Schenker Ltd v Negocios Europa Ltd (6th October 2017) Moulder J (unreported)

In an under-reported judgment the English Courts have finally confirmed the oft-presumed position that the English freight rule applies to carriage by air.

The common law rule does not require contractual incorporation. It provides that a claim in respect of damage, loss or delay to cargo cannot be asserted by way of deduction from a freight invoice. Thus a cargo claimant must pay freight in full notwithstanding that his cargo may not have arrived or have arrived damaged or late. The rationale for the rule is that there should be prompt payment, avoidance of delay, protection of cash flow and some assurance that a carrier is not disadvantaged in providing credit.

The English common law “freight rule” has been established for more than 100 years in carriage of goods by sea (The Brede [1974] Q.B. 233 & The Aries [1977] 1 W.L.R. 185) and has been extended to domestic and international road haulage (United Carriers Ltd v Heritage Food Group (UK) Ltd [1996] 1 W.L.R. 371).

Despite the significant difference between the time and cost of transportation by air and sea, the English Court held there was no logical or sensible distinction to be made between different forms of transport and applied the common law rule.

The effect is that summary judgment for freight will now be a potent weapon in the hands of air carriers where cargo claimants seek to withhold payment.