A company established in Porto purchased exotic wooden logs from a French company. The logs were transported from Dieppe, France, to Viana do Castelo, Portugal. Unloading revealed that there were 13 missing logs. A further 14 logs were broken or damaged during the unloading process. The plaintiff insurer paid out to the buyer and claimed reimbursement from the shipowner and the shipowner's local agent. The agent argued that it incurred no liability as it merely represented the ship and shipowner ashore in relation to the port authorities.

In addition, the agent argued that the plaintiff's claim was extinguished because the action was brought more than one year after the delivery of the goods, as provided for in art 3.6 of the Hague Rules. The plaintiff submitted that the period of expiry is that of art 27.2 of Decree Law No. 352/86 of 21 October, ie two years, so the action was brought in time. A remedial order was prepared in which, in addition to affirming the validity and regularity of the proceedings, the court of first instance, without objections from the parties, dismissed the objection of forfeiture of the plaintiff's claim by virtue of the time bar.

The court of first instance then dismissed the plaintiff's action as unfounded on the grounds that no liability on the part of either of the defendants was proved. The plaintiff appealed.

Held: Appeal upheld. The defendant shipowner is liable to pay the plaintiff PTE 1,049,613.

Article 1.b of the Brussels Convention of 25 August 1924 in DR Series I of 2 June 1932 (the Hague Rules) states that a contract of carriage means only 'contracts of carriage covered by a bill of lading or any similar document of title'. Article 1.e of the same Convention tells us that carriage of goods 'covers the period from the time when the goods are loaded on to the time they are discharged from the ship'. In turn, Decree Law No 352/86 tells us that the contract of transport of goods by sea is governed by the international treaties and Conventions in force in Portugal and, in the alternative, by the relevant statute.

It should also be noted that the carrier ['shipowner' in the Portuguese translation] includes the owner or the charterer who enters into a contract of carriage with a shipper (art 1.a of the Hague Rules) and that the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried (art 3.2 of the Hague Rules).

All that is to say that the contested judgment failed, with due respect, to comply with the terms of the bill of lading or appreciate its significance in its dual function as a receipt of delivery to the carrier of certain goods described therein and proof of the transport contract signed between the shipper and the carrier and the conditions thereof. The carrier received the goods 'clean on board' and was obliged to deliver them at the port of destination, only fulfilling the contract with the delivery of the goods to the recipient. It is clear that the defendant shipowner, by allowing some logs to disappear and allowing damage to others, failed to perform its obligation of transport and delivery of the goods delivered to it. The insurer who paid for the deterioration or loss of the insured objects is subrogated to all the insured's rights against the third party causing the claim.