This case concerned a claim brought by Fiat against the carrier, American Export Isbrandtsen Lines, in respect of the latter's liability for loss or damage caused to Fiat's goods carried on the Exchester. Fiat appealed in cassation against the decision of the Court of Appeal of Florence, claiming violation of art 4.5 of the Hague Rules, on the ground that the Court of Appeal had incorrectly calculated the carrier's liability on the basis of the number of packages carried.

Fiat argued that when calculating the carrier's limited liability, regard must be had not only to whether the goods are in packages, but also to whether the goods are considered units of freight, in which case the limitation must be calculated by reference to each freight unit inside the packages. Fiat also argued that the Italian Code of Navigation refers only to freight units when calculating the carrier's limitation of liability.

Held: The appeal is dismissed.

The Court recalled art 4.5 of the Hague Rules, which provides that:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connexion with goods in an amount exceeding 100 pounds sterling per package or unit, or the equivalent of that sum in other currency unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.

The Court also examined both the French text ('par colis ou unité'), and the English text ('per package or unit') of art 4.5. The Court agreed with the judgment of the Court of Appeal of Florence, noting that the limitation of liability regime applies to packaged goods.

The Court emphasised that the term 'unit' does not prevail over the term 'package', as the conjunction 'or' in the text of the article has a disjunctive function, so that the two alternative terms are placed on a plane of absolute equality. The Court also pointed out that it is impossible to give an international rule a different meaning, based on domestic law, to that resulting from the words used in the Convention and the common intention of contracting States.

The Court recalled the preparatory proceedings of the Hague Rules. The first proposal of the Comité Maritime International when preparing the draft Convention established a limitation of liability regime, at the choice of the carrier, per package, per unit of measure, or per unit of weight. This proposal received several criticisms during the Hague Conference in 1921, which supported a per package limitation of liability. However, there was no consensus even on this proposal, and the Comité Maritime International finally added the word 'unit' after the word 'package' linked with the conjunction 'or'. The text of the new article was elaborated on during the Conference of the International Law Association in 1921, and considered a complete legal regime, as not all goods are carried in packages. Finally, the text was adopted at the Conference in Brussels.

In conclusion, the Court decided that it was necessary to understand if the parties wanted to derogate from the regulatory framework of art 4.5 of the Hague Rules, to the extent that this limits the liability of the carrier for loss or damage to goods to 100 gold pounds for each package, and instead wanted that sum to be calculated on the basis of each freight unit paid for.