Resolving Disputes over Logistics Service Contracts with International Carriers in Vietnam
When Vietnamese businesses enter into international logistics service contracts (e.g., ocean, air, or cross-border road transport), the risk of disputes is hard to avoid. So when a dispute with an international carrier arises, what should a business prepare, which solutions should it choose, and what should it watch out for to protect its lawful rights and interests? This article offers practical guidance based on up-to-date regulations and real-world experience.
1. Causes, challenges, and key legal issues in international logistics disputes
Before looking for solutions, businesses need to understand the nature of the risks and the “hot spots” that commonly trigger disputes.
1.1. Common causes of disputes in international logistics contracts
Poorly drafted contracts lacking essential clauses
Many international carriage contracts used by Vietnamese companies rely on generic templates and overlook crucial clauses on governing law, dispute resolution forum, document-checking obligations, cargo insurance, liability caps, etc. When an incident occurs, the parties may then lack clear legal footing.
Insufficient document checks, customs declarations, and transport control
In logistics operations, if the customer fails to verify the full document set (bill of lading/air waybill, invoice, certificate of origin, customs declaration, etc.) or the carrier mishandles customs procedures, cargo may be detained, penalized, lost, or damaged.
No clear governing law or dispute resolution mechanism
In cross-border deals, if the contract does not specify the governing law (Vietnamese law or a foreign law) and the forum for dispute resolution (arbitration or court, in Vietnam or abroad), the parties can easily clash over jurisdiction and applicable law once a dispute arises.
Limitation periods, exemptions from liability, and sector-specific rules
Under Article 319 of the 2005 Law on Commerce, the general limitation period for commercial disputes is two years from the date the rights and interests were infringed. Logistics contracts often also include exemptions from liability (force majeure, natural disasters, government actions, strikes, etc.); if the carrier proves such events, liability may be excluded or reduced.
Difficulties enforcing foreign awards or judgments
If an arbitral award or court judgment is rendered overseas, bringing it to Vietnam for enforcement can be challenging absent mutual legal assistance or if recognition/enforcement conditions are not met.
1.2. Challenges when resolving disputes between Vietnamese shippers and international carriers
Determining jurisdiction
If the contract does not select a specific arbitral institution or court, the parties may argue over which court has competence. Where the carrier has a head office or branch in Vietnam, Vietnamese courts may have jurisdiction in certain scenarios.
Applying foreign law, treaties, and trade usages
If the contract has foreign elements, courts or arbitral tribunals may apply foreign law or international trade usages where the parties agree or a relevant treaty has been ratified.
Evidence and international legal costs
Operational records, shipment histories, ship logs, delivery reports, and originals of international documents are often abroad, making collection, translation, and legalization costly.
Divergent legal systems
If the carrier is from a jurisdiction with a different legal system (common law vs. civil law), the rules on proof, obligations, and liability may differ significantly from Vietnamese law.
Enforcing foreign decisions
Even after prevailing, if the counterparty has no assets in Vietnam, enforcement depends on recognition procedures under international legal assistance frameworks or Vietnamese law.
2. Dispute resolution methods and how to use them strategically
When a dispute arises, businesses can choose among several mechanisms—don’t rush to litigation if less adversarial options remain.
2.1. Negotiation and mediation—priority first steps
Direct negotiation
The parties meet to present positions, claim compensation, or amend the contract to settle differences. This is the quickest and most cost-effective approach.
Commercial mediation
If negotiation fails, a neutral mediator can help the parties reach a settlement. Under Decree 22/2017/ND-CP on commercial mediation, a settlement is not binding like an arbitral award or court judgment.
Advantages
Preserves the business relationship where future cooperation is desired and reduces time and cost compared to arbitration or court proceedings.
2.2. Commercial arbitration—a preferred route in cross-border disputes
Arbitration is popular in international logistics for its flexibility and confidentiality. To use it effectively, businesses should ensure:
A clear arbitration clause
The contract should specify the arbitral institution (e.g., VIAC, ICC, SIAC), governing law, procedural rules, seat/venue, and language. Clauses that merely say “disputes shall be resolved by arbitration” without naming an institution risk challenges to jurisdiction.
