PRAGNUM Successfully Defended a Global Logistics Provider in a Dispute with Ukraine's Largest Steel Producer
A leading international logistics company with a global network and one of Ukraine's foremost providers of freight forwarding services faced a lawsuit brought by the country's largest metallurgical company. The claimant in the proceedings was PJSC ArcelorMittal Kryvyi Rih.
The dispute concerned compensation for container demurrage charges, recovery of an advance payment made under an international freight forwarding agreement, and the validity of a unilateral set-off of mutual homogeneous claims.
The customer challenged both the legitimacy of the demurrage charges and, consequently, the lawfulness of the freight forwarder's set-off.
Rather than relying on a conventional litigation strategy, PRAGNUM's legal team developed a comprehensive, multi-dimensional approach that combined contractual analysis, operational evidence, corporate tax accounting, and sophisticated legal doctrines.
The team collected and systematised the complete documentary trail confirming the client's demurrage expenses—from invoices issued by the international ocean carrier to payment instructions evidencing that the client had reimbursed its agent for those amounts.
PRAGNUM successfully demonstrated that, under the terms of the agreement, the burden of proving that the delay in returning the containers had been caused by the freight forwarder rested with the customer. The claimant's legal position failed to satisfy the standard of proof established by PRAGNUM's litigation strategy.
The lawyers also conducted an in-depth review of the claimant's tax records and identified a critical inconsistency in its position. The court was shown that the customer had accepted the VAT adjustment calculation, thereby effectively acknowledging the financial consequences of the set-off before subsequently attempting to challenge its validity.
To further rebut the claimant's allegations, the team carried out a detailed audit of the logistics chain and presented the court with a comprehensive chronology of events demonstrating that more than 40 days of delay were not attributable to the logistics operator.
PRAGNUM also submitted a detailed chronology of the parties' correspondence confirming that the customer had acknowledged its obligation to reimburse the demurrage charges and was fully aware of the actual expenses incurred.
The Commercial Court of the City of Kyiv dismissed the claim in its entirety, confirming both the validity of the logistics operator's claims and the lawfulness of the set-off.
The claimant appealed the judgment. However, the Northern Commercial Court of Appeal upheld the decision of the court of first instance, dismissed the appeal in full, and ordered the claimant to bear all legal costs.
By combining logistics expertise, tax law and established principles of civil law, PRAGNUM once again demonstrated its ability to protect business interests in highly complex commercial disputes.
This successful case has strengthened legal certainty for international logistics operators by confirming their right to resolve disputes efficiently through the mechanism of set-off without the risk of prolonged court proceedings or unnecessary disruption to working capital.
The case demonstrates how the combination of industry-specific expertise and a comprehensive legal strategy can not only secure successful outcomes in complex disputes but also contribute to the development of legal practice and greater certainty for businesses.
If your business requires a comprehensive defence strategy in a complex commercial dispute, the PRAGNUM team is ready to assist.
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