Previsión Española Sociedad Anónima de Seguros y Reaseguro (Previsión) and Sur Sociedad Anónima de Seguros y Reaseguros (Sur) (the plaintiffs) claimed for compensation for amounts paid in contribution to general average against Brisa Lines SA (Brisa) and Oceanmaris Management Inc (Oceanmaris) (the defendants). The defendants were the carrier/time-charterer and shipowner respectively of the MV Stamatina. The plaintiffs were the insurers of Maderas Coloniales SL (Madeconsa) and Compañía de Coordinación de Comercio Internacional SA (Cointer) respectively, owners of two shipments of wood carried under bills of lading from Belem, Brazil, to Marin, Vigo, Spain. The vessel departed from the port of Belem on 21 March 2001, even after deficiencies were detected in the engine that seriously affected its seaworthiness. On 9 April 2001, near Azores Island, the ship experienced an engine breakdown. The master hired a salvage company to tow the vessel the port of Leixoes, Portugal. The master declared general average, and the adjusters and the representatives of the salvors contacted the plaintiffs requesting securities for payment. An arbitral award of 14 December 2001, decided on the basis of the York-Antwerp Rules 1974 as agreed in the contract, established the amounts to be paid by the cargo interests as their contribution for general average. The plaintiffs paid those amounts on behalf of their insureds.

The plaintiffs then filed a claim against the defendants, alleging that their negligence caused the situation of danger that required the salvage. The insurance companies contended that the negligence was evident in the ship’s deficiencies detected before the beginning of the voyage and the negligence of the crew. The plaintiffs based the claim, apart from some local provisions, on art 3 of the Hague Rules. Only Brisa appeared in the proceedings and argued that the plaintiffs were not entitled to claim, that the action had expired (caducada), and that in its capacity of time charter of the vessel, it was not obliged to pay the damages claimed by the plaintiffs. It also alleged that the subject matter of the arbitration was not general average but rather the consequences of the salvage agreement. The first instance court admitted the claim and ordered the defendants to pay compensation. On appeal, the decision was affirmed. Brisa recurred the decision in cassation before the Tribunal Supremo/Supreme Court (SC).

Held: The SC affirmed the decision. The carrier considered that it had acted with due diligence as it requested the shipowner to repair the defects of the vessel and that it did not start the voyage until those defects were corrected. The SC noted that it was proved that the MV Stamatina was unseaworthy before the beginning of the voyage. Hence, the SC rejected this argument. Brisa also argued that it was not liable for the unseaworthiness of the vessel because, as it was the time-charterer of the ship, it was only responsible for its commercial management. It was the shipowner's duty to make the ship seaworthy as it kept the technical and nautical control of the vessel. Brisa was not allowed to instruct the master in anything else than in the commercial aspects of navigation. The SC found that, although Brisa's statements were correct, the decision on appeal determined that the cause of the need for salvage was the defects of the vessel duly discovered at the moment the voyage started. This defendant was ordered to pay in its capacity as carrier. Such a position was not objected to in the process and came from its signature on the bill of lading. Every carrier must take care that the ship is in a seaworthy condition before the beginning of the voyage, according to art 3.1.a of the Hague Rules. The time-charterer is not released from liability by the fact that it is only charterer for a time, when the unseaworthiness is due to its fault, according to art 4.1 of the Hague Rules. The evidence of the defects of the MV Stamatina affecting its seaworthiness makes it reasonable to conclude that Brisa's conduct was negligent at that moment for not doing what was necessary to assure the carriage was performed in good condition.

Brisa also alleged an infraction of the York-Antwerp Rules 1974, arguing that the general average should have been adjusted before discussing if the plaintiff was entitled to claim a contribution in the expenses. The SC stated that, although the arbitration dealt with the salvage, the cargo interests, or their insurers in this case, could claim the liability of the persons that caused the situation of danger. The expenses incurred for salvage of the goods compromised in the voyage fall within the concept of general average, according to rule A of the York-Antwerp Rules 1974. Those expenses are subject to the proportional regime that governs the contribution. When they have been paid to the salvors by the party obliged to do so (rule 6), this party can claim the respective portion to each one of the owners of the interest in danger, or, as it is in the case, to the party whose negligence caused the situation of risk. Brisa's argument that the party who paid the salvage expenses cannot claim from the negligent party that had caused the situation of danger and made salvage necessary, without first having liquidated the general average in which those expenses were integrated, was erroneous. The first instance and the appeal decisions had adjusted the general average according to the arbitral award based on the cost of the salvage and its expenses. Furthermore, there was no additional evidence of a breach of the York-Antwerp Rules 1974.

Another argument raised by Brisa was an alleged infraction of the International Convention on Salvage 1989 (Salvage Convention 1989). The SC said that this Convention was not ratified by Spain when the salvage occurred. Hence, art 6, which establishes the authority of the master to enter into a salvage agreement on behalf of the shipowner, and for both of them to contract on behalf of the cargo interests on board, was not in force at that moment. However, the SC noted that the basis of this claim was not to identify who was responsible for the contractual credit of the salvors. Rather, this claim was about who must answer for the economic damage caused to the cargo owners by the need for salvage. In other words, who was the party liable for the situation of danger and the subsequent necessity for salvage that produced the credit resulting from the contract entered into by the master? The amount collected by the salvors also constitutes the measure of the damage.

Finally, Brisa also argued an infraction of art 3.6 of the Hague Rules as the lower courts did not apply the time limitation period established in that provision. The SC stated that the correct construction of that rule means that the initial date to calculate the one-year period could not be the date of the delivery of the cargo at the port where the vessel was towed by the salvors. Such a period must be counted from the time in which the indirect damage for which the plaintiffs seek compensation was duly determined. In this case, it was when the arbitral award was executed because that award solved the situation of uncertainty regarding the existence and quantum of the obligation.