This was an appeal from the judgment of the Istanbul 2nd Commercial Court of First Instance (7 February 2003, 2000/1324-2003/130).

The plaintiffs, EURONAID and the Lutheran World Federation, both charitable organisations, claimed that a carriage contract was signed between EURONAID and a non-party, Anglia Bulk Cargo Ltd, to transport 5,000 mt of wheat from Ghent, Belgium, to Djibouti, for Ethiopia. The first defendant, T Denizcilik Tic San AS, transported the goods using its vessel, the T-1. After the vessel arrived in Djibouti and began unloading, its crane broke down, necessitating repairs at Massawa, Eritrea. Instead of returning to Djibouti to complete the unloading, the entire cargo was discharged in Eritrea, where it was lost due to an ongoing civil war. The plaintiffs claimed a maritime lien under art 1235.7 of the Turkish Commercial Code (TCC No 6762) [based on art 4.1.e of the MLM Convention 1993]. It was also argued that the second defendant, the insurer of the shipowner, Steamship Mutual Underwriting Assoc Ltd, guaranteed the defendant shipowner's personal liability and the ship's maritime lien. The plaintiffs pursued debt collection, which was halted by the defendants' challenge. The plaintiffs sought to overturn that challenge and claimed NLG 619,748.19 plus default interest from 12 May 1998.

The first defendant argued that the claim was time-barred and that the guarantee letter could not be subjected to enforcement by conversion into money. It explained that the vessel’s crane broke down during unloading, requiring a trip to Eritrea. Due to the ensuing civil war, it was impossible to return to Djibouti, and the local authorities seized the cargo. It could therefore not be held liable for the partial loss of the cargo, and requested dismissal of the case.

The second defendant contended that the security provided was a guarantee letter and that the conditions for enforcement had not been met, thereby requesting the dismissal of the case.

The Court of First Instance held that after loading the cargo onto the ship, ownership of the cargo was transferred to the Lutheran World Federation (the second plaintiff) according to the bill of lading, which also granted it the right to distribute the goods. The first defendant diverted some cargo to another country not scheduled for delivery, creating a gap in the aid program and causing financial loss for the second plaintiff, valued at NLG 619,748.19.

The Court found that there was no evidence that Eritrean authorities played a role in offloading the cargo at Massawa port, which was later seized and distributed by local authorities six months after unloading. The Court dismissed the argument that the first defendant was not obligated to return to Djibouti port, stressing that Massawa was not a suitable port due to the ongoing conflict between Eritrea and Ethiopia, and the first defendant’s decision to leave the port was only to meet the docking deadlines.

The Court held the first defendant liable, determining that there was no applicable liability exemption under TCC art 1063/2 [based on art 4.2 of the Hague Rules], which addresses loss or damage due to acts of war, unrest and riots, actions of public enemies, orders of competent authority or quarantine restrictions. The shipowner was ordered to pay damages amounting to NLG 619,748.19, equivalent to EUR 281,229.47, with interest accruing from 10 November 2000, while the claims against the second defendant were dismissed.

The plaintiffs and the first defendant appealed to the Supreme Court of Appeal.

Held: Appealed upheld in favour of the defendant.

The Supreme Court of Appeal overturned the lower Court's decision in favour of the first defendant, citing procedural errors. The plaintiffs' counter-appeal was deemed invalid because it did not conform to the procedural requirements specified in art 432.4 of the Code of Civil Procedure (No 1086). The Court of Appeal held that the case should have first addressed the issue of timeliness based on art 1067 of the TCC [based on art 3.6 of the Hague Rules], as repeatedly asserted by the defendant. This procedural oversight by the lower Court required the annulment of its decision. The Court of Appeal did not address the other appeals by the defendant at this stage.