The claimant contracted Compañía Chilena de Navegación Interoceánica SA (CCNI) to carry 22 containers from different ports in the Peoples Republic of China (PRC) to Busan, Korea. From there, they were to be shipped onboard the Gant Star for final delivery at Balboa, Panama. The cargo consisted of merchandise for the Christmas season sales in Panama and South America. The carrier offered an estimated date for arrival in Panama for around 5 September 2001, but it arrived two months later, on 8 November 2001. The plaintiff claimed consequential damages resulting from the delay in the delivery.

The defendant accepted it had delayed the carriage and promised new earliest dates to deliver the cargo. The carrier even offered to transship the container into another vessel to proceed with the carriage in due time. None of this was accomplished. The reason for the delay was a malfunction in the vessel’s engine. In addition, it was demonstrated that the ship sailed back to Busan to discharge and take on new cargo. CCNI did so despite its awareness that the plaintiff’s cargo was needed at a specific time in Panama. The cargo interest had informed CCNI of the need to have the merchandise on time in order to have it available for sales during the Christmas season. The defendant invoked cl 16 of the bill of lading, which set out an exoneration of liability for delays. The First Maritime Court upheld as valid this clause for the cargo shipped in the PRC, but as invalid for the cargo shipped in Hong Kong according to the applicable law to each part of the transport. Both parties appealed the decision.

Held: The Supreme Court of Justice, acting as a Court of Maritime Appeals, partially overturned the lower court decision, applying the Hague Rules in its literal construction. It concluded that the delay was not because of the common risks in navigation but because of a defect of unseaworthiness as well as an unjustified deviation. The carrier was negligent for want of due diligence in making the ship seaworthy and for the unjustified deviation. Applying arts 3.8 and 4.1 of the Hague Rules, the Supreme Court stated that, as the delay was caused by a want of due diligence in making the ship seaworthy, any clause that may have the effect of releasing the carrier of liability for damages caused by lack of compliance with this duty, shall be held null and void. In consequence, the exoneration clause for delay was held null and void and the carrier was liable for the consequential damages caused by such a delay.