This was an appeal from the judgment of the Izmir 6th Commercial Court of First Instance (10 June 2013, 2012/217-2013/217).

The plaintiff claimed that SF Corp, the insured under its cargo policy, sold 1,504 boxes totalling 19,118.85 kg of dried apricots to their insured, K Food Textile Corp, under an invoice dated 1 July 2009. The goods, destined for the final recipient, W Farms Inc, were loaded into a 20-foot container and transported on the defendant's vessel, the B Star. The shipment was transferred to the Zim Ontario 2 at Haifa, Israel, and later discharged at New York, USA.

Upon delivery to the buyer, the container contents were found to be crushed and wet. An inspection was conducted, and a report issued by A ... International Survey Services Ltd on 13 October 2009, noting that 138 boxes were damaged due to inadequate sealing of the container doors and water ingress, resulting in a total loss of USD 4,475.13. This was paid to the insured on 27 October 2009. Despite the plaintiff sending a demand letter to the defendant on 14 August 2009, no payment was made. Consequently, the plaintiff initiated a collection process through the Izmir 21st Enforcement Office, to recover the equivalent of USD 4,475.13, amounting to TRY 6,665.24. However, the enforcement proceedings were halted due to the defendant’s objection. The plaintiff sought the dismissal of the objection, the continuation of the enforcement, and a 40% penalty for denial of debt.

The defendant argued that the plaintiff did not have active standing to sue, emphasising that the transportation was under a Free On Board (FOB) international sale agreement. Additionally, the defendant noted that the lawsuit was filed more than one year after the goods were delivered, thus exceeding the statute of limitations as per art 1067 of the Turkish Commercial Code (TCC No 6762) [based on art 3.6 of the Hague Rules]. The defendant also contended that notice of the lawsuit to the actual carrier, B ... Maritime AŞ, was necessary and that in such shipments, the shipper’s/claimant’s rights and obligations end when the goods pass the ship’s rail.

Further, it was argued that the loading, stowing, and sealing of the container was conducted by the shipper, and the container was delivered sealed to the carrier, preventing any possibility for the carrier to inspect it. The consignment note included a 'Shipper’s Load, Count & Seal' entry. Additionally, the entry under FCL (Full Container Load) conditions confirmed that the container was sealed by the shipper.

The defendant also argued that the responsibilities for loading the goods into the container, stowing, counting, sealing the container, and ensuring the container’s fitness for carriage rested with the shipper. According to the entry in the bill of lading, these facts should not create a presumption against the carrier. The defendant also highlighted that no proper notification of damage was made, and the damages that occurred during maritime transport from Türkiye to the USA, were not reported within three days following delivery, as required. Based on these arguments, the defendant requested dismissal of the case.

The Commercial Court of First Instance ruled in favour of the plaintiff based on the allegations, defences, the adopted expert report, and the entirety of the case file, including correspondence and email records between the parties. The Court found that the defendant carrier had informed the insured, K Food Textile Corp, of the container’s pick-up location/port, thus providing the container used in transportation. The Court held that the 138 crates of dried apricots were damaged due to the container’s weak seals, which allowed rainwater to enter and spoil the goods, rendering them only suitable for use as animal feed and devoid of any economic value.

The damage to the cargo was found to arise from the unseaworthiness of the container used in the carriage. Since the container was supplied by the carrier, it was also considered to be part of the ship's hold, making the ship unseaworthy due to the container’s condition. Therefore, the carrier was held liable for the resulting damages under art 1019 of the TCC [based on art 3.1.c of the Hague Rules], which addresses the carrier's liability for damages arising from the ship's unseaworthiness.

The Court therefore accepted the lawsuit, rejected the defendant’s objection, and ordered the continuation of the collection process based on the expert report dated 24 May 2013. The Court confirmed the plaintiff insurer’s payment of USD 4,475.12, equivalent to TRY 6,665.24 as the principal amount, plus accrued interest of TRY 760.20, totalling TRY 7,425.44.

The defendant appealed to the Supreme Court of Appeal.

Held: Appeal partly upheld.

The Supreme Court of Appeal affirmed the lower Court's decision on the basis of liability, rejecting the defendant's appeal in that regard. However, it overturned the decision on the limits of liability, specifically because the lower Court did not consider the defendant's argument regarding the limitation clause in the bill of lading stipulating that compensation for loss or damage should be calculated at USD 2 per kg. The Supreme Court found that without addressing this point and obtaining an expert report on this matter, the decision was based on an incomplete examination. Additionally, the Court noted that the quantification of the claimed damages required judicial determination, and it was incorrect to award execution denial compensation to the plaintiff on these grounds. Thus, the decision was overturned on these aspects, while upholding the finding of liability against the defendant.