Globalink Transportation and Logistics Worldwide LLP v DHL Project & Chartering Ltd

The no-set-off rule for freight is confined to claims arising from contracts of carriage and to freight in the narrow sense. It does not ordinarily extend to sums charged by a freight forwarder for arranging carriage. A freight forwarder may nevertheless rely on the rule for freight actually paid to a carrier where it contracted as the carrier’s agent and seeks reimbursement of that freight. An arguable cross-claim arising from the same contract will ordinarily operate as a set-off unless the rule applies or the parties have agreed otherwise. Where the evidence establishes an arguable claim but leaves a limited issue improbable rather than impossible, the court may make a conditional order under Civil Procedure Rules 1998 Part 24.

Globalink sought summary judgment for unpaid sums under a freight-forwarding agreement concerning the transport of refinery equipment from Russia to Kazakhstan. DHL admitted the debt but advanced a larger counterclaim for losses allegedly caused by Globalink’s failure to arrange suitable and timely transportation. DHL sought to set off that counterclaim.

The principal issues were whether the counterclaim had a real prospect of success and whether it could operate as a defence by way of set-off. Globalink argued that its charges were freight and that the rule in The Aries [1977] 1 WLR 185 barred deduction.

1. Summary judgment. The court applied the principles in European Union v The Syrian Arab Republic [2018] EWHC 1712 (Comm). DHL’s counterclaim was realistic and had a real prospect of success. The court could determine the short legal issue concerning set-off because the relevant evidence was before it.
2. Counterclaim. It was arguable that Globalink owed contractual duties to exercise reasonable skill and care in arranging transportation. The force majeure arguments, the alleged effect of the parties’ later agreements, and the contractual limitation clause all raised issues requiring trial. The counterclaim was better characterised as damages for additional transportation and storage costs caused by alleged breaches, rather than damages for delayed delivery. The limitation clause therefore did not clearly apply.
3. No set-off rule. The rule in The Aries [1977] 1 WLR 185 applies to contracts of carriage and freight in the narrow sense. A freight-forwarding contract requiring the agent to arrange carriage is not thereby converted into a contract of carriage, even if the forwarder may sometimes carry the goods itself. Extending the rule to all forwarding charges would be an extension of the existing law and would conflict with the general availability of set-off.
4. Actual carrier freight. On the concession based on Britannia Distribution v Factor Pace [1998] 2 Lloyds Rep 420, Globalink could recover without set-off sums which it had paid as freight to carriers while acting as agent. The evidence did not establish that the relevant freight had been paid. A conditional order therefore required Globalink to pay $113,000 into court as a condition of defending the claim for that sum. No further order was made on the balance of the claim.