The plaintiff claimed for damage to a cargo of rice carried onboard the M/V Yong Shun, which arrived in January 1995 at the port of El Callao, Peru. It was stated in court that the cargo was received onboard the vessel in good order and condition as the bill of lading indicated the expression 'clean on board'. This assertion was not rebutted by the defendant. The plaintiff submitted as evidence two experts’ reports stating that the cargo was damaged due to a malfunction of the vessel´s machinery and lack of technical knowledge of the crew. There was no submission of relevant evidence on behalf of the vessel. The Maritime Court concluded that the damage of the cargo was caused by the defective conditions of the ship and granted summary judgment in favour of the cargo owner.

The defendant appealed the decision, alleging exemption of liability according to art 4.2.a of the Hague-Visby rules, which was the law applicable to the claim.

Held: The Civil Branch of the Supreme Court of Justice (SCJ), acting as Court of Maritime Appeals, upheld the decision, modifying only the amount of the compensation to be paid by the defendant. The SCJ noted that the defendant did not invoke during the proceedings its exoneration of liability based on its personnel’s negligent conduct. The SCJ stated that art 4.1 of the Hague-Visby rules imposes liability on the carrier when damages occur due to unseaworthiness and such defective condition is caused by a lack of due diligence in making the ship seaworthy and providing proper crew, equipment, and supplies. A vessel is seaworthy, explained the SCJ, when 'it has the degree of suitability that an ordered, careful and prudent shipowner would require its ship to have at the beginning of its voyage, considering all probable circumstances'. Any carrier alleging the exemption of liability listed in art 4.2.a, under the assumption that it has practised due diligence, must prove that in fact due diligence was practised, in order to rely on the alleged exemption. For this purpose, it is not sufficient for a shipowner seeking exoneration of liability to submit classification society certificates, as they do not constitute full evidence of the ship’s seaworthiness. The voluminous and proper evidence submitted by the plaintiff clearly proved the bad conditions of the vessel, the crew's lack of expertise and the want of due diligence, which made the carrier liable for the damage claimed.