Asking customs to hold a suspected infringing shipment is not free of responsibility: the right holder must post security large enough that, if the request proves wrong, the cargo owner has an immediate source of compensation. Understanding the security level and refund conditions keeps the company from being caught short on cash whenever a border case arises.
Legal basis to start from
Under the mechanism in Articles 73 to 76 of the Law on Customs, when requesting suspension of clearance for goods suspected of infringing intellectual property rights, the right holder must provide security in cash equal to 20 percent of the value of the suspected consignment, with a minimum of VND 20 million, or a guarantee from a credit institution covering the whole corresponding obligation. This security is not a fee paid to the state; it is the compensation source for the cargo owner and related parties if the suspension is concluded to lack grounds or the right holder fails to pursue infringement handling within the statutory period.
How this applies in practice
Three practical points matter. First, the value used to compute the security is the value of the consignment asked to be suspended, so the larger the shipment the larger the amount frozen, and companies should keep a pre-arranged bank guarantee line instead of scrambling for cash. Second, the security is refunded when the case ends with no compensation obligation outstanding, or after the right holder has fulfilled a compensation duty under an effective decision. Third, if a wrongful request causes losses such as storage and demurrage charges and delivery delay, the security will be used to pay compensation at the cargo owner’s request and under the competent authority’s decision, and any shortfall remains payable by the right holder.
What to do next
- Set up a standing bank guarantee line for border enforcement activity, instead of preparing cash case by case.
- Request suspension only when the infringement evidence is relatively solid, because each request locks security equal to 20 percent of the consignment value.
- Track the suspension deadline and complete the next handling step in time, to avoid losing priority in handling and prejudicing the security refund.
Frequently Asked Questions
How much security is required when asking customs to detain suspected goods?
The security is 20 percent of the value of the suspected consignment with a minimum of VND 20 million, under the security mechanism for requesting suspension of customs clearance in Articles 73 to 76 of the Law on Customs. The more valuable the shipment, the larger the security to be posted.
Can the security be cash or a bank guarantee?
Security may be provided by paying a cash amount or by a guarantee letter from a bank or authorised credit institution covering the whole obligation. For companies with frequent cases, a bank guarantee line avoids freezing cash flow the way per-case cash deposits do.
When is the security refunded?
The security is refunded when the case ends with no compensation obligation remaining on the right holder, for example the goods are determined infringing and handled, or the right holder has completed a compensation duty under an effective decision. The refund runs through the customs office holding the security or the issuing guarantor.
Is the security lost if the request was wrong?
The security will be used to compensate the cargo owner’s actual losses such as storage, demurrage and delay damage, under the competent authority’s decision. If the loss exceeds the security, the right holder must still pay the shortfall, which is why goods should not be detained on weak infringement evidence.
This article has been quality-reviewed by the FLAW AI Legal Council