By Lawyer Nguyen Nhu Hai – UniLaw LLC

MITIGATING LIABILITY RISKS: TIPS FOR SHIPPERS FROM UNILAW, A LEADING VIETNAMESE MARITIME LAW FIRM

In the complex world of international trade, the sea remains the primary artery for global commerce. However, the maritime environment is fraught with legal and operational risks that can jeopardize a shipper’s cargo, capital, and reputation. Whether you are navigating the nuances of vietnam maritime law or dealing with a dispute across international waters, understanding your rights and liabilities is paramount. At Unilaw, as vietnam maritime lawyers and vietnam litigation lawyers, we have observed that many disputes arise not just from accidents, but from a failure to anticipate legal pitfalls during the documentation and declaration phases of shipment.

To begin our analysis, let us examine a definitive ruling by the High People’s Court in Hanoi that illustrates how evidentiary burdens and specific clauses in a Bill of Lading can determine the outcome of a multi-billion VND claim. This case serves as a cautionary tale for shippers regarding the “said to weigh” clause and the physical security of cargo holds.

Lessons from the Raw Sugar Shortage Case: Judgment No. 36/2023/KDTM-PT

The dispute in Judgment No. 36/2023/KDTM-PT (dated July 28, 2023) involved a claim for cargo shortage. A shipper (The Thai Sugar Trading Corp) contracted for the transportation of 10,000 tons of raw cane sugar from Bangkok, Thailand, to Quy Nhon, Vietnam, aboard the vessel Giang Hai 11, owned by T1 Company. The cargo was insured by Bao Minh Insurance. Upon arrival and discharge at Quy Nhon port, a significant shortage was discovered: the first shipment was short by 56.336 tons, and the second by 32.63 tons. Bao Minh Insurance paid the consignee for the loss and then, exercising its right of subrogation, sued the carrier (T1 Company) for compensation amounting to 532,448,375 VND plus interest.

The carrier’s defense rested on two critical points: First, the Bill of Lading contained the clause “said to weigh,” meaning the carrier simply recorded the weight as declared by the shipper without independent verification. Second, after loading, the shipper’s representative had sealed the cargo holds with lead seals, which remained intact and unbroken until the vessel reached the discharge port.

The High People’s Court in Hanoi upheld the lower court’s decision to dismiss the claim. The Court reasoned that under vietnam admiralty law and international practices (such as the Hague Rules), if a carrier receives cargo based on the shipper’s declaration and the holds are sealed by the shipper, the carrier is not liable for shortages if those seals are intact upon arrival. The Court noted that the “said to weigh” clause specifically protects carriers when they lack the means to verify the accuracy of the weight at the time of loading. Furthermore, natural wastage during the many days of discharge in open-air conditions was a plausible factor that the plaintiff failed to rule out. The result was that the insurance company (standing in for the shipper/consignee) had to bear the loss despite having paid out the initial claim.

The Foundation of Carriage Contracts under Vietnam Maritime Code 2015

Understanding the legal nature of your agreement is the first step in risk mitigation. Shippers must be aware of how vietnam maritime law defines the contract of carriage and the roles of the parties involved. The 2015 Vietnam Maritime Code provides the primary framework for these transactions.

Article 145. Contract for carriage of goods by sea

1. A contract for carriage of goods by sea is an agreement concluded between a carrier and a charterer, whereby the carrier receives carriage service charges paid by the charterer and uses a sea-going ship to carry goods from a port of loading to a port of discharge.

2. Goods include machinery, equipment, raw materials, fuel, consumer goods and other movables, including live animals, containers or similar tools of transport provided by the shipper for packing the goods carried under the contract for carriage of goods by sea.

In simple terms, this article defines the core exchange: the carrier moves your goods for a fee. It also clarifies that “goods” covers almost everything, including the containers you might provide yourself.

It is also vital to distinguish between different types of carriage contracts, as the liabilities vary significantly. Vietnam maritime lawyers often have to clarify whether a client is operating under a simple transport document or a full ship charter.

