Greenhair Cabeleireiros & Cia Lda (Greenhair) brought a cargo damage claim against Abreu - Carga & Transitos Lda (Abreu), its freight forwarder, and Mediterranean Shipping Co (Portugal) (MSC), the subcontracting carrier.

Greenhair sells cosmetics and other personal hygiene products. It purchased disposable manicure and pedicure kits from its Brazilian supplier, Higibras Cosmética do Brasil (Higibras). Greenheart contracted with Abreu to arrange transport, including cargo insurance, from Brazil to Portugal. The goods were transported on an MSC ship contracted by Abreu. The goods arrived damaged by water and mould.

The Court below dismissed Greenhair's claim. Greenhair appealed to the Court of Appeal.

Held: The appeal is dismissed and the decision below is confirmed.

Greenhair challenges the decision of the Court below, invoking the presumption arising from art 3.4 of the Hague Rules. Greenhair submits that Abreu has the burden of demonstrating that the cargo damage was not caused during transport, arguing that the Court below incorrectly applied the burden of proof rules by placing on Greenhair the burden of demonstrating that the damage did not result from a defect in packaging.

Abreu argues that, as the goods were transported in sealed containers, and neither it nor MSC had any involvement in stuffing the goods into the containers or sealing them, and a 'said to contain' clause was added to the bills of lading, the carrier could not check the contents of the container. In this case, the presumption of art 3.4 of the Hague Rules cannot apply. Hence, the burden of proof falls on Greenhair.

A contract of carriage can be defined as a contract whereby the carrier undertakes/enters into an obligation with the shipper/consignor to physically move goods from one place to another in return for monetary consideration.

The Hague Rules still constitute the most relevant regulation of maritime freight contracts. The Hague Rules have undergone two amendments: the Protocol of 23 February 1968 (the Visby Protocol); and the Protocol of 21 December 1979 (the SDR Protocol). Portugal has not adhered to these Protocols and, as such, they cannot be directly enforced by Portuguese courts.

Given the international nature of maritime law, it is always necessary to bear in mind the international and domestic regimes (here, the domestic regime on maritime transport of goods, approved by DL 352/86 of 21 October). It is necessary to determine whether the Convention is applicable in the specific situation. If the Convention applies, the domestic regime does not.

In accordance with the interpretation most commonly adopted of art 10 of the Hague Rules, the spatial scope of application of the Convention implies:

1. international transport; and
2. issuance of a bill of lading in a Contracting State.

This case involves transport of goods from Brazil to Portugal, with a bill of lading issued in Brazil. There is no doubt that this is international maritime transport (transportation between ports in different States). The Hague Rules are not directly applicable here, because Brazil is not a party tothem. However, cl 5.1(b) of the bill of lading stipulates that it will be subject to the Hague Rules, which is therefore the applicable law chosen by the parties.

The bill of lading is central to this type of contract. Once issued and delivered by the carrier to the shipper, it constitutes a document representing the goods described therein - which may be made out to order or to bearer - and is transferable in accordance with the general regime for credit instruments - cp art 1.b of the Hague Rules and, domestically, arts 3 and 11 of DL No 352/86 of 21 October.

The bill of lading or transport document performs a threefold function: it serves as a receipt for delivery to the carrier of the specific goods described therein; it proves the contract of carriage concluded between the shipper and the carrier and its terms and conditions; and it represents the goods described therein, being negotiable and transferable, in accordance with the general regime for credit instruments.

Issuing the bill of lading constitutes an important obligation of the carrier. Indeed, after receiving the goods and at the request of the shipper, the maritime carrier must, under the Hague Rules, issue and deliver a bill of lading describing the goods and their condition. Furthermore, after receiving and loading the goods, the carrier must, at the request of the shipper, deliver to the latter a bill of lading containing, among other elements (art 3.3):

(a) The leading marks necessary for identification of the goods as the same are furnished in writing by the shipper before the loading of such goods starts, provided such marks are stamped or otherwise shown clearly upon the goods if uncovered, or on the cases or coverings in which such goods are contained, in such a manner as should ordinarily remain legible until the end of the voyage.

(b) Either the number of packages or pieces, or the quantity, or weight, as the case may be, as furnished in writing by the shipper.

(c) The apparent order and condition of the goods.

As regards the apparent condition and packaging of the goods, this reference refers only to the apparent condition verifiable by reasonable examination.

