Short answer: Compensation for cargo lost by a logistics company follows a 3-step formula: (1) determine whether the relationship is with a trader providing logistics services or merely a pure carrier — the compensation frameworks differ completely; (2) check the liability exemptions and the 14-day claim / 9-month suit-notice deadlines (Article 237 of the 2005 Commercial Law); (3) apply the liability cap in order: parties agreement → at most VND 500 million per claim where the client did not declare the cargo value in advance → not exceeding the declared cargo value where declared in advance and confirmed by the trader (Article 5 of Decree 163/2017/ND-CP).
1. Step 1: logistics or pure carriage — the boundary decides the framework
This is the easiest step to get wrong. A trader providing logistics services performs one or more stages of the logistics chain (warehousing, freight forwarding, customs procedures, distribution…) — governed by Articles 237 and 238 of the 2005 Commercial Law and Decree 163/2017/ND-CP, including the VND 500 million liability cap.
By contrast, where the provider performs only pure carriage under a transport contract, the 2015 Civil Code applies (Articles 530, 534.5, 540.4, 541): the carrier compensates actual damage for lost or damaged property (unless otherwise agreed or provided by law), with no VND 500 million cap. Force majeure causing loss or damage exempts the carrier from compensation, unless otherwise agreed.
Practical consequence: wrongly applying the 500 million cap to pure carriage (or ignoring the cap where the counterparty is a logistics trader) miscalculates the compensation from the start.
2. Step 2: check exemptions and deadlines — missing them can forfeit rights
Article 237.1 of the Commercial Law lists the liability exemptions for logistics traders: loss caused by the fault of the client or the client authorized person; acting in accordance with client instructions; inherent defects of the goods; exemptions under law and transport customs.
Pay special attention to two “rights-forfeiting” deadlines:
- 14 days from delivery to the consignee: no claim notice received within this period → the trader is exempt from liability.
- 9 months: after a claim, no notice of arbitration or court proceedings received within 9 months → the trader is exempt from liability.
Article 237.2 further provides that the logistics trader is not liable for profits the client would have earned, or for delays or wrong-place performance not caused by its fault — unlike the general damages principle (Article 302 of the Commercial Law); do not apply the wrong rule.
The limitation period for commercial dispute lawsuits is 2 years (Article 319), except for the case at point e, clause 1, Article 237.
3. Step 3: apply the liability cap in the correct order
Article 238 of the Commercial Law sets the principle of limitation of liability for logistics traders; the Government details it in Article 5 of Decree 163/2017/ND-CP (effective 20/02/2018, still in force, replacing Decree 140/2007/ND-CP):
- Where relevant law provides a liability cap, apply that provision.
- Otherwise, as agreed by the parties.
- No agreement: (a) client did not declare the cargo value in advance → compensation of at most VND 500 million per claim; (b) client declared the value in advance and the trader confirmed it → compensation not exceeding that declared cargo value.
Where goods pass through multiple stages with different liability caps, the highest cap applies.
The single most important practical warning: declaring the cargo value before handing goods to the logistics provider, with written confirmation, is the only way to raise the compensation cap to the true cargo value. Without a declaration, even billion-dong cargo is compensated at most VND 500 million per claim.
4. Losing the right to limit liability
Article 238.3 of the Commercial Law: the logistics trader loses the right to limit liability where it is proved that the loss, damage or delay resulted from the trader intentionally acting or failing to act, or acting recklessly with knowledge that the consequence would probably occur.
5. A second layer of protection: cargo insurance
Beyond the statutory compensation framework, businesses should consider cargo insurance as a second layer of protection. Note: insurance compensation depends entirely on the terms of the specific insurance contract — check the exclusion clauses carefully before signing; this article only suggests what to check, without asserting details.
Frequently asked questions
Cargo worth VND 2 billion is lost but no value was declared in advance — how much compensation? At most VND 500 million per claim (Article 5.3(a) of Decree 163/2017) — unless the parties agreed otherwise or relevant law provides differently.
What if the claim is made after 14 days? The logistics trader is exempt from liability if it received no claim notice within 14 days from delivery to the consignee (Article 237.1). Claim immediately upon discovering loss or damage.
Does the 500 million cap apply to simply hiring a truck to carry goods? No — for a pure carriage relationship, the Civil Code applies: compensation follows actual damage, with no 500 million cap. Specific advice is needed to determine the true nature of the relationship.
In a compensation dispute with a logistics or transport provider, or need a logistics service contract reviewed before signing? Reach us via the Contact page of FLAT Law Firm.
The information in this article is for reference only and does not constitute legal advice.
The legal content of this article is reviewed by the AI Legal Council of FLAT and submitted to the owner for approval before publication; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.