Institutional vs. ad hoc arbitration
For international logistics, institutional arbitration is often preferred for clear procedural frameworks and stronger administrative support.
Leveraging technology & online proceedings
Platforms such as e-case systems now allow electronic filing and case tracking, reducing paper-handling and logistics costs.
Awards and enforceability
Arbitral awards are final and binding. To enforce abroad—or in Vietnam against assets located here—recognition and enforcement must follow applicable domestic laws and international instruments.
Pros
Typically faster than court litigation, confidential, and allows appointment of arbitrators with specialist expertise in international logistics.
Cons
No appeal on the merits, potentially high costs in complex matters, and practical challenges if the losing party resists compliance.
2.3. Courts—the fallback when there is no valid arbitration agreement
If there is no arbitration clause or the clause is invalid/inoperable, court litigation becomes necessary.
Jurisdiction of Vietnamese courts
Where the carrier has a head office/branch in Vietnam or performance (delivery, payment, warehousing) occurs in Vietnam, Vietnamese courts may have jurisdiction.
Procedure under the 2015 Civil Procedure Code
Filing, evidence submission, hearings, first-instance judgment, and possible appeal.
Publicity and reputation
Court proceedings can be public, potentially affecting corporate reputation if unfavorable information becomes public.
Foreign enforcement hurdles
A Vietnamese judgment may require recognition in the counterparty’s country to be effective against foreign assets, subject to that country’s rules and treaties.
3. Preventive measures and strategies once a dispute arises
Effective dispute resolution starts with preparation: robust drafting, risk control, and a playbook for when conflicts occur.
3.1. During contract drafting—prevention is better than cure
Specify governing law and forum
Choose a clear governing law (Vietnamese law or a specified foreign law) and a specific forum (e.g., “Disputes shall be resolved at VIAC under Vietnamese law” or “ICC arbitration under English law”).
Document-check and customs-procedure plan
Oblige the carrier to provide original documents, handle customs properly, and bear costs for errors.
Liability caps, exemptions, and cargo insurance
Where feasible, set a liability cap (e.g., tied to cargo value), obtain comprehensive cargo insurance, and define force-majeure scenarios (natural disasters, government actions).
Internal claim time limits
Set contractual deadlines for notices of claim after delivery (e.g., 14–30 days); missing the deadline may forfeit claims.
Security and secured payment
Adopt safer payment methods (L/Cs, bank guarantees) to mitigate non-payment risks when disputes occur.
3.2. When a dispute arises—maximize your position
Collect and preserve evidence early
Gather contracts, addenda, correspondence, delivery minutes, transport logs, invoices, customs papers, inspection reports, etc., organize them clearly, and prepare translations where needed.
Pursue less adversarial steps first
Send formal notice proposing negotiation; if agreed, attempt mediation before filing.
Cost–benefit analysis of international proceedings
International logistics disputes are often lengthy and costly (evidence gathering, translation, travel). Assess feasibility and recovery prospects.
Choose a reputable arbitral forum and experienced arbitrators
Selecting a respected institution and arbitrators with international logistics expertise improves award quality and recognition prospects.
Plan for enforcement
Identify jurisdictions where the counterparty has assets for recognition/enforcement, or secure collateral (e.g., deposits, assets in Vietnam) to improve recovery odds.
Challenge or defend jurisdiction when appropriate
If the other side alleges lack of jurisdiction due to an ambiguous clause, you can contest or defend the forum’s competence where the contract contains a clear dispute resolution provision.
3.3. Keep pace with new rules and digitalization trends
E-arbitration
Online case-management and hearing tools help cut costs and enhance flexibility, enabling electronic filings and progress tracking.
Recognition of e-contracts, e-signatures, and digital evidence
Legal frameworks increasingly acknowledge electronic transactions and digital evidence—an inevitable trend as logistics and supply chains digitize.
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