Clarity to benefit contracts

Litigation over a seafood purchasing contract between a Russian buyer and a local seller based in southern Khanh Hoa Industrial Zone resorting to Vietnam International Arbitration Centre (VIAC) highlights the trend of local firms failing to understand