The respondent purchased fuel from a foreign company, and the appellant, an Austrian insurance company, insured the carriage of the cargo from Russia to Israel. The quantity of fuel measured in the container at the port of origin was recorded in the bills of lading and in the insurance certificates (approximately 71,900 mt). The amount of fuel measured on the ship immediately upon loading was almost identical to that measured at the port. However, the amount of fuel measured when the cargo arrived in Israel was about 500 mt less than what was purchased and which was included in the bill of lading. The respondent sued the appellant for compensation for the missing fuel and succeeded in the Magistrate's Court. The appellant appealed to the District Court. The main argument was that the ship did not load the full quantity of fuel purchased at the port of origin, and the shortage occurred where the insurance certificate was not yet applicable, and therefore the appellant had no obligation to compensate for the shortage. The appellant argued that the bills of lading could not serve as proof of the correctness of their contents with respect to the quantity of fuel, since the supplier may not have supplied the entire cargo in the first place.

The District Court rejected the appeal. It held that the bills of lading serve as prima facie evidence of the correctness of their content. A reservation appearing in the bills of lading regarding the amount of the cargo in general is insufficient to negate the power of the bill of lading as evidence. Regarding the applicability of the insurance, it held that when the insurance certificate contains the expression 'from warehouse to warehouse' the insurance enters into effect upon the departure of the goods from the place of storage at the port of origin, and also applies to damage or loss caused while loading the ship.

The appellant sought leave to appeal to the Supreme Court. The appellant requested that the previous judgments be set aside and that the applicability of Ottoman customary law vis-à-vis the Carriage of Goods by Sea Ordinance (Ordinance) be determined, especially where the parties agreed on the application of English law. The appellant also argued that the damage was not proven, since the bills of lading should not be regarded as admissible evidence of the amount of cargo loaded on board the ship: (a) in accordance with s 6 of the Ordinance, the rule regarding a bill of lading as apparent evidence does not apply in the case of bulk (non-packaged) cargo; (b) in accordance with Ottoman law, the bill of lading does not serve as evidence since the supplier did not sign it, and the case should be distinguished from the Spector case (Bara (Haifa) 904/00 Spector & M N Continental (Unpublished), where a bill of lading was recognized as apparent evidence despite the absence of sufficient signatures; and (c) the bill of lading serves as prima facie evidence in the relationship between the maritime carrier and the cargo owner, but not in relations between insured and the insurer. 

Held: Appeal dismissed.

On the point of admissibility of the bill of lading as evidence, the Ordinance overrides Ottoman law. Section 9 of the Ordinance states: 'The Ottoman law on the carriage of goods at sea shall not be in force, and any provision of the Ottoman Law that deals with the carriage of goods at sea and which contradicts the provisions of this Ordinance shall no longer be valid.' According to the Ordinance (art 3.4 of the Schedule): 'Such a bill of lading will serve as prima facie proof that the carrier has received the goods specified in the bill of lading ...'

The bill of lading can also be seen as prima facie proof to the insurer that the carrier received the goods as specified in the bill. The wording of art 3.4 of the Schedule to the Ordinance is general, and does not indicate to whom the bill of lading will serve as prima facie evidence. Thus, linguistically speaking, the Ordinance can be interpreted in a manner that will also apply to an insurer. The Ordinance gives legal effect to the Hague-Visby Rules, an international Convention for regulating the carriage of cargo by sea according to bills of lading. The Ordinance does not refer explicitly to insurers, but that does not rule out the possibility of its application in the present case against them. Article 3.4 creates an exception to the rule regarding hearsay testimony, in order to make it easier for applicants to sue for damage in maritime transport. Without the provision, according to the ordinary rules of evidence, a party to the proceeding who wishes to file a bill of lading must get the author to testify to the correctness of its contents. In the context of international trade this will create considerable practical difficulties. Furthermore, in the manner of insurance claims, after the insured has received reimbursement of its losses from the insurer, the insurer is in the shoes of the policyholder, and can claim compensation from the creator of the damage (for example, the carrier). At this stage, the insurer is certainly entitled to rely on the bill of lading as prima facie evidence in its claim against the carrier (CA 2277/92 ZIM v The Israel Phoenix, PD 86 (3) 861, 866). From this it follows that there is no justification to prevent the insured to present the bill of lading as prima facie proof of delivery of the goods described therein, also in a claim against the insurer. It should be noted that we are dealing with ostensible evidence, and the insurer must of course bring evidence to the contrary.

In view of the aforesaid, the respondent can rely on the bill of lading as prima facie proof. The receipt of the bill of lading as evidence, combined with the results of the measurement on board the ship, leads to the conclusion that the shortage was created after the loading of the ship, and at least after the departure of the supplier's warehouse, that is, when the 'from warehouse to warehouse' condition is fulfilled.

General reservations that appear in bills of lading ('weight, quality and quantity unknown' or 'said to contain') are not useful and lack validity. They may be analogised to 'without prejudice' correspondence to lawyers, insurance companies and others, which does not constitute a 'magic exemption'.

The petitioner cannot even build on the argument that the bills of lading should not be seen as prima facie evidence of the fact that the cargo is in bulk and not packed, an exception that appears in s 6 of the Ordinance. Section 6 of the Ordinance states:

Modification of paragraphs 4 and 5 of Article III of Rules in relation to bulk cargoes

Where under the custom of any trade the weight of any bulk cargo inserted in a bill of lading to which the rules apply is a weight ascertained or accepted by a third party other than the carrier or the shipper and the fact that the weight is so ascertained or accepted is stated in the bill of lading, then, notwithstanding anything to the contrary in the Rules, the bill of lading shall not be deemed to be prima facie evidence against the carrier of the receipt so goods in the weight so inserted in the bill of lading, and the accuracy of it at the time of shipment shall not be deemed to have been guaranteed by the shipper.

This section deals with special cases in which the carrier could not verify the accuracy of the weight recorded in the bill of lading. However, this does not negate the possibility of submitting the bill of lading as prima facie proof to the insurer, since it can demand indemnification from any liable party, and not only from the carrier.

There is no reason to assume that the damage occurred in the stage prior to the loading of the ship. Even if the damage was caused between the warehouse and the ship, the respondent had the right to sue. This alternative does not undermine the respondent's claim.