This was an appeal from a judgment of the 13th Istanbul Regional Court of Appeal (2020/165-2022/309) and the 17th Istanbul Commercial Court of First Instance (2014/1189-2019/282).

The plaintiff insurer argued that Boru Çelik Boru ve Tic Ltd Şti purchased steel cargo from the defendant shipper, Demir Çelik Fabrikaları AŞ, which was insured against transport risks under a cargo insurance policy dated 21 June 2013. The loading and stowage of the cargo were carried out on 17-18 June 2013 at the defendant shipper's port facilities by the shipper. The vessel sank with its cargo on 23 June 2013 during the voyage, resulting in a total loss of the cargo. The loss, amounting to TRY 296,265, was determined through an expert assessment and paid by the plaintiff to the insured, subrogating the plaintiff to the insured's rights. The plaintiff contended that, under art 1178.2 of the Turkish Commercial Code (No 6102 TCC) [based on art 3.2 of the Hague Rules and the Hague-Visby Rules], the defendant carrier/shipowner was liable for loss or damage occurring during carriage. The plaintiff further claimed that the defendant, as the insurer of the vessel, was responsible for third-party liabilities arising under the issued policy. It was argued that the defendant shipper was also liable because the sinking resulted from improper and unsafe stowage and securing of the cargo inside the hold. The plaintiff sought recovery of TRY 296,265.00 plus interest from the defendants, reserving further rights.

The defendant carrier/shipowner, M/V '...-1' Gemisi Denizcilik San ve Tic Ltd Şti, denied liability for the loss of the cargo, asserting that the vessel was seaworthy and that all due diligence had been exercised to maintain its fitness for the voyage. The defendant argued that the vessel's sinking resulted from a technical failure related to management and, therefore, under art 1180 of the TCC [based on art 4.2.a of the Hague Rules and the Hague-Visby Rules], the carrier was exempt from liability for loss or damage arising therefrom. Additionally, the bill of lading contained a FIOS clause, which placed responsibility for loading and stowage on the shipper, thereby absolving the carrier of liability.

The defendant insurer, Raets Marine Insurance BV, represented in Türkiye by Y Marine Ltd Şti, requested dismissal of the claim.

The defendant shipper asserted that the loading and securing of the cargo was carried out in accordance with standards and without any recorded reservations. The bill of lading was signed, and the voyage commenced without issue. The defendant denied that cargo shifting caused the sinking and maintained that it bore no liability.

The Commercial Court of First Instance found that the vessel was unseaworthy at the commencement of the voyage due to improper loading and consequently had sunk. Under art 1141 of the TCC [based on art 3.1 of the Hague Rules and the Hague-Visby Rules], the carrier is responsible for ensuring that the vessel is fit for the voyage, including its seaworthiness and cargoworthiness. Since the vessel was deemed unseaworthy at departure, the shipowner was held liable for the loss of the cargo. The plaintiff, having compensated the insured party, was entitled to recover damages from the carrier.

The defendant shipowner/carrier argued that loading, stowage, and securing of the cargo was performed by the defendant shipper and that the vessel sank due to improper stowage and loading, which caused it to take on water. However, based on the testimony of the crew and the circumstances of the sinking, the Court found this defence unsubstantiated. Consequently, the defendant shipper was not held liable for the cargo damage.

The Court ordered the defendant shipowner to pay compensation of TRY 296,265, along with interest, to the plaintiff. The claims against the vessel’s insurer was dismissed due to the plaintiff’s withdrawal of the claim.

Both the plaintiff and the defendant shipowner appealed to the Regional Court of Appeal.

The Regional Court of Appeal held that unseaworthiness could arise from overloading beyond the vessel's capacity or improper stowage affecting stability. While improper stowage could impose liability on the shipper, in this case, unseaworthiness resulted from excessive loading, which was beyond the shipper's knowledge or responsibility. Therefore, the shipper was not liable for the resulting damage. The Court found no error in the trial Court's decision and rejected both appeals on the merits.

The plaintiff and the defendant shipowner subsequently appealed to the Supreme Court of Appeal.

The plaintiff later withdrew its claim against the defendant shipowner. The Supreme Court of Appeal, in its decision dated 16 January 2024 (E:2022/3955, K:2024/322), determined that a supplementary decision was required from the trial Court regarding the withdrawal.

The trial Court, in its decision dated 24 April 2024, dismissed the claim against the defendant shipowner on withdrawal. Since the plaintiff's appeal against the defendant shipper was still ongoing, the case file was forwarded to the Supreme Court of Appeal.

Held: Appeal dismissed

The Supreme Court of Appeal upheld the Regional Court of Appeal’s decision, dismissing the plaintiff’s appeal against the defendant shipper.