The first respondent, Miloubar Central Feedmill Ltd, imported a cargo of corn from the Ukraine on the Feyha, a ship owned by the applicant carrier, Feyha Maritime Ltd. The cargo was insured by a marine policy with the second respondent, Phoenix. The cargo failed to reach its destination due to a fire that broke out on the ship on 13 May 2015.

On 5 April 2016, the first respondent filed a suit against the second respondent, who served a third party notice on the ship on the same day. The ship was added as a defendant in the case by an amendment approved on 24 April 2016. The amended statement of claim alleged that if the first respondent did not receive compensation from the second respondent for all the damage caused to it, the ship must compensate it for the balance, as the damage occurred when the cargo was in its possession and as a result of its negligence. 

The same day that the second respondent filed a third party notice against the ship, it added another lawsuit filed against the ship in the Haifa District Court, sitting as a Maritime Court. On 24 September 2017 this claim was settled between the second respondent and the carrier. Despite this settlement agreement, the first respondent argued that its claim against the ship  remained intact, because it had full cover under the second respondent's policy for the damage caused to the cargo.

The carrier applied for a dismissal in limine, claiming that the first respondent had no cause of action against it, since the consignee in the bill of lading was Miloubar Cooperative Agricultural Society Ltd and not Miloubar Central Feedmill Ltd. Accordingly, the carrier argued, Miloubar Central Feedmill Ltd was not a party to the bill of lading, did not own the cargo, was not the insured, and had no right of claim against the ship. Even if the statement of claim was amended to reflect the correct party, there was no cause of action against the applicant carrier for damage caused to the cargo, since the claim was time-barred on the basis of art 3.6 of the Hague-Visby Rules, as enacted in Israel's Ordinance for the Carriage of Goods by Sea. The carrier emphasised that this statute of limitations under the Hague Rules was not a procedural limitation, but rather a substantive statute of limitations, which meant that the first respondent's right of claim had expired and no longer existed.

The first respondent argued that the purpose of the one-year statute of limitations in the Hague-Visby Rules is to enable the carrier to consolidate its evidence while preventing it from setting a shorter limitation period under the bill of lading. In view of the fact that the carrier formulated and maintained appropriate evidence on, among other things, its conduct after the incident, and because the second respondent's claim against the carrier was filed against it within a year, there was no justification for deciding that the claim against the carrier had expired. The first respondent also argued that the Hague-Visby Rules stipulate that the claim against the ship will be extinguished unless 'a claim is filed within a year' and that the second respondent's claim complied with this requirement.

The Magistrate's Court rejected the carrier's application for dismissal of the first respondent's suit, holding that the amendment to the statement of claim was only formal and technical, and that, where a technical error can be corrected in order to prevent blocking access to the courts, it was appropriate to do so. In the present case, the identification of the claimant made no substantive difference to the claim against the carrier. Changing the name of the claimant did not impair the carrier's ability to defend itself and therefore did not undermine the purpose of the substantive statute of limitations in the Hague-Visby Rules.

The carrier filed an application for leave to appeal to the District Court, which was rejected on its merits, although for different reasons. The District Court held that, while the first respondent's claim against the carrier was not a proper claim between the parties, the second respondent's claim was, and this was sufficient to stop time running. The carrier applied for leave to appeal to the Supreme Court.

Held: Leave granted, appeal upheld, decisions of lower courts voided, claim against the applicant carrier dismissed.

The Hague Rules were signed in Brussels to balance the interests of maritime carriers and cargo claimants and to create a uniform level of liability in the maritime transport industry. Over the years there have been changes to the Convention, namely the Visby Protocol of 1968, which led to the adoption of rules called the Hague-Visby Rules. In 1992, the Hague-Visby Rules were adopted in Israel. The relevant provision in this case is the one dealing with prescription, which appears in art 3.6 of the Hague-Visby Rules. In the original Hague Rules, the directive appeared in a different version, and was amended following the Visby Protocol. However, the amendment does not give rise to the question that arises in this case. The amendment, in essence, led to the fact that the one-year limitation period would apply to all liability in respect of the carried goods and not only for claims for loss or damage. It also allowed the parties to the contract of carriage to agree to extend the limitation period. The statute of limitations, whether before or after the amendment by the Visby Protocol, determined that a year after the date of delivery of the goods or from the date on which they were to be delivered, the carrier and the vessel would be exempt from liability. This exemption indicates that this is a substantive, rather than procedural, statute of limitations. 

A central purpose of the Hague and Hague-Visby Rules is to bring uniformity to the rules of practice in different countries with regard to the obligations and rights of maritime carriers on the one hand, and those in need of their services on the other. It appears that the need to amend these rules stemmed from the lack of equality in the bargaining positions between the two sides to the transport transaction. The strong position of maritime carriers forced the cargo holders in the past to accept bill of lading terms that greatly limited the carriers' responsibility.Thus, for example, prior to the statute of limitations in the Hague-Visby Rules which establishes a one-year limitation period, cargo interests were obliged to agree to a much shorter limitation period, such as a month or two. It therefore appears that the period of prescription prescribed in art 3.6 of the Hague Rules was intended to strengthen, on the one hand, the position of cargo interests by extending the period of limitation that was in force in the past; and, on the other hand, to establish a short enough period of time to expedite the filing of claims in order to enable the maritime carrier to keep evidence and to clarify the facts of the case, given the nature of its international activities. The relatively short period of limitation in claims against maritime carriers gives expression to and recognises the unique components of this industry, and enables the preservation of economic stability.

When interpreting art 3.6, one should strive to interpret the Hague-Visby Rules in a way that will advance the uniformity of the law. This is true, as a rule, with regard to any case of interpretation of rules originating in international Conventions and instruments, and in particular with respect to rules whose purpose is, among other things, to establish a uniform level of responsibility in various countries around the globe. However, while there is agreement that only a claimant with a right to a claim can stop the running of the limitation period, it is not clear whether a claim filed by a person entitled to do so can prevent the prescription of a claim filed by another claimant.

From the foreign case law, it appears that parallel proceedings submitted to various forums can stop the running of the limitation period. But these cases focused mainly on a different question, namely whether a claim filed by a person entitled to do so before a foreign forum that is competent to hear the claim can stop the running of the limitation period for another claim between those same parties (or between parties with a relevant link) submitted to another forum. In other words, the variable factor discussed in those rulings is the filing of the claim, whereas in this case the variable factor between the claims is the parties to the claim, or, more precisely, the identity of the claimant. It is not appropriate to interpret these authorities permitting a claim filed in another forum to stop the running of the limitation period as allowing for a claim filed by another party to do so. The identity of the parties is an integral part of the 'claim' for the purposes of the statute of limitations, and a rule permitting the changing of the identity of the claimant without affecting the statute of limitations would undermine the clarity of, and frustrate the purposes of, the statute of limitations in the Hague Rules.