Judgment no. 108/2017/KDTM-ST dated august 11, 2017 on dispute over logistics services contract

THE PEOPLE’S COURT OF TAN BINH DISTRICT OF HO CHI MINH CITY

JUDGMENT NO. 108/2017/KDTM-ST DATED AUGUST 11, 2017 ON DISPUTE OVER LOGISTICS SERVICES CONTRACT

On August 11, 2017, at the office of People’s Court of Tan Binh District, the first instance trial was conducted to hear the case No. 132/2016/TLST-KDTM dated November 16, 2016 on “Dispute over logistics services contract” according to the Decision to Bring the Case to Trial No. 88/2017/QĐXXST-KDTM dated July 27, 2017 between litigants:

- Petitioner:  T Distribution and Commerce Limited Liability Company, headquartered at: Floor M, Building A, 117-119 L, Ward X, District Y, Ho Chi Minh City.

Authorized legal representative of petitioner: Mrs. Do Thi T, born in 1961, address: 199 L, Ward X, District Y, Ho Chi Minh City (Letter of Authorization dated April 4, 2017) (Mrs. T is present).

- Respondent:  C Food Export and Import Limited Liability Company, headquartered at: 279-281 C, Ward X, District Y, Ho Chi Minh City.

Authorized legal representative of respondent: Mr. Nguyen Ba L, legal representative of C Food Export and Import Limited Liability Company (Company’s Director). (Mr. L is present).

THE CASE

Representation of the petitioner’s representative Mr. Nguyen Thai B in the lawsuit petition, deposition and meeting minutes of handover and publication of evidence and reconciliation:

In early July 2016, Mr. B - Director of T Distribution and Commerce Limited Liability Company  (hereinafter referred to as Company T) communicated with Mr. Nguyen Ba L - Director of C Food Export and Import Limited Liability Company (hereinafter referred to as Company C) asking Company C to import a consignment of soybeans on behalf of Company T from Company Y (hereinafter referred to as Company S) from Thailand to Vietnam. Through the phone call, Mr. L promised to check the Company in Thailand and complete customs paperwork to take the consignment. Believing the promise of Mr. L, Company T entered into a Logistics Services Contract No. 127/2016-UTNK dated July 12, 2016 with Company C. Mr. B reached arrangements on goods, quantity, price with Company S in Thailand, then Company C concluded a Sales Contract with Company S (Thailand) to import the consignment of soybeans worth USD 2,700 to Vietnam. Mr. B came to Company C to transfer money 2 times, first time: 35% of contract value, equivalent to VND 22,288,000, second time: 65% of contract value, equivalent to VND 39, 312,000. In total, Company T transferred Company C VND 60,485,000 but Company T has not received goods from Company S (Thailand) so far. As stated by Mr. B, Company C did not check the eligibility of documents provided by the Company in Thailand and not carefully check the time of departure before the wire transfer to Company S resulting in the consequence that Company S does not deliver the goods.  Therefore, Company T claimed damages of VND 60,485,000 from Company C. In the reconciliation record dated March 27, 2017, Mr. B claimed damages of VND 39,312,000 as equivalent the second money transfer from Company C because Company C did not check the time of departure before transferring such money to Company S. Company T does not claim the first money transfer of VND 22,288,000.

Representation of Mrs. Do Thi T - authorized representative of Company T in the reconciliation record dated June 1, 2017: The Contract dated July 19, 2016 between Company Y (S) and Company C was made as Company T delegates Company C to sign a contract with Company C with seller, quantity, quality, price predetermined by Company T, but Company T and Company C do not conclude a sales entrustment contract. After that, Company T entered into a Logistics Service Contract with Company C to import the consignment based on the Sales Contract between Company C and Company Y (S). Pursuant to Clause 1 Article V of the Logistics Service Contract between Company T and Company C, Company C acts as the trustor to monitor and make reports. Pursuant to Clause 6 Article II of Logistics Service Contract between Company T and Company C, Company C must import and deliver the goods to Company T be in its original conditions of packing.  Company C’s fault was not checking whether the number of bill of lading matches with the shipping line from the Company in Thailand and not checking the time of departure before transfer money for the second time to the Company in Thailand. It constitutes a breach of contract. Also under the contract dated July 19, 2016 between Company Y (S) and Company C, the fact that Company C did not check if the bill of lading is real or fake before transferring money constitutes a breach of contract. Thereby, Company C made a fault resulting in breach of the Logistics Service Contract concluded with Company T. In order to reach an agreement to resolve the case quickly, in the previous reconciliation, Company T reduced the amount of claimed damages, only claiming damages as equivalent to the second money transfer of 65% of contract value of VND 39,312,000 from Company C. But now that Company C does not act in good faith, Company T still upholds the claim as stated in lawsuit petition, claiming Company C damages of VND 60,485,000.