The carrier is only liable for damages arising within the timeframe of the transportation period. In the first phase - receipt of the goods - the carrier may include in the transport document certain information regarding the characteristics of the goods to be transported, as well as their apparent state and condition, ie the affixing of reservations.

In specific reservations, the carrier identifies any specific discrepancies with the shipper's declarations, detected through its examination or verification/inspection of the goods. In contrast, generic reservations do not identify specific discrepancies. They are reservations precisely because the carrier cannot inspect the goods, adding expressions such as 'disse essere', 'said to contain', 'unknown quantity', 'unknown weight', 'unknown brands and volumes', or similar. They are, in essence, 'ignorance clauses'. This type of generic reservation is, more often than not, connected with the phenomenon of containerisation, because such reservations (like all others) must have a basis or a well-founded motivation, and are commonly used when the carrier cannot verify the contents of a sealed container.

According to the Hague Rules, the content of a bill of lading regarding the characteristics and condition of the goods constitutes a presumption, unless proven otherwise, of receipt by the carrier of the goods as described therein.

The admissibility of reservations presupposes that they are clear, precise, and capable of being justified. The carrier may not rely on ambiguous expressions that do not allow the true scope of the nonconformities or state and condition to be discerned. They must be sufficiently founded. A mere reservation is not enough to reverse the burden of proof. The bill of lading must state its reason or basis, which will be evident when, without the need for express reference, the fact substantiates the claim (justification in re ipsa), as is the case with FCL. Indeed, the validity of a reservation depends on whether there is a duty to verify in concreto, which only exists to the extent that the characteristics of the goods can be reasonably verified.

Regarding generic reservations, these will be admissible based on the criterion of the specific existence or otherwise of a duty to verify: if there is no specific duty to verify, the carrier is entitled to make generic reservations. If there is a specific duty to verify, the carrier cannot make such reservations. As a rule, when sealed containers are involved, it is difficult to accept the existence of verifiability in re ipsa of the apparent condition of the goods and their packaging. If the carrier received a container sealed and stowed by the shipper, the condition of the goods inside the container will be difficult to verify.

Regarding FCL, which are containers stowed by the shipper and delivered to the carrier already closed and sealed, generic reservations will in principle be admissible, provided there is justification, although, as a rule, the carrier can verify the weight of the container. If the carrier makes generic reservations ('said to contain'), the presumption will not apply from the outset. The evidentiary value of shipping documents in these situations where generic reservations are made is therefore quite limited. Reservations do not constitute grounds for excluding the carrier's liability. Rather, they affect the document's evidentiary function, having the effect of reversing the burden of proof. In other words, the document's evidentiary value regarding the characteristics of the goods described therein is nullified. In the event of reservations regarding the apparent condition and condition of the goods, the presumption that they were received in good condition and condition by the carrier also ceases to apply. By making reservations, the holder of the document is warned that all matters subject to reservations are solely attributable to the shipper, as the reservation removes the evidentiary value of the bill of lading. In the event of a dispute, the holder of the bill of lading will be responsible for proving the discrepancy between the goods delivered to the carrier and the goods received at the destination.

On the basis of the facts in this case:

1. The packaging of the goods was the responsibility of the Brazilian seller/shipper, Higibras;
2. Higibras was responsible for packaging the goods in cardboard boxes, palletising them and placing them in a closed and sealed container;
3. The goods were delivered to the carrier in a closed FCL (full container load) container, which prevented the carrier from verifying their contents;
4. The clause 'said to contain' constitutes a generic reservation that, because there is a reason - it is not possible to verify the goods - removes the probative value of the bill of lading as to the characteristics of the goods described therein and, likewise, removes the presumption that they were received in apparent good condition and condition by the carrier;
5. If this presumption is removed, it is up to Greenhair to prove the non-conformity between the goods as delivered to the carrier and the goods received at the destination, which it failed to do;
6. Furthermore, since the existence of water from the outside of the container as a possible cause of the humidity and mould found has been ruled out, the hypothesis that such humidity was caused by condensation resulting from the humid and hot conditions at the time of packaging prevails, which would always lead to the exclusion of the carrier's liability for insufficient packaging by the shipper (art 4.2.n of the Hague Rules).

Greenhair's responsibility was to prove that the goods were in perfect condition at the time of commencement of transportation, having arrived at their destination in a state of non-conformity with their original condition, which it failed to demonstrate. Since the liability of the actual carrier (MSC) has not been demonstrated, Abreu's freight forwarder's liability is also excluded.