Court Of Appeal Upholds No Set-Off Clause And Time Bar Provision In BIFA Standard Trading Conditions

Röhlig (UK) Ltd v Rock Unique Ltd [2011] EWCA Civ 18

Time-bar provisions are commonly found in contracts for the carriage of goods by sea and road. The importance of complying with the one-year time-limit under Article III Rule 6 of the Hague-Visby Rules (HVR) is well-known to the shipping industry. Many potentially good cargo claims subject to the HVR have been known to fail because the claims were not brought within 12 months of discharge. The hard line taken by the English courts (and arbitrators) in respect of demurrage time-bar provisions contained in voyage charter parties is also well-established. In the present case, the Court of Appeal upheld the reasonableness of the nine-month time limit contained in the British International Freight Association ("BIFA") standard trading conditions 2005 and found that it operated to bar the customer's claims against the freight forwarder, even in circumstances where the customer may not have reasonably been able to discover its cause of action before the time-bar expired. The Court of Appeal also upheld the standard "no set-off clause", which protected the company's cash-flow, described as "the life-blood of the business".

Background to dispute

The dispute in this case related to unpaid invoices issued by a freight forwarder, Röhlig, to a UK importer, Rock. Rock alleged that it had been overcharged, and denied that it was liable to pay the whole of the amounts shown in the disputed invoices. Röhlig sought summary judgment in respect of the unpaid amounts and Rock counterclaimed to recover amounts by which it said it had been overcharged in the past under other invoices.

First instance decision

The first instance judge refused to decide the matter summarily. He concluded, however, that the contract between the parties incorporated the BIFA standard trading conditions, the material provisions of which were as follows:

"21(A) The Customer shall pay to the Company in cash, or as otherwise agreed, all sums when due, immediately and without reduction or deferment on account of any claim, counterclaim or set-off......

27(B) . . . the Company shall in any event be discharged of all liability whatsoever and howsoever arising in respect of any service provided for the Customer . . . unless suit be brought and written notice thereof given to the Company within nine months from the date of the event or occurrence alleged to give rise to a cause of action against the Company."

The principal issues were (i)...