Representation of the defendant - Company C, represented by Mr. Nguyen Ba L, in the deposition and reconciliation records: On July 12, 2016, Company C entered into a Logistics Service Contract No. 127/2016-UTNK with Company T. Company C was entrusted to import a consignment, only responsible for putting its name in import documents, customs procedures and delivery of goods to the warehouse of the Party A when the goods arrive at Port C, Ho Chi Minh City. Company T contacted and agreed with Company Y (S) of Thailand by itself, sent information of Company C, made a contract with the foreign party and negotiated quality, price, and Thailand party the previous sample of goods to Company T. Mr. B brought the scan of the Sales Contract with Company S (Thailand) to Company C and required Company C to receive money of Company T and transferred it to Company Y (S). In order to complete procedures for money transfer to Company Y (S), Company C must sign the Sales Contract with Company S and send a copy thereof to the bank. Company C does not know about the time of delivery and time of departure when there is no notice given from Company T. Company C transferred money as designated by Company T. The bill of lading was also sent by Company T to Company C. Company C certifies that it has concluded a Sales Contract with Company S of Thailand as designated by Company T for valid money transfer. Pursuant to Clause 6 Article II of Logistics Service Contract “Party B is obliged to import the goods and deliver the goods in their original conditions of packing to Party A according to the order and quantity that Party A has negotiated with the foreign partner. Party A will designate the foreign partner to deliver the goods to Party A according to the contract concluded with the foreign partner. Party B shall not held responsible for goods quality and foreign documents, late arrival notice and price declared in the import contract”. Therefore, Company C is only obliged to put it name in import documents, complete customs procedures and deliver the goods to the warehouse of Party after the goods arrives at Port C of Ho Chi Minh City and is not obliged to check import documents, verify if the foreign partner does an honest business or practices fraud because Party A provides information of the foreign partner and Party A works with the foreign partner to receive sample and make the order, etc.  In Clause 1 Article III (Responsibilities) “Party A is obliged to provide the amount of money matching with the import contract in order for Party B to transfer to the seller as committed in the foreign trade contract”.  Clause 3 Article III stipulates: Company T is obliged to provide sufficient valid and accurate documents relevant to the goods such as export license, bill of lading, contract, etc. in order for Company C to complete customs procedures and receive the goods. The first money transfer to the foreign partner right after the signing of the contract is VND 22,288,000. In the second money transfer, after Company T received the bill from the foreign partner, Company T forwarded it to Company C and required Company C to transfer Company S remaining 65% of the contract value of VND 39,312,000.  Company C makes no fault and has properly performed the contract, Company C confirms that it only concluded a Logistics Service Contract with Company T and did not sign any other sales entrustment contract. Company C concluded the Sales Contract with Company S only for the purpose of performing the Logistics Service Contract with Company T, so it denies any damages claimed by Company T. Up to now, Company C has not received any fee under the Logistics Service Contract.

Representation of Mrs. Do Thi T - authorized representatives of Company T at the court hearing: The petitioner and respondent only entered into a Logistics Service Contract on July 12, 2016, the entrustment to purchase goods from Company S was made from a phone call between Mr. B and an employee of Company C. However, the number of Logistics Service Contract is 127/2016-NTNK, the UTNK initials imply the entrustment to purchase goods from Company S. Documents such as contract, bill of lading, packing list, etc. were also provided by Company T for Company C. In the deposition made on January 4, 2017, the defendant confirms the acceptance of entrustment to import the above-mentioned consignment, but is only obliged to put it name in import documents “we accept the entrustment to import the above-mentioned consignment”. In the meeting minutes dated April 4, 2017, the defendant declares that it did not conclude any other entrustment contract with the petitioner, but exactly, the Logistics Service Contract No. 127/2016-UTNK reflects the nature of the entrustment contract that the defendant only signed in the scan of Sales Contract with Company S. Pursuant to Article 15 and Article 19 of the contract which the defendant signed with the Company in Thailand “Contracting parties mutually agree that any e-copy of this contract shall be treated as the original. Contracting parties agree to all terms and conditions of the contract right after contracting parties conclude the contract”. In the meeting minutes dated April 4, 2017, the defendant declared that the defendant did not sign any other entrustment contract with the petitioner but the defendant confirms its role to “acts as the trustor to monitor and make reports”. Under the contract signed between the defendant and the petitioner, Article 5 stipulates the charge for entrustment contract is VND 4,000,000. The defendant confirms that it only signed on the scan of the Sales Contract with Company S and it is not obliged to work with Company S. Under commerce law, the scan is a data message, information generated, sent, received and stored in electronic means. Therefore, a scan and a typescript both have the same validity. As soon as possible after the damage occurs, the petitioner has contacted the defendant many times to deal with the case with the Company in Thailand but the defendant does not act in good faith. Therefore, based on the Civil Code 2005 in Viet Nam, Article 281, 302, 307, 308; Article 235, 302, 303 of the Commercial Law 2005, 02 sets of contracts:  Logistics Services Contract signed by the petitioner with the defendant and the Sales Contract signed by the defendant with the Company S, based on the record of reconciliation and the deposition of the defendant made at the Court, requesting the Court to force the defendant to pay the petitioner the damages of VND 39,312,000 due to a breach of the contract.

