As Standard Club informs, on 19 February 2019, the Commercial Court decided that the rule established in The Aries [1977] 1 WLR 185 (HL), as per which freight must always be paid and claims cannot be set off against it, did not apply to freight forwarders.
Nicholas Vineall QC, the deputy judge of the High Court, had to decide about an application made by the claimant, Globalink Transportation and Logistics Worldwide LLP (Globalink) for summary judgment against the defendant, DHL Project & Chartering Limited (DHL), pursuant to CPR part 24.
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In this case, the defendant seeked to bring a counterclaim in order to extinguish or at least reduce the claim for freight. As Standard Club says, in general English law allows for a counterclaim to be advanced as a defence, especially where claim and counter-claim arise out of the same contract, the defence of set-off is not an option for freight claims.
The rule of law that came up from ‘The Aries’ is that the carrier has a right to payment of its freight. Setting off a counter-claim against the freight claim is not allowed and the carrier has the right to a summary judgment even if there is a considerable counter-claim with a realistic chance to be successful.
Nevertheless, in this judgment, it was decided that this rule did not apply to freight forwarders.
The most important point to take away is that freight forwarding contracts are simply not the same as a contract of affreightment and one of the consequences of that difference is that there will generally be a right to set-off in a freight forwarding contract
Standard stated.
Operations dealing with freight forwarders should consider this, and if they have doubts they should contact the club for clarification and further help.
In addition, the case is a reminder regarding force majeure. With respect to whether or not the low water levels constituted a force majeure event, the Court decide that it was not. Namely, not only was it expected that the water levels would be low in the canal at that time of year, but it was Globalink’s failure to arrange for a timely delivery at the final destination which caused the delay. If the transport arrangements been made earlier, then the goods would have arrived at the refinery before the canal closed down for the winter.
As the judge mentioned:
It would be absurd if a party could excuse itself from the consequences of a breach by reference to force majeure when the force majeure was caused by the party’s own breach
