Plaintiff carrier chartered in a vessel from Third Party shipowner to transport a shipment of steel for Defendant shipper. In the loading port, the steel was found to be rotted. However, as the shipper demanded and against its LOI, the carrier acquired the shipowner’s consent to issue the clean bill of lading. The steel further deterioated in the course of transportation due to the carrier’s failure to exercise due diligence to take care of the goods. In the port of discharge, the consignee found the steel severely damaged and commenced arbitration against the shipowner who in turn claimed against the carrier. The carrier settled the cargo damage disputes with and paid compensation and arbitration fees towards the consignee (final sufferer). Now, the carrier sued the shipper for recourse. The court held that (i) the carrier was entitled to make a recourse claim against the shipper on the basis of the LOI, deemed as a separate and independent contract between the parties, which was used by the shipper for the acquisition of the clean bill of lading; (ii) prior to the loading, part of the steel had already been rotted. However, by observation of the relevant cargo damage reports, the final damage found by the consignee in the port of discharge was not contributed by the pre-loading steel erosion, but also by the carrier’s failure to exercise due diligent to take care of the cargo; and (iii) so, the carrier and shipper should equally share the compensation and arbitration fees arising from the cargo damage that the carrier paid to the consignee.