Hilo Cadenas SA (the charterer) entered into an agreement with the owners of the vessel Lucky Importer for the transport of cotton bales from Peru to Argentina. A cotton bale was damaged during the trip. El Cabildo Cía de Seguros Generales SA, the insurer of the cargo, compensated the charterer for all damages and filed a claim against the shipowners for the reimbursement of the compensation amount paid to the charterer.

The shipowners’ maritime agent answered the claim on behalf of the former. Based on art 4.2.a of the Brussels Convention 1924 (the Hague Rules), it argued that the shipowners had no liability because the cargo was damaged due to the flooding of the hold as a result of a mistake made by a crew member who opened the wrong drain tap upon following the captain’s orders to let water flow from one tank to another.

The Court of first instance ruled in favour of the shipowners, upholding the maritime agent’s arguments. The insurer appealed. It argued, among other things, that a distinction should be drawn between 'nautical fault' (in this case, the '[a]ct, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship' under art 4.2.a of the Hague Rules) and 'commercial fault' (in this case, a failure by the carrier to 'properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried' under art 3.2 of the Hague Rules), and that although the cargo had been initially damaged due to a nautical fault, it had been exposed to the consequences of such nautical fault for an unnecessarily extended period of time, on account of the carrier’s negligence to safeguard the cargo upon detecting the flooding, and the vessel should therefore be held liable for the damage caused to the cargo due to its own commercial fault.

Held: The National Court of Appeals in Federal, Civil and Commercial Matters (the Court of Appeals) reversed the ruling and ordered the shipowners to reimburse to the insurer the amounts paid to the charterer. It concluded that, although the damage originated as a result of a nautical fault in the terms of art 4.2.a of the Hague Rules, the shipowners had nonetheless breached their obligation to properly preserve and care for the cargo under art 3.2 of the Hague Rules because the cargo was checked upon only after 24 hours had passed since the flooding occurred, with the cargo being exposed to the water for more than a day.