The first defendant, a company located in Limassol, owned or was the charterer of the second defendant, the vessel Libra. In August 1989 the first defendant carried chemicals from Lebanon to Limassol on the Libra. The chemicals, sold by Pepsi Cola Lebanon, were packaged in 45 plastic containers and 90 cartons. They are used by the plaintiffs, who were also the purchasers of the cargo, for the production of soft drinks. When the ship arrived at Limassol port, it was found that the container had been breached and the contents were wet. The survey indicated the presence of salt, meaning that sea water had entered the container.

The defendants invoked the exemption clauses of art 4 of the Hague Rules, which have been incorporated into the law of Cyprus: in particular arts 4.2.a, 4.2.c, 4.2.h and 4.2.i. The testimony provided by the defendants was intended to show that the cargo could not have been damaged during the voyage, but that this had happened during the transport stage before loading. The defendants argued that by using their loading system they had fulfilled their obligations under art 3.2 of the Hague Rules.

The plaintiff's lawyer raised the question whether the Hague Rules are applicable, given that, according to art 2 of the Maritime Transport of Goods Act, Chapter 263, they apply only to the carriage of goods from any Cypriot port to any other port within or outside Cyprus.

Held: The Hague Rules are applicable. Judgment for the plaintiff.

Here the transfer was made from Saida to a Cypriot port and at first sight the Hague Rules are not applicable. However, the Hague Rules as implemented in Cyprus were incorporated into the bill of lading by virtue of the paramount clause in the bill of lading.

In order to avoid liability under the Hague Rules, the carrier must prove that the goods have been loaded in a poor condition, at least externally. The testimony of the defendants in this case has not done so. It moves into the sphere of speculation. There is no satisfactory testimony to substantiate the defendants' allegations. Finally, there was no notation in the bill of lading that the container was punctured or unclean. The defendants are therefore not protected by the exemptions of art 4 of the Hague Rules that they have invoked.

The defendants raised the further question of the applicability of art 4.5 of the Hague Rules, arguing that the plaintiff's compensation could not exceed GBP 100 per unit. The plaintiff argued that art 4.5 should be interpreted in conjunction with art 9 of the Hague Rules which provides that 'The monetary units mentioned in this Convention are to be taken to be gold value.'

Applying The Rosa S [1989] 1 All ER 489 (CMI2232) and Brown Boveri (Australia) Pty Ltd v Baltic Shipping Co (The Nadezhda Krupskaya) [1989] 1 Lloyd's Rep 519 (CMI668), the Court held that '£100' was to be interpreted as '£100 sterling gold value'. The Court noted that art 21 of the Central Bank of Cyprus Law no 48/63 provides for the exchange rate between the Cyprus pound and gold, and that, according to art 2 of the Currency Law, gold coin is legal tender. Therefore the Court held for the plaintiff and against the defendants for the sum of £100 or the equivalent in Cyprus pounds at the rate set by the Central Bank Law and subject to the limitation that it will not exceed the amount of the claim ie CYP 6,495.