Zurich España Cía de Seguros y Reaseguros SA (the plaintiff), an insurance company acting under an assignment of rights, claimed for damage to machinery owned by Danobat Sociedad Cooperativa Ltd (the insured) against Mediterranean Shipping Co España Bilbao SA (the defendant). The insured sold the machinery to a company in the US and contracted with the defendant for the packing, stowage and carriage of the cargo from Bilbao, Spain, to New York, USA. On 24 August 1998, while the cargo was in Felixstowe, UK, for transhipment, it fell from the truck that carried it to the other vessel. The expert’s report stated that the truck was too narrow to carry the box containing the machinery. The damaged machinery was sent back to Bilbao for inspection. The plaintiff paid the insured for the damage.

The defendant rejected any liability for the damage and alleged that it was not the defendant for this claim (falta de legitimación pasiva). The first instance court rejected the plaintiff’s claim and released the defendant from liability. The plaintiff appealed the decision. The Court of Appeal reversed the decision and ordered the defendant to pay compensation. The Court found that the damage did not occur in the maritime section of the carriage. It considered that the defendant was liable, because, apart from its status as the agent of the carrier at the Spanish port, it assumed responsibility for securing the cargo at that port and for handling at the intermediary port for transhipment. The defendant recurred the decision in cassation before the Tribunal Supremo/Supreme Court (SC). The defendant argued that the bill of lading did not make any distinction between the maritime and the land sections of the carriage and that the bill only identified as the carrier to the company appointed to carry the cargo for the maritime leg, which covered the period from the time when the goods were loaded to the time when they were discharged from the ship, according to art 1.e of the Hague Rules as modified by the Brussels 1968 and London 1979 Protocols (the Hague-Visby Rules with SDR Protocol). As the bill of lading named another company as the carrier, the plaintiff alleged that it had no liability for the damage.

Held: The SC affirmed the decision. The SC stated that the interpretation of the bill of lading did not support the defendant’s argument, because the Hague-Visby Rules related to the carriage of goods by sea and could not be applied to a land segment, regardless of whether the bill of lading referred to a non-maritime section for the transport. Therefore, this regulation was not applicable to damages the decisive cause of which was the discharge at a port for transhipment operations. Furthermore, the SC remarked that the Court of Appeal did not ground its decision on the interpretation of the bill of lading, but in other evidence that proved that the plaintiff had contractually undertaken responsibilities to prepare the cargo before its carriage and for the transhipment operation in the English port.