Regarding No. 28/2019/KDTM-ST dated november 11, 2019 on dispute over logistics service contract

THE PEOPLE’S COURT OF BIEN HOA CITY – DONG NAI PROVINCE

REGARDING NO. 28/2019/KDTM-ST DATED NOVEMBER 11, 2019 ON DISPUTE OVER LOGISTICS SERVICE CONTRACT

On November 11, 2019, at its headquarter, the People's Court of Bien Hoa city, Dong Nai province held an open first instance trial for the case No. 27/2019/TLST-KDTM entertained on March 27, 2019 regarding “Dispute over logistics service contract” under the Decision to bring the case to court No. 41/2019/QĐXX-ST dated October 7, 2019 and the Decision on adjournment of the court session No. 318/2019/QĐST-KDTM dated October 25, 2019 between litigants:

- Plaintiff: DT L (VN) Limited Liability Company;

Address: 5^th Floor, D Building, N street, ward, T district, Ho Chi Minh city.

Legal representative: Mr. David Michel V, born in: 1971; Attorney in fact: Mr. Tran Trung T, born in: 1971.

Address: L12/13, 12^th Floor, V Building, B Ward, District 1, Ho Chi Minh City.

(According to the Power of Attorney dated January 21, 2019)

- Defendant: OT Single-member Limited Liability Company;

Headquarter Address: No. 31, A Residential Zone, A Ward, Bien Hoa City, Dong Nai Province.

Legal representative: Mr. Nguyen Dinh T, born in: 1978. Title:  Director.

Residence address: M3/8, A Quarter, L Ward, Bien Hoa City, Dong Nai Province.

(Mr. Th and Mr. T are present)

CASE DETAILS

* According to the petition to sue and testimonies provided during the process of participating in the Court proceedings, the plaintiff's attorney in fact, Mr. Tran Trung Th, made the following representations:

On December 25, 2016, DT L Limited Liability Company (hereinafter referred to as DT L VN company) and OT Single-Member Limited Liability Company (hereinafter referred to as OT) entered into a Delivery Service Contract (hereinafter referred to as service contract) under which OT Company agreed to assign DT L VN company to act on their behalf to transport goods to the locations required by OT Company.

Pursuant to the service contract, DT L VN company has carried goods to the locations required by OT company multiple times.

During the implementation of the contract, in 2018, there were 03 shipments completed by DT L VN Company as required by OT company, but up to now, OT company has not yet paid related fees to DT L VN company. Below are the shipments in detail:

1. The shipment transported by sea from Ho Chi Minh City to Minneapolis port - USA according to the bill of lading No. VNSE18010043 dated January 29, 2018: the outstanding amount is VND 209,471,322 (According to 02 VAT invoices No. 0001002 and No. 0001003 dated April 12, 2018).

2. The shipment transported by air from Tan Son Nhat Airport – HCMC to the Minneapolis port - USA according to the air waybill No. 001SGN76041593/VNAE1800008 dated February 12, 2018: the outstanding amount is VND 63,891,647 (According to 02 VAT invoices No. 0000850 and No. 0000851 dated February 28, 2018).

3. The shipment transported by sea from Ho Chi Minh City to Minneapolis port - USA according to the bill of lading No. VNSE18010043 dated February 19, 2018: the outstanding amount is VND 177,406,572 (According to 03 VAT invoices No. 0001117, No. 0001118 and No. 0001119 dated May 15, 2018).

According to the agreement made in Article 4.2 of the Service Contract, "VAT invoice must be paid by the bank transfer within 30 working days after receiving the payment request".

Till the time of initiation of the lawsuit when those aforesaid amounts are overdue, even though  DT L VN company has requested OT company to make payments multiple times and OT company promised to do so soon, no payment has been made so far.

After filing the lawsuit, on February 1, 2019, because OT Company finished paying DT L VN Company the amount of VND 63,891,647 (for the shipment service rendered on February 12, 2018), DT L VN Company petition a partial withdrawal of the original petition to sue for the principal amount of VND 63,891,647. As for the interest on the late payment for  this shipment that OT Company has not yet paid, DT L VN Company is continuing to request the Court to resolve this case.

At the trial, DT L VN Company petitioned the Court to settle the claim that OT Company must perform the following obligations:

- Paying DT L VN Company the principal amount of VND386,877,894 and the amount of interest of VND 68,379,792 on the late payment of the aforesaid debt from the date the payment obligation arises to the date of adjudication by the Court of First Instance (November 11, 2019) with the overdue interest rate of 01%/month.

- OT Company must pay the interest amount equivalent to VND 6,580,840 on the late payment incurred from the carriage of the shipment under the bill of lading No. 001SGN76041593/VNAE1800008 dated February 12, 2018 for the interest charging period from March 29, 2018 to January 31, 2019  at the overdue rate of 01%/month.

The total amount that DT L VN Company petitioned the Court to pronounce that OT Company  must pay both principal and interest of VND 461,838,526 in total (including VND386,877,894 as the outstanding principal and VND 74,960,632 as the outstanding interest).

* According to the contents of the written representation dated April 29, 2019, the minutes dated June 25, 2019 and at the trial, the defendant's legal representative - Mr. Nguyen Dinh T – made the following statements:

Regarding the contents of the service contract L dispute specified in the petition to sue dated January 21, 2019 of DT L VN Company, the defendant OT Company confirmed that only a draft of the Service Contract was received from the DT L VN Company and, by the time the dispute arose, there were still terms that both contracting parties have not yet agreed upon, such as Debt maturity, penalty for late payment, compensation for loss or damage to cargoes during transportation, service price, etc. Therefore, the service contract dated December 25, 2016 has not officially been sealed by the two parties. Specific shipments were mainly rendered through separate quotations.

The delivery of goods by OT Company to DT L VN Company that proceeded to carry such goods to a third party was based on the agreement between the import-export staff of the OT Company and DT L VN Company via phone or email without any consent from the OT company’s legal representative. After receiving the payment request from DT L VN Company and the tax declaration process, OT company discovered that, in the records and documents regarding import and export of goods transported by DT L VN Company, although there was no quotation or the purchase order approved by the Director of the OT company, DT L VN Company's transportation of goods and issuance of the invoice was not conformable to the import and export process.

OT Company confirmed that 02 shipments (e.g. the shipment of January 29, 2018 and the shipment of February 19, 2018) that DT L VN Company transported according to the plaintiff's representation were the goods under the custody of the OT company and the goods were properly delivered to a third party abroad under the agreement between the OT Company and the third party. However, according to the feedback from the overseas consignee, the goods were distorted or deformed and they had to repack and re-inspect the entire shipment of goods. For such reason, the third party deducted these costs, forcing OT Company to bear the costs to be deducted through the carrier’s fault. Then OT Company sent an email to inform DT L VN Company of the complaint about the quality of their shipping service and DT L VN Company sent a response email admitting this fault. However, at the time of notification, since the two parties have not yet reached an agreement on remedial costs, the specific damage level has not been determined yet.

Now DT L VN Company is suing OT Company to claim the payment of the shipping amount for the aforesaid shipments which equaled the total amount of VND 461,838,526 (including the principal amount of VND 386,877,894 and the interest amount of 74,960,632 VND). At the hearing, Mr. T, a representative of OT Company, disagreed about such claim for the following reasons:

There exists no service contract between DT L VN Company and OT Company dated December 25, 2016; DT L VN Company’s transportation of the OT Company’s goods took place by the unofficial connection between the logistics staff of OT Company and the import-export staff of DT L VN Company. Up to now, OT company is still difficult defining whether the goods that their staff hired carriers to deliver have been transported to third parties (OT customers).

DT L VN Company’s claim over the amount of interest on the late payment is unfounded because bases for calculation of the interest do not exist due to the absence of the relevant contract.

The earlier payment of the amount of 63,891,647 VND for the air freight to DT L VN Company was made owing to the acquaintance and import-export business relationship between Mr. T and the legal representative of DT L VN Company starting since 2016. The above payment amount is Mr. T's personal money, not OT company's money.

* In the process of settling the case, the Court repeatedly summoned the parties to the Court for the mediation process, but the defendant's representative did not come, so the Court could not conduct the conciliation session.

* At the trial, the representative of the People’s Procuracy of Bien Hoa city gave the following opinions:

- Regarding the compliance with legislation on legal proceedings:

In the process of adjudicating the case from the time of acceptance of the case to earlier than the time the trial panel deliberates, the Judge, trial panel and the court clerk comply with the regulations of the procedural laws.

With regard to the compliance with procedural laws of litigants: The plaintiff has complied while the defendant has not complied with rights and obligations of the civil procedural laws.

- With regard to matters of the case to be settled:

Based on the documents and evidence in the case file, there are sufficient grounds to determine that OT Company has violated its obligation to pay transportation service costs to DT L VN Company.

Therefore, petitioning the Trial Panel to accept the petition to sue filed by DT L VN Company, forcing OT Company to pay the principal amount for 2 consignments with the bills of lading number VNSE 18010043 dated January 29, 2018 and  VNSE 18020034 dated February 19, 2018 with a total value of VND 386,877,894 (Three hundred and eighty six million, eight hundred seventy seven thousand, eight hundred and ninety four dong) and the overdue interest due on the date of opening of the hearing of first instance; make the payment of the overdue interest for the bill of lading No. 001SGN76041593/VNVNNAE 1800008 dated February 12, 2018 from 30 days from later than the date of the plaintiff's issuance of the invoice (February 28, 2018) to the date of the defendant’s discharge of their payment obligations (February 1, 2019 ).

Dismissing the adjudication of the claim for the principal amount of VND 63,891,657 for the bill of lading No. 001SGN76041593/VNVNNAE 1800008 dated February 12, 2018 which has been withdrawn by the plaintiff’s petition.

- Regarding the first-instance commercial court cost: Because the plaintiff's petition to sue is accepted, OT Company must bear the first instance commercial court cost with quota as prescribed by law.

COURT’S COMMENTS

After studying documents and evidence in the case file which have been examined at the court session and based on the arguments at the court session, the trial panel shall draw the following conclusions:

[1] Regarding the court procedures:

At the trial, Mr. Nguyen Dinh T - Director, who is the legal representative of OT Company, petitioned for the adjournment of the trial so that he hired an Attorney at law to protect the  defendant’s legitimate rights and interests. Considering that:

On October 22, 2019, Mr. Nguyen Dinh T filed a written request for the adjournment of the trial scheduled to open on October 25, 2019 for his business reason and wished to change to another date for him to have the opportunity to express his opinions at the court hearing. According to this request, the Court issued a decision to adjourn the trial on October 25, 2019, and at the same time setting another date (November 11, 2019) for the reopening of the trial.

On the other hand, during the proceedings from the acceptance of the case to the time the Court brought the case to trial, even though the defendant was informed by the Court of the lawsuit of procedural activities and repeatedly summoned to appear at the court hearing to resolve the case, the defendant tried to delay or procrastinate and also failed to present any papers or documents about the request for the defender of legitimate rights and interests legal for the defendant for the Court’s consideration. Now at the trial, the defendant's representative keeps requesting the adjournment of the court hearing on the pretext of hiring an attorney at law to act on his behalf to protect his legitimate rights and interests. After considering that the request for the adjournment of the trial by the defendant's representative is unfounded, the Trial Panel shall not accept this request.

[2] Regarding the jurisdiction to settle the case:

Considering that the defendant, OT company, is located at No. 31, A Residential Zone, A Ward, Bien Hoa City, Dong Nai Province. DT L VN company’s filing of the lawsuit against OT company to the People’s Court of Bien Hoa city, where the defendant's office is located, to petition the Court to settle the case is conformable to jurisdiction regulations referred to in clause 1 of Article 30; point b of Clause 1 of Article 35; point a of Clause 1 of Article 39 in the Civil Procedure Code in Viet Nam.

[3] Regarding the legislative relation regarding the dispute:

Based on the plaintiff's petition to sue; documents and evidence available in the case file and opinions presented by the litigants in the course of participation in the court proceedings. Considering that the dispute between DT L VN company and OT company is the dispute arising from L service activities between both entities holding business registration and running their for-profit business. Pursuant to clause 1 of Article 30 in the Civil Procedure Code; Article 513 of the 2015 Civil Code; Article 233 in the 2005 Law on Commerce
The trial panel determines that the dispute-related legislative relation is "The dispute over the logistics service contract”.

[4] Regarding the dispute contents:

According to documents and evidence included in the case file and the representations given by parties at the court hearing, considering that:

The plaintiff asserted that: DT L Company and OT Company entered into a Delivery Service Contract (hereinafter referred to as service contract) under which OT Company agreed to assign DT L VN company to act on their behalf to transport goods to the locations required by OT Company; the detailed contract value was determined according to the quotations for specific shipments. The plaintiff drafted this contract and emailed the defendant on March 7, 2018. On March 16, 2018, the defendant emailed the plaintiff a scan of this contract signed and sealed by Mr. Nguyen Dinh T - OT Company’s Director. Till now, the defendant still keeps the original of this contract and have not sent it to the plaintiff to have it completely signed or sealed. Due to the fact that the Director of the OT Company signed and stamped this contract, the defendant affirmed the agreement on conclusion of the contract with no objection.

The defendant, OT company, assumed that: The defendant only received the draft contract from DT L VN Company and, by the time the dispute arose, there were still many terms that both parties did not yet agree upon, such as: debt maturity, late payment penalty, compensation for loss or damage arising during transportation, service price, etc. Therefore, the service contract dated December 25, 2016 was not officially been sealed by the two parties. Specific shipments were mainly rendered through separate quotations.

Based on the documents in the case file and by the admission of Mr. Nguyen Dinh T - Director of OT Company - in the minutes dated June 25, 2019 and at the trial, Mr. T determined the Director’s signature and the stamp attached to the Delivery Service Contract dated December 25, 2016 with DT L VN Company is his own signature and exactly the corporate stamp of OT company. The fact that OT Company did not send the original copy of this contract to DT L VN Company for completion of signing and sealing activities is only a matter of formalities for the purpose of finalizing this document. Although OT Company did not accept the contract dated December 25, 2016, in reality from January 29, 2018 to February 19, 2018, DT L VN Company’s rendering of the service of transporting 03 shipments of OT Company to a third party abroad at the request of OT Company is true, specifically including:

+ The first shipment transported by sea from Ho Chi Minh City to Minneapolis port - USA (according to the bill of lading No. VNSE18010043 dated January 29, 2018).

+ The second shipment transported by air from Tan Son Nhat airport - HCMC to Minneapolis port - USA (according to the air waybill No. 001SGN76041593/VNAE1800008 dated February 12, 2018).

+ The third shipment transported by sea from Ho Chi Minh City to Minneapolis port - USA (according to the bill of lading No. VNSE18020043 dated February 19, 2018).

These service activities arise mainly through case-by-case quotations sent via telephone exchanges or emails between the forwarders (import-export staff) of the two parties. By the admission of the plaintiff and the defendant, these service activities, in fact, had taken place since 2016, and the parties implicitly admitted with the aim of establishing the rights and obligations of the parties. Hence, since this was viewed as a habit in commercial activities, it was effective to parties.

In the process of hearing at the court, Mr. T also admitted that the shipments that DT L VN Company carried are the goods of OT Company and that these goods were properly delivered to the foreign third party at the address specified by the OT Company. This forms sufficient grounds to determine that DT L VN Company has completely rendered the service to OT company. In fact, out of 3 shipments that DT L VN Company acted as a forwarding agent to carry, there was 01 shipment transported by air on February 12, 2018 and OT company already paid the service charge to DT L VN on February 1, 2019 without any objection. At the trial, Mr. T’s testimony that, because of his acquaintance with the representative of DT L VN Company, he used his personal money to pay DT L VN Company, is unfounded because the document between the Bank for Foreign Trade of Vietnam - Ky Dong branch on February 1, 2019 showed that the payer of the amount of VND 63,891,647 is OT Company, not Mr. T.

Therefore, for the remaining 2 shipments, till now Mr. T’s belief that DT L VN Company rendering of the transportation service for the goods of OT Company is based on the unofficial connection between the import-export staff of OT Company and the staff of DT L VN Company without his consent, and his refusal to pay the service charge for these two shipments, are unfounded. With respect to Mr. T’s assumption that the staff of OT Company made an unofficial connection with the staff of DT L VN Company to perform the service, considering that this is a matter of internal management of the Company, and the assignment of tasks of each staff member falls under the authority of the OT company’s manager, the trial panel shall not resolve this issue.

Also, Mr. T added that the goods of two sea shipments (dated January 29, 2018 and February 19, 2018), according to the overseas consignee's feedbacks, were distorted and deformed and, as all of those shipments of goods required repacking and re-inspection, they charged OT company all repacking or reinspection costs incurred despite the fact that that fault laid with the carrier. However, because OT Company failed to show any evidence, the court finds their blame unfounded.   If OT Company insisted that the goods were damaged through the fault of DT L VN Company, they may have filed a complaint within 14 days from the date of DT L VN Company’s delivery of these goods to the consignee or may have filed the petition to sue to the Commercial Arbitration or Court within the duration of 9 months from the delivery date under the provisions of Article 237 of the 2005 Law on Commerce. However, because OT company has not yet provided any document or evidence about their alleged damage or about their complaint or petition to sue as stated above till now, the Court finds it unfounded to continue to settle this blame. 

Under clause 1 of Article 237 in the 2005 Law on Commerce, logistics service trader will be granted the relief from liabilities in the following regulated circumstances:

“dd) Logistics service trader fails to receive any notice of complaint within the 14-day duration from the date of the trader's delivery of goods;

e) After receiving a complaint, logistics service trader is not informed that they are the defendant in a arbitration or court proceedings within the 9-month duration from the date of delivery of goods”.

[5] As for the petition to sue filed by DT L VN Company, considering that:

On February 1, 2019, OT Company finished paying DT L VN Company the amount of VND 63,891,647 (according to 02 VAT invoices No. 0000850 & 0000851 dated February 28, 2018) for air shipments and, at the hearing, DT L VN Company requested the withdrawal of a part of the primary petition to sue for the stated principal amount. Pursuant to clause 2 of Article 244 in the Civil Procedure Code, the trial panel accepted and dismissed the trial of a part of the plaintiff’s petition to sue.

Regarding the debt amount of VND 209,471,322 (according to 02 VAT invoices No. 0001002 and No. 0001003 dated April 12, 2018) and VND 177,406,572 (according to 03 VAT invoices No. 0001117, No. 0001118 and No. 0001119 dated May 15, 2018) of two sea shipments sent on January 29, 2018 and February 19, 2018, despite OT Company’s refusal to acknowledge their indebtedness, upon receiving the value-added tax invoice of each shipment that DT L VN Company issued, OT Company did not have any response or complaint about the amount specified in these invoices. Pursuant to Clauses 5 and 6, Article 236 of the 2005 Commercial Law, it is necessary to force OT Company to pay DT L VN Company the outstanding service charge for the two shipments, which equals the total amount of VND 386,877,894 (Three hundred eighty six million, eight hundred seventy seven thousand, eight hundred and ninety four Vietnamese Dong).

Regarding the interest payment claim, considering that the late payment interest of the amount of VND 63,891,647 (from March 29, 2018 to January 31, 2019) and the interest of the debt of VND 368,877,894 have not been paid by OT Company yet. The Court sees that DTL VN Company's requesting OT Company to repay the late payment interest is compliant with Article 306 in the 2005 Commercial Law.

Regarding the interest rate, considering that DTL VN’s claim for OT company's repayment of the late payment interest accrued till the first-instance trial date at the interest rate of 01%/month (0.033%/day), as the Court sees that this interest rate which is less than the average interest rates applied to the overdue principal by 03 banks (including Vietcombank – Dong Nai branch; Agribank – Dong Nai branch and Vietinbank – Dong Nai bank) at the time of payment is beneficial to OT company, the Court agrees to this interest rate. Therefore, the late payment interest amount shall be calculated as follows:

Thus, it is necessary to force OT Company to be obliged to pay DT L VN Company the interest amount of VND 74,960,632 (Seventy four million, nine hundred sixty thousand, six hundred and thirty two Vietnamese Dong).

Based on the above arguments, the trial panel shall accept the plaintiff's entire petition to sue, forcing OT Company to be obliged to pay DT L (VN) Company the amount of VND 461,838,526 (Four hundred and six fifty one million, eight hundred thirty eight thousand, five hundred twenty six Vietnamese Dong).

The sum comprises:  Principal amount of VND386,877,894 (Three hundred eighty six million, eight hundred seventy seven thousand, eight hundred and ninety four Vietnamese Dong; the interest amount of VND 74,960,632 (Seventy four million, nine hundred sixty thousand, six hundred and thirty-two) Vietnamses Dong).

[6] With regard to the request of the representative of the People's Procuracy of Bien Hoa city speaking at the hearing, it is found that, as these speeches were consistent with the evidence provided in the case file, they shall be be accepted.

[7] In terms of court costs: Pursuant to Article 147 in the Civil Procedure Code; Article 26 in the Resolution No. 326/2016/UBTVQH14 in Viet Nam dated December 30, 2016 of the Standing Committee of the National Assembly, stipulating rates, exemption, reduction, collection, payment, management and use of court fees and charges; forcing OT company to bear the court costs of trial of the commercial case with quota prescribed by laws. Repaying the advance payment of court costs to DT L VN company.

In light of the aforesaid arguments,

HEREBY DECIDES

- Pursuant to Clause 1 of Article 30; Point b, Clause 1, Article 35; Point a, Clause 1, Article 39; Clause 2, Article 244; Article 266; Article 271; Article 273; Article 280 of the Civil Procedure Code;

- Pursuant to Article 513 of the 2015 Civil Code in Viet Nam; Articles 233, 335, 336, 337 of the 2005 Commercial Law in Viet Nam; Resolution No. 01/2019/NQ-HDTP in Viet Nam dated January 11, 2019 of the Judicial Council of the Supreme People's Court, guiding the application of a number of provisions of the law on interest, interest rates and penalties;

- Pursuant to Article 147 in the Civil Procedure Code; Article 26 in the Resolution No. 326/2016/UBTVQH14 dated December 30, 2016 of the Standing Committee of the National Assembly, stipulating rates, exemption, reduction, collection, payment, management and use of court fees and charges;

Making the following pronouncements: Accepting the entire petition to sue filed by DT L (VN) Limited Liability Company against OT Single-member Limited Liability Company regarding “Logistics service contract dispute”.

1. Forcing OT Company to be obliged to pay DT L (VN) Company the amount of VND 461,838,526 (Four hundred and six fifty one million, eight hundred thirty eight thousand, five hundred twenty six Vietnamese Dong).

The sum comprises:  Principal amount of VND386,877,894 (Three hundred eighty six million, eight hundred seventy seven thousand, eight hundred and ninety four Vietnamese Dong; the interest amount of VND 74,960,632 (Seventy four million, nine hundred sixty thousand, six hundred and thirty-two) Vietnamses Dong).

2. In terms of court cost:

OT company must be liable for the costs of the first-instance trial of the commercial case equaling VND 22,473,500 (Twenty two million, four hundred seventy three thousand and five hundred Vietnamese Dong).

Repaying the amount of VND 11,695,000 (Eleven million, six hundred ninety five Vietnamese Dong) that DT L (VN) company paid in advance according to the invoice No. 0004062 dated February 20, 2019 issued by the Civil Enforcement Subdepartment of Bien Hoa city, Dong Nai province.

3. Regarding enforcement of the court judgement:

From the day following the day of the first-instance trial to the date of the complete execution of the judgment, the obligor to the judgment must also bear the interest on the amount of the remaining judgment execution amount at the interest rate agreed by the parties provided that such rate must conform with the provisions of the law; If there is no agreement on the interest rate, the judgement must adopt the interest rate specified in Clause 2, Article 468 of the 2015 Civil Code.

In cases where the court judgement or decision is executed under the provisions of Article 2 of the Law on Civil Judgment Execution in Viet Nam, the obligor to the civil judgment may have the right to negotiate about how the judgment is executed, voluntarily execute the court judgement or shall be subject to law enforcement processes under Articles 6, 7 and 9 of the Law on Civil Judgment Execution; the time limit for execution of the court judgement shall be subject to regulations laid down in Article 30 of the Law on Civil Judgement Execution.

4. In terms of the right to appeal: Defendant and plaintiff present at the trial may file an appeal within 15 days from the date of the court’s pronouncement.