismissed.

The decision was appealed to the Regional Court of Appeal.

The Regional Court of Appeal found that the settlement agreement signed on 30 September 2015 was valid. The Court ruled that both parties were aware of the condition of the cargo when the agreement was signed, and the compensation amount of USD 150,000 for the damage was mutually agreed upon. It also noted that the plaintiff did not wait for a precise assessment of the damage before taking action, which could not be considered an act of fraud by the defendant. The Court concluded that the defendant’s claim that the entire cargo was damaged and unsellable was not proven to be a fraudulent act, and that the plaintiff had failed to provide sufficient evidence of deception. As such, the plaintiff’s appeal was rejected.

The decision was appealed by the plaintiff to the Supreme Court of Appeal.

Held: Appeal dismissed

The Supreme Court of Appeal held that the legal rules applicable to the dispute, the characterisation of the legal relationship, the conditions for filing the lawsuit, the rules of procedure and evidence, as well as the reasoning stated in the decision, were in accordance with procedure and law. Thus, the previous ruling was confirmed, and the plaintiff’s claims were dismissed.