Pesqueras Bermeanas de Tunidos SA (the plaintiff) claimed for damage to a cargo of frozen fish carried from Abidjan, Ivory Coast, to Villagracia de Arosa, Spain, against D Juan Ramón, the master of the MV Malu, flagged in Honduras. The plaintiff had arrested the ship for obtaining security.

The first instance Court admitted the claim partially and ordered the defendant to pay compensation. On appeal, the Court of Appeal (CA) considered that the carrier, Tabby Compañía Naviera SA, should have been joined to the proceedings as a defendant. Hence, the proceeding was incomplete, which made the Court unable to decide the merits of the case. The CA reversed the decision and nullified the security provided to release the vessel from arrest. The plaintiff recurred the decision on cassation before the Tribunal Supremo/Supreme Court (SC). The plaintiff alleged omission in the application of arts 3.1, 3.2, 3.6, 3.8, 4.2, and 4.5.e and the incorrect application of arts 2.8, 4.2.a and 7 of the Hague-Visby Rules. The Law on Carriage of Goods by Sea of 22 December 1949 (LCGS 1949) introduced the Hague Rules into the Spanish legal system with some modifications, amended later by the Protocol of 23 January 1968 (Visby Rules), and by the SDR Protocol of 21 December 1979. The plaintiff also alleged omission of the application of arts 1.1.e, 7.1.a-c of the International Convention Relating to the Arrest of Sea-Going Ships (the Arrest Convention 1952).

Held: The SC reversed the CA decision.

The SC acknowledged that the case law has established that a defective integration of the relevant parties in the proceedings (litisconsorcio necesario) does not affect the intrinsic validity of the plaintiff-defendant relationship, but the ability to obtain a solution of the merits of the claim. That is because the party does not have the legal power granted by the law to answer as a defendant, impeding the Court to order the party to make a declaration or to perform acts or payments that fall outside its capacity. In this case, that did not occur.

The Code of Commerce makes the master responsible for the cargo from its receipt at the dock or next to the ship until it is delivered at the pier at its destination unless other conditions had been agreed. Neither the Hague-Visby Rules nor the LCGS 1949 interferes with this rule but indirectly affirms it, considering the agency functions of the master as a substitute of the shipowner/carrier at the port of destination. As the cargo was transhipped from another vessel to the carrying vessel and the bill of lading was signed by the master, there was no doubt that the master assumed the function of a carrier, and therefore, his acts bound the carrier. As a result, the object of the process was not exclusively about the duties and faults of the master or crew members, but also those attributed to the shipowner/carrier according to the Hague-Visby Rules, applicable to the case by reference to the paramount clause.

The term ‘carrier’ includes the owner or charterer who enters into a contract of carriage with a shipper (art 1.a of the Hague-Visby Rules). The carrier, master, and agents of the carrier are responsible for the receipt and handling of the cargo under a bill of lading according to art 3.3 of the Hague-Visby Rules. They are also obliged to seal the document as 'shipped' and have the ability to annotate any other particularity (art 3.7 of the Hague-Visby Rules). The Rules also provide an obligation of custody of the cargo during the voyage, which is commonly complied with by the master and its servants. All these provisions justify the possibility to sue the master individually. This situation has a component of solidarity, but different criteria govern the distribution of the liability among these parties and the resulting actions between them without prejudice that the evidence shows that the damage resulted from nautical fault. In that case, the carrier is exonerated from liability (art 4.2.a of the Hague-Visby Rules), and the master shall be liable without extending the responsibility to the carrier. This construction is supported by the conduct of the master in the arrest proceedings, where he acted as guarantor by providing security to release the ship and appointing an attorney for his representation without opposing his standing to be brought as a defendant in his statement of defence.

The master also alleged the lack of jurisdiction of the Court based on an arbitration clause. The plaintiff argued that art 7.1 of the Arrest Convention 1952 determines the jurisdiction of the arresting court to decide the merits of the claim and also noted the connection points that refer to the Spanish jurisdiction (domicile of the plaintiff or principal place of business), and that the shipment was under a bill of lading. The defendant argued that the charterparty containing the clause was not applicable and that there was no evidence of the arbitration clause. The SC rejected the first argument on the ground that art 7.3 of this Convention recognises the efficacy of arbitration clauses by fixing a period for the arresting party to commence arbitral proceedings. That the defendant did not invoke the arbitration clause when the vessel was arrested does not mean that he cannot allege the clause in the main proceedings. Regarding the application of the clauses of the charterparty, the SC stated that although the Hague-Visby Rules do not apply to charterparties (art 5), if bills of lading are issued as a consequence of a charterparty, the Rules apply to that shipment. The bill of lading for this shipment included the indication 'Congenbill', which, according to international usages, is issued for carriage under charterparties. Therefore, if the alleged charterparty contained an arbitration clause, that was applicable. However, there was no proper evidence of such clause, and so that defence was unsuccessful.