DISPUTE OVER A LOGISTICS SERVICE CONTRACT

Legal issue: Claim for compensation for damages and contractual penalties

Case brief: 

P.T Joint Stock Company (P.T.) is an export company specializing in shipping goods from Vietnam to South Korea. Upon receiving an export order from a buyer in South Korea, P.T. would deliver the goods to a transportation company for carriage to Cat Lai Port. At the port, the goods would be handed over to an export service provider to be transferred to the designated shipping line. The shipping line would then transport the goods by sea to the Port of Busan, South Korea, and deliver them to the buyer.

To facilitate domestic transportation, P.T. entered into a contract with L. Logistics Company Limited (L. Logistics) to transport goods by road, moving export containers from P.T.’s warehouse in Long An to Cat Lai Port. The contract included a dispute resolution clause stating: “In the event of a dispute that cannot be resolved amicably within 30 days, either party may choose to file a lawsuit in court or request commercial arbitration.”.

After more than two years of executing the contract, L. Logistics replaced its drivers, and Mr. N.L.H. became the new driver. Driver H received, weighed, and issued a warehouse exit slip recording the weight of the shipment, then transported and delivered the goods to the designated person at Cat Lai Port on April 20, 2021. Subsequently, the shipment arrived at the Port of Busan, South Korea. Upon receiving and inspecting the goods, the buyer discovered that more than half of the goods were missing and notified P.T. of the loss and requested compensation of approximately 2.5 billion VND.

On May 30, 2021, upon receiving the buyer’s compensation claim, P.T. invited L. Logistics to a meeting to resolve the dispute. At the meeting, L. Logistics requested that P.T. provide evidence that the loss was caused by L. Logistics. As the parties were unable to reach an agreement, P.T. initiated arbitration proceedings, requesting that the Arbitral Tribunal: Order L. Logistics to compensate for the lost goods and pay a contractual penalty of 12% of the value of the lost goods.

How we helped our clients: 

Representing L. Logistics Company Limited before the Arbitral Tribunal, our attorney has issued a Defense, submitted to the Tribunal and the Claimant, wherein the following defenses was raised on behalf of the Respondent:

1. Challenge to the Tribunal’s Jurisdiction: Citing Article 43(5) of the Arbitration Law 2010 and Article 4 of Resolution 01/2014/NQ-HĐTP guiding the Arbitration Law 2010, the attorney argued that the arbitration agreement did not specify the name of a particular arbitral institution. Furthermore, the Claimant, P.T. Company, had failed to demonstrate that the parties subsequently agreed to select this specific arbitral institution but were unable to do so. Consequently, the Claimant lacked the standing to initiate arbitration proceedings before this Tribunal. The Respondent therefore requested that the Tribunal dismiss the case.
2. Denial of Breach of Contract: The attorney asserted that the Claimant, P.T. Company, has failed to prove that the Respondent, L. Logistics Company Limited, breached the contract. Specifically, the Claimant had not demonstrated that the Respondent violated its obligation to ensure the safety of the goods from the time of receipt to the time of delivery as per the transportation contract. The parties conducted a weight check upon receipt and delivery of the goods. The Respondent’s liability was limited to the scope of road transportation from P.T. Company’s warehouse to Cat Lai Port, and the loss of goods could have occurred during the subsequent sea transportation from Cat Lai Port to Busan, South Korea.
3. Absence of Actual Damages: The attorney argued that P.T. Company had not suffered any actual damages as the buyer had merely issued a claim for compensation, and P.T. Company has not incurred any actual losses. Based on points (2) and (3) above, and pursuant to Articles 302 and 303 of the Commercial Law 2005, the Respondent, L. Logistics Company Limited, had not breached the contract nor caused any actual damages, and therefore bore no liability for compensation.
4. Failure to Lodge a Timely Complaint: Our attorney contended that P.T. Company failed to lodge a complaint within 14 days from the date of receiving the goods at Cat Lai Port, as required by Clause d, Article 237 and Article 294 of the Commercial Law 2005. Our attorney requested that the Tribunal, if it proceeded with the case, applied this provision to exonerate L. Logistics Company Limited from liability.

Dispute Resolution Result: Upon receipt of the Defendant’s Statement of Defense, filed by its legal counsel, the Plaintiff reviewed the document and voluntarily dismissed its complaint. The Defendant has not made any further requests regarding this matter.