Article 146. Types of contracts for carriage of goods by sea

1. A contract for carriage of goods evidenced by a transport document is a contract for carriage of goods by sea concluded on the condition that the carrier is not required to reserve for the charterer the whole ship or a specific part thereof but only carries the goods on the basis of their type, quantity, size or weight. A contract for carriage of goods evidenced by a transport document shall be concluded in a form agreed upon by the parties.

2. A voyage charter party is a contract for carriage of goods by sea concluded on the condition that the carrier reserves the whole ship or a specific part thereof for the charterer to carry goods for a specific voyage. A voyage charter party must be concluded in writing.

Essentially, if you are just sending a few containers, you are likely using a “transport document” (like a Bill of Lading). If you are hiring the whole ship for a trip, you need a written “voyage charter,” which involves more complex duties for both sides.

The Critical Importance of Accurate Shipper Declarations

As seen in the Giang Hai 11 case, the information provided by the shipper is the baseline for all liability. Shippers often underestimate their duty to provide accurate data, assuming that once the carrier signs the Bill of Lading, the carrier is solely responsible. However, Article 154 of the Vietnam Maritime Code places a heavy burden on the shipper.

Article 154. Obligations of the shipper

1. The shipper must ensure that the goods are packed and marked with signs and codes in accordance with regulations. The carrier may refuse to load onto the ship goods which fail to satisfy the necessary packing standards.

2. The shipper must provide in a timely manner to the carrier necessary documents and instructions regarding explosive, flammable and other dangerous goods or goods for which special measures must be taken during loading, carriage, storage and discharge. The shipper shall compensate for losses arising from the late, inaccurate or invalid provision of the necessary documents and instructions.

3. The shipper, whether intentional or unintentional, shall be liable to the carrier, passengers, crew and other cargo owners for losses arising from the inaccurate or untruthful declaration of goods, if the carrier proves that the shipper is at fault for such losses.

This means you must pack and label your items correctly, or the carrier can simply say “no” to taking them. If your goods are dangerous, you must tell the carrier how to handle them; if you don’t, or if you lie about what’s in the box, you have to pay for any damage that happens to the ship or other people’s cargo.

Furthermore, Article 161, Clause 5 provides a specific shield for carriers against dishonest shippers:

Article 161. Remarks in bills of lading

5. The carrier shall not be liable to compensate for loss of or damage to the goods or for other cargo-related losses in all cases where the shipper has intentionally mis-stated the type and value of the goods upon loading and such statement has been recorded in the bill of lading.

If you lie about what you are shipping to get a lower rate or bypass rules, and something goes wrong, you lose your right to claim any money from the carrier at all. The carrier is completely off the hook.

Carrier Liability: Due Diligence and Seaworthiness

While shippers have heavy duties, carriers are not without strict obligations. A primary area of vietnam maritime law litigation involves the concept of “seaworthiness.” Before the voyage begins, the carrier must ensure the vessel is fit for the journey. This is not just about the hull but also the equipment and the crew.

Article 150. Obligations of the carrier

The carrier must exercise due diligence so that, before and at the commencement of the voyage, the ship is seaworthy and has a proper crew, equipment and supplies; and the holds, refrigerating and cool chambers and other areas in which goods are carried are fit and safe for the receipt, carriage and preservation of goods in accordance with their nature.

This means the ship owner has to work hard to make sure the boat is ready, the sailors are qualified, and the storage areas are clean and working properly before the ship even leaves the port. If they don’t do this, they can be held responsible for damage to your goods.

However, if the carrier performs this “due diligence” and the ship still fails due to a “latent defect” (a hidden flaw that couldn’t be found even with careful checking), they may be exempt from liability under Article 151, Clause 1:

Article 151. Carrier’s release from liability

1. The carrier shall not be liable to compensate for loss of or damage to the goods resulting from the ship’s unseaworthiness, if they have fully performed the obligations provided for in Article 150 of this Code. In this case, the carrier must prove they have exercised due diligence.

