The plaintiff, a meat exporter, arranged with the defendant carrier to carry meat from Lisbon to a buyer in Funchal, Madeira. The container was in good condition and set at 0° C when delivered to the plaintiff for stuffing. The meat arrived at the port of Funchal with changes in smell and colour that made it totally unsuitable for human consumption. This was caused by temperature variations within the container during sea transport, in particular by the exposure of the meat to a temperature much higher than that agreed and recommended for the transport in question. The damaged goods were destroyed. The plaintiff entered into protracted negotiations with the defendant's P&I club in order to reach an amicable settlement, but these negotiations failed and the plaintiff then instituted proceedings against the defendant. The defendant argued that the plaintiff's claim was time-barred, but the court of first instance held for the plaintiff on the basis that the delay caused by the negotiations amounted to an abuse of rights. The defendant appealed but was unsuccessful. The defendant therefore appealed in cassation to the Supreme Court of Justice.

Held: Appeal allowed. The judgment under appeal is revoked and the plaintiff's claim dismissed.

It is beyond question that in 1932 Portugal acceded to the Hague Rules, and since the entry into force of DL 37.748, of 1 February 1950 the provisions of arts 1-8 of the Hague Rules are now applicable to all bills of lading issued in Portuguese territory. Whatever the nationalities of the parties, the legal relationship set out in the dispute must first be governed by the rules contained in the Convention, and only subsequently, in the alternative, by national law. According to art 3.6 of the Convention, legal proceedings must be brought within one year of delivery of the goods, under penalty of expiry of the right of action.

The action was brought more than four months after the expiry of that period of one year after receipt of the goods. Accordingly, the defendant could in fact invoke, under normal conditions, the forfeiture of the plaintiff's right to bring an action for damages for faulty performance. However, the plaintiff considers that the defendant's invocation of forfeiture constitutes an abuse of rights. The plaintiff argues that the defendant led it to believe that the defendant would pay damages without recourse to the courts, deftly entertaining the plaintiff with promises of amicable settlement and asking the plaintiff for a little more patience for payment of compensation.

On the facts, however, the procedures undertaken by the defendant and its P&I club are not sufficient in themselves to be regarded as abnormal, especially since in the case of maritime transport one is faced with facts requiring complex investigation. While expressing the view that it wished to see the matter amicably resolved, the defendant gave no guarantee to the plaintiff that it would pay, nor did it ever mention or imply that it would relinquish the right to invoke the forfeiture of proceedings if there was recourse to litigation. There is no factual basis for a finding of bad faith on the part of the defendant.