At the court hearing, the petitioner requests to withdraw a part of the lawsuit petition equivalent to the first money transfer of VND 22,288,000, and only claim the defendant the second money transfer of VND 39,312,000.

Representation of the defendant, Company C, represented by Mr. Nguyen Ba L: Company C does not sign any entrustment contract with Company T, only signing the Logistics Service Contract on July 12, 2016. The phrase UTNK does not say anything, it is just a record for convenient arrangement and monitoring of documents.  Company T, by its own, contacted and negotiated the price, quantity ... with Company S and then brought the scanned contract to Company C and required Company C sign it, and then send a copy to the Bank in order to transfer money to Company S. All documents such as bills of lading, contracts ... are passed by Mr. B to Company C and Mr. B required Company C to transfer money to S. Company. Under the Logistics Service Contract, there is no term defining that the Company C is held responsible for checking whether the documents are real or fake, moreover, the petitioner provided such bills of lading and appointed the foreign partner to deliver goods.  Company C is only responsible for customs procedures when goods arrive at Port C, receive goods and transport them to the warehouse for the petitioner. Currently, Company C has not yet received the service cost under the Logistics Service Contract but it also has to pay the money transfer fee to the Bank.  Company C has complied with the signed Logistics Service Contract, so it does not agree to pay any amount to Company T.

JUDGEMENT OF THE COURT

After consideration of the case file assessed and the adversarial process at the court hearing, the Trial Panel judges as follows:

The Company initiates a lawsuit regarding a Logistics Service Contract against C Food Import and Export Limited Company, the legal action of Company T was made within the prescriptive period stipulated in Article 319 of the 2005 Commercial Law, the dispute is a type of dispute arising in commercial business activities as stipulated in Clause 1, Article 30 of the Civil Procedure Code 2015. In the Logistics Service Contract signed by both parties on July 12, 2016, Clause 7.3 of Article VII, Section General Commitment, they mutually agree:  If there is any dispute or disagreement arising or related to this contract ... the parties have the right to refer the dispute to the Economic Court of Ho Chi Minh City to resolve ... " "The agreement on the jurisdiction of the parties to dispute settlement is unclear and incorrect in accordance with Articles 35, 37 and 39 of the Civil Procedure Code, the agreement on this dispute settlement body is invalid.  Therefore, Company T files a lawsuit regarding dispute over the Logistics Service Contract with the People's Court of Tan Binh District and the C Food Import and Export Limited Company is headquartered in Tan Binh District so this case belongs to jurisdiction of Tan Binh District People's Court according to Clause 1, Article 30, Point b, Clause 1, Article 35, Point a, Clause 1, Article 39 of the Civil Procedure Code.

Considering the claim of Company T for damages of VND 39,312,000 from Company C:

Based on Logistic Service Contract No. 127/2016-UTNK dated July 12, 2016, the presentation of Company T, Company C and the evidence presented by the parties:  Company T and Company C had signed a Logistics Service Contract to deliver and transport imported soybeans used for food Company T and Company C both certify that both parties only sign the Logistic Service Contract No. 127/2016-UTNK dated July 12, 2016, between Company T and Company C there is no contract that Company T entrusted to Company C to buy commodities or import soybeans from Company S (Thailand).  In Clause 6 Article II of Logistics Service Contract that the two parties have signed (in terms of works and expenses), it stipulates:  Party B is obliged to import goods and deliver goods in its original condition of packing to Party A according to the order and quantity that Party A has negotiated with the foreign partner, and then Party A appoints the foreign partner to deliver the goods to Party B under the foreign contract.  Party B shall not held responsible for goods quality and foreign documents, late arrival notice and price declared in the import contract”. This shows that Company S's delivery to Company C is because Company T negotiates with Company S, then appoints a foreign partner to deliver the goods to Company C "... according to foreign contract", but does not specifically define which contract and which company that Company C must import the goods from.  In Clause 3, Article III of Logistics Service Contract, there is a term on the responsibilities of Party A:  providing a full set of valid and accurate documents related to the goods (export license if any), certosanitary Certificate , bill of lading, contract, invoice, packing list ... for Party B to carry out customs procedures and receive goods.  Thus, all documents relating to goods, including bills of lading, provided by Company T to Company C, must be valid and accurate.  At the trial, the representative of Company T also confirmed that the sales contract (scanned version) with Company SL and the bill of lading were all provided by Company T to Company C. In the bill of lading BLA228007 dated July 25, 2016 that Company T provided to Company C also shows clearly the information related to the goods such as soybean, ship’s name: TR, ship’s owner: TRANS O, date on board ... so that Company T has no valid grounds for affirming that Company C has constituted the breach of the contract for its failure to check the validity and information of the time of departure before transferring money to the Company in Thailand. Under the Logistics Service contract, Company C is only held responsible for the name on the import documents, customs procedures, transporting goods to Company T’s warehouse (according to Article II). Company T confirms that VND 60,485,000 is the amount that Company T gave to Company C to transfer money to Company S according to the sales contract signed between Company C and Company S on July 19, 2016. Company C has also transferred this amount to Company S, certified by K Joint Stock Commercial Bank - Branch T. Company C has done the same as required in the Logistics Service Contract so Company C makes no fault in not receiving the goods of Company T. Bill of lading BLA dated July 25, 2016 is supplied by Company T to Company C so the failure to check the accuracy of the bill of lading is entirely fault of Company T. Therefore, based on Article 302, 303 of the Commercial Law 2005, Company T has no valid grounds for claiming Company C damages of VND 39,312,000.

With reference to court fees: Since the entire request of Company T is not accepted, according to the provisions of Clause 3, Article 27 of the Ordinance on Court Charges and Fees, Company T has to pay the first instance civil court fee of VND 2,000,000, deducted from the paid advance payment of court fees VND 1,512,125 according to the receipt of advance payment of court fees No. 0011594 dated November 10, 2016. Company T must also pay the amount of VND 487,875.

Pursuant to documents and evidence mentioned above:

HEREBY DECIDES

- Pursuant to Clause 1 Article 30, Point b Clause 1 Article 35, Point a Clause 1 Article 39; Clause 1 Article 273, Clause 1 Article 280 of the Civil Procedure Code 2015 in Viet Nam.

- Pursuant to Articles 302, 303, 233 of Commercial Law 2005 in Viet Nam;

- Pursuant to Clause 3 Article 27 Ordinance on Court Fees and Charges in Viet Nam;

1/ Turn down all lawsuit requests of T Distribution and Trading Company Limited, claiming Food C Import and Export Limited Company the damages of VND 39,312,000.

2/ With regard to court fees: The first instance business charge is VND 2,000,000 (two million dong), which is borne by T Distribution and Trading Limited Company, deducted from the paid advance payment of court fee VND 1,512,125 according to the receipt of advance payment of court fees and charges No. 0011594 dated November 10, 2016. T Distribution and Trading Company Limited must pay the amount of VND 487,875 (four hundred and eighty seven thousand, eight hundred and seventy five dong).

3/ Right to appeal: The petitioner and defendant are entitled to appeal within 15 days from the date of sentencing.

The People's Procuracy of the same level and the superior People's Procuracy shall have the right to protest according to the provisions of the Civil Procedure Code.

In case the judgment or court decision is enforced as per regulations in Article 2 of the Law on enforcements of civil judgments in Viet Nam, the judgment creditor and judgment debtor are lawfully allowed to reach an agreement on judgment enforcement, request judgment enforcement, be subject to voluntary execution or coercive judgment enforcement in compliance with regulations in Article 6, 7, 7a and 9 of the Law on enforcement of civil judgments, and the effective period of judgment enforcement shall comply within provisions in Article 30 of the Law on enforcement of civil judgments./.