Essentially, if the carrier can prove they did everything they were supposed to do to keep the ship safe, but a secret problem caused the ship to fail anyway, they don’t have to pay for the lost cargo.

Strategic Mitigation: Understanding Carrier Exemptions

A seasoned vietnam admiralty lawyer will tell you that most carrier defenses are built on a specific list of “exemptions” found in both vietnam maritime law and international conventions like the Hague-Visby Rules. Article 151, Clause 2 of the Vietnam Maritime Code lists these scenarios where the carrier is fully released from the duty to compensate for cargo loss.

Article 151. Carrier’s release from liability

2. The carrier shall be entirely released from liability if the loss of goods results from:

a) Fault of the master, crew, pilot or the carrier’s employees in the navigation or management of the ship;

b) Fire not caused by the carrier;

c) Disasters or maritime accidents at sea or in the waters where the ship is permitted to operate;

d) Natural disasters;

dd) War;

e) Actions infringing upon public order and safety not caused by the carrier;

g) Arrest by the people or restraint by a court or another competent state agency;

h) Quarantine restrictions;

i) Action or omission of the shipper, cargo owner, their agent or representative;

k) Strike or other similar actions of laborers regardless of their causes, which completely or partially interrupt work;

l) Riots or civil commotions;

m) Action of saving lives or property at sea;

n) Shrinkage in volume or weight or any other loss or damage of goods resulting from their quality, latent defects or other defects;

o) Improper packing of goods;

p) Improper or inappropriate marking of signs or codes of goods;

q) Latent defects of the ship which cannot be detected though the carrier has performed their duties with due diligence;

r) Any other cause occurring without the carrier’s fault or intentional act or without the fault or intention of the carrier’s employees or agents.

This is a long list of “get out of jail free” cards for the carrier. If the damage was caused by a storm, a war, a strike, or even a mistake by the captain while driving the ship, the carrier usually doesn’t have to pay you back. It also includes cases where you didn’t pack the goods well enough or if the goods naturally rot or shrink.

To mitigate these risks, shippers must ensure they have comprehensive cargo insurance. Do not rely on the carrier’s liability, as it is limited both by these exemptions and by financial caps.

The Bill of Lading: Your Primary Legal Shield

The Bill of Lading (B/L) is the most critical document in maritime commerce. It serves three roles: a receipt for the goods, evidence of the contract of carriage, and a document of title. Any vietnam litigation lawyer will first ask to see the original B/L in a cargo dispute. Its contents are strictly regulated by Article 160.

Article 160. Contents of bills of lading

1. A bill of lading shall have the following contents:

a) Name and head office of the carrier;

b) Name of the shipper;

c) Name of the consignee or a statement that the bill of lading is an order or a bearer one;

d) Name of the ship;

dd) Description of the goods, their type, size, volume, quantity, weight or value, if necessary;

e) Description of the external condition of the goods or their packing;

g) Marks, codes and identification features of the goods as informed in writing by the shipper before loading and marked on each unit or package of goods;

h) Carriage service charges and other charges of the carrier; and mode of payment;

i) Port of loading and place of receipt of goods;

k) Port of discharge or instructions on the time and place for designating the port of discharge;

l) Number of original copies of the bill of lading issued to the shipper;

m) Time and place of issuance of the bill of lading;

n) Signature of the carrier or the master or another authorized representative of the carrier.

This list specifies exactly what must be on the document for it to be legally valid. It must include who is sending and receiving the goods, what the goods are, which ship they are on, and the signature of the person in charge. If information is missing, it could cause big problems if you ever need to go to court.

A major risk for shippers is the delivery of goods without the presentation of the Original Bill of Lading (OBL). This often happens in cases of fraud or when agents at the destination port are negligent.

Case Highlight: Misdelivery in the Ceramic Pots Case (Judgment 330/2017/KDTM-ST)

In this case, Company B (Vietnam) sold ceramic pots to a French buyer. The goods were transported to Rotterdam, Netherlands. However, the carrier’s agent delivered the goods to the buyer without requiring the Original Bill of Lading, which the seller (Company B) still held because they hadn’t been paid. The Court found the carrier liable, stating that the B/L is a document of title and delivery without it is a fundamental breach of contract. The carrier was ordered to pay the full value of the goods (16,776 USD) to the Vietnamese shipper.

Article 166. Obligation to discharge goods

When the ship arrives at the port of discharge, the carrier shall be obliged to discharge and hand the goods to the lawful holder of a bill of lading, a sea waybill or another transport document of equivalent value for receiving the goods… After the goods have been discharged, all other transport documents shall no longer be valid for receiving the goods.

This law reinforces that the carrier must only give the goods to the person who has the real, original documents. Once they hand over the goods to the right person, the other copies of the paperwork are no longer useful for getting the cargo.

Ship Arrest: A Powerful Tool for Shippers

If you have a legitimate claim against a ship owner—perhaps for cargo damage or a breach of the charter party—one of the most effective ways to secure your interest is the arrest of the ship. This is a specialized procedure under vietnam admiralty law that prevents a vessel from leaving port until the owner provides a financial guarantee.

Article 139. Maritime claims giving rise to the right to arrest sea-going ships

Maritime claims giving rise to the right to arrest a ship are claims in the following cases:

1. Cases provided for in Article 41 of this Code;

2. Loss or damage caused or threatened to be caused by a sea-going ship to the environment…;

3. Expenses related to the lifting, relocation, salvage, destruction or making harmless of a sunken, wrecked, grounded or abandoned ship…;

4. Agreements related to the use or charter of a sea-going ship…;

5. Agreements related to the carriage of goods or passengers on a sea-going ship…;

6. Loss of or damage to goods, including luggage, carried on a sea-going ship;

7. General average;

8. Towage of a sea-going ship;

9. Use of maritime pilotage;

10. Goods, materials, food, fuel, equipment (including containers) supplied or services provided for the purpose of the ship’s operation, management, preservation and maintenance…;

This is a list of reasons why you can ask the court to stop a ship from sailing. If the ship damaged your goods, if the owner didn’t follow their contract, or even if they owe money for fuel or repairs, you can have the ship “arrested” to make sure you get paid later.

The time limit for such an arrest is generally short, as governed by Article 141:

Article 141. Duration of ship arrest to secure the settlement of maritime claims

1. The maximum duration of ship arrest to secure the settlement of a maritime claim is 30 days from the date the ship is arrested.

A ship can only be held for 30 days under this specific rule. During this time, the person who asked for the arrest must officially start a lawsuit or a specialized legal process to keep the ship or get a payment guarantee.

Navigating Marine Insurance and “Due Diligence”

For shippers, marine insurance is the final safety net. However, insurance policies have their own “exclusion clauses” that can leave you unprotected if the ship was clearly unsafe or if the shipper was negligent. A significant case handled by our vietnam maritime lawyers involved the vessel Thanh Hung 41.

Case Highlight: The Chinking of “Thanh Hung 41” (Source-)

The vessel Thanh Hung 41 sank in August 2021 while carrying 3,670 tons of stones. The insurance company (PVI) refused to pay the claim because the ship’s technical safety certificate had expired four months before the accident. PVI argued that the vessel was “not seaworthy” and “unfit for traffic,” which were grounds for exclusion under the policy. However, the Court ruled in favor of the shipper. The Court found that when PVI issued the insurance certificate, they had already inspected the ship’s papers and found them valid at that time. Since the voyage was ongoing and PVI never warned the shipper about the expiring certificate, they could not later use that expiration as a surprise excuse to avoid paying for the sinking.

This leads to an important section of vietnam maritime law regarding insurance exemptions:

Article 325. Release of insurers from liability

1. Unless otherwise agreed upon in an insurance contract, in the case of hull insurance and insurance of carriage service charges, the insurer shall not be liable for losses resulting from:

a) Unseaworthiness of the ship at the commencement of the voyage, unless it results from a latent defect or from situations that could not be avoided even though the insured has exercised due diligence;

b) Loading onto the ship explosive or flammable substances or other dangerous cargo in violation of regulations on the carriage of such goods, if the insured was aware but the insurer was not.

Basically, if a ship isn’t safe to sail at the very start of the trip, or if you hide dangerous materials on board without telling the insurance company, they don’t have to pay if something goes wrong. However, if the problem was a hidden defect that nobody could have known about, you might still be covered.

Article 325. Release of insurers from liability (continued)

2. Unless otherwise agreed upon in an insurance contract, in the case of cargo insurance, the insurer shall not be liable for losses resulting from:

a) Natural properties of the goods;

b) Leakage, natural shrinkage or natural wear and tear of the goods;

c) Improper or inappropriate packing of the goods;

d) Delay in the supply of goods.

This means insurance usually won’t cover things that happen naturally, like a liquid leaking a little bit or goods getting smaller as they dry out. It also won’t pay if you packed the goods badly or if you were just late in delivering them.

Key Takeaways for Shippers

Based on our extensive experience at Unilaw, we recommend that shippers adopt a “legal first” strategy. This involves several layers of protection:

1. Verify the Vessel’s Status: Always check the registry and technical certificates of the vessel carrying your goods. An unseaworthy vessel is a liability that even insurance might not cover.
2. Scrutinize the Bill of Lading: Be wary of “said to weigh” or “shipper’s load and count” clauses if you cannot guarantee the accuracy of your declaration. If you are the consignee, insist on a “Clean” Bill of Lading without unfavorable remarks.
3. Dangerous Goods Compliance: Never withhold information about the nature of the cargo. The liability for nondisclosure is absolute and can lead to massive compensation claims if the ship or other cargo is damaged.
4. Timely Action: Maritime law has very short “statutes of limitations.” For cargo damage, you generally have only one year to file a lawsuit in Vietnam.

Article 169. Statute of limitations for lawsuits related to damage to or loss of goods

The statute of limitations for a lawsuit related to damage to or loss of goods carried under a transport document is one year from the date the goods are discharged or should have been discharged to the consignee.

You have exactly one year from the day you got your goods (or should have gotten them) to sue the carrier if they are damaged or missing. If you wait one day longer, the court will likely throw your case out automatically.

Conclusion

The maritime landscape in Vietnam is evolving, with courts becoming increasingly sophisticated in applying international rules like Hague-Visby alongside the Vietnam Maritime Code. As a vietnam litigation lawyer, we advise all our clients to treat every piece of paper—from the initial booking confirmation to the final delivery order—as a critical piece of evidence. Whether you are seeking a vietnam admiralty lawyer to resolve a dispute or a vietnam maritime lawyer to draft a robust charter party, Unilaw stands ready to guide you through the storms of maritime trade. Mitigating liability is not just about avoiding accidents; it is about building a legal fortress around your commercial activities.

1. Judgment No. 36/2023/KDTM-PT dated 28/07/2023 of the High People’s Court in Hanoi: Art. 148, 151, 152 of the Vietnam Maritime Code 2015; Art. 4 of the Hague Rules.

2. Judgment No. 330/2017/KDTM-ST dated 23/03/2017 of the People’s Court of Ho Chi Minh City: Art. 70, 71, 72, 73, 77 of the Vietnam Maritime Code 2005.

3. Judgment No. 200/2023/KDTM-ST dated 25/09/2023 regarding vessel “Thanh Hung 41”: Law on Insurance Business; Art. 8, 24 of the Law on Inland Waterway Transport 2004.

5. 95_2015_QH13_m_298374.doc (Vietnam Maritime Code 2015): Articles 145, 146, 148, 150, 151, 154, 160, 161, 166, 169, 139, 141, 325.