In December 1971, a vehicle owned by Rosario Cerra (RC) was loaded onto the ferry Costa Gaia, together with cargo owned by Alfio Gambino (AG).

Because of overloading and poor stowage, the ferry shifted during the unloading operations in the port of Lipari, Italy, causing the vehicle and cargo to fall into the sea.

The Tribunal of Messina, upholding RC's and AG's claims, ordered the shipowner and carrier, Traghetti delle Isole Eolie SpA (TIE), to pay compensation, and dismissed TIE's request for limitation of liability under the Italian Code of Navigation. This decision was confirmed by the Court of Appeal of Messina, which excluded limitation of liability because of the extra-contractual nature of TIE's liability. TIE appealed in cassation. In particular, TIE argued it was not liable as the excepted peril of nautical fault applied. Moreover, TIE denied the characterisation of its liability as extra-contractual, given that it was the shipowner and carrier, and claimed the application of package limitation per freight unit under the Italian Code of Navigation.

Held: The appeal concerning the application of the nautical fault exception is dismissed. The appeal concerning the limitation of liability is upheld.

The Court recalled the distinction between commercial fault and nautical fault: the former relates to a fault of the master or the crew as to their duties connected to the commercial use of the ship; and the latter refers to a technical act of navigation, including fault in navigation regarding the regularity of manoeuvres, fault in the management of the ship, such as the care and the maintenance of the vessel, and fault in acts affecting the safety of navigation. The Court considered that the irregular placement of the cargo causing the shifting of the ship and the loss of the goods carried was a commercial fault on the part of the carrier. The Court also noted that the irregular placement of the cargo constituted a violation of the obligation to make the ship seaworthy at the beginning of the voyage under the Italian Code of Navigation.

Furthermore, the Court recalled art 1.a of the Hague Rules, defining the carrier as the shipowner or the charterer who enters into a contract of carriage with a shipper. Depending on which of these two is the party to the contract of carriage, the other is not also liable under art 4.1 of the Hague Rules. Moreover, both enjoy the package limitation regime under art 4.5 of the Hague Rules. The Court observed that this limitation concerns the carrier's liability understood as a whole, without distinction between contractual and extra-contractual liability.

The Court also emphasised that under arts 4.2 and 4.5 of the Hague Rules, neither the carrier nor the ship is liable under the excepted perils and beyond the limits of the package limitation regime.