Air carriage contract cannot be cancelled with retroactive effect

In 2021, the freight company Schenker AS undertook an assignment for Grieg Seafoods AS to transport 76 tons of frozen salmon to China. Due to insufficient cooling capacity at Guangzhou airport, the parties agreed to have the salmon delivered to the recipients quickly after arrival. However, mandatory infection control measures from Chinese authorities led to the delivery taking place four days later. A large part of the shipment that had been left outdoors was then spoiled.

The question before the Supreme Court was whether Grieg Seafoods AS had to pay for the freight service, or whether the payment obligation had lapsed because the company was entitled to cancel the carriage contract retroactively.

The Supreme Court concluded that the issue of cancellation had to be resolved according to non-statutory contract law. For agreements where a delivered service cannot be returned, general contractual principles prescribe strict conditions for retroactive cancellation. A particularly serious breach is not enough. For retroactive cancellation to be relevant, the breach must be so extensive that the freight service has no or only very limited value, or that the purpose of the service has been substantially frustrated.

In its individual assessment, the Supreme Court concluded that the strict conditions for retroactive termination were not met. It was emphasised that Grieg Seafood AS's customers in China had paid in advance, and that the company had thus been compensated for the freight charge. Indirect consequences of the cancellation in the form of unresolved claims from the Chinese customers had to be brought as compensation claims.

The judgment clarifies the conditions for cancelling air carriage contracts where the service has already been completed.

Read the judgment from the Supreme Court (PDF)

Area of law: Aviation law. Contract law. 

Key paragraph: 65  

Justices: Øie, Matheson, Falch, Steinsvik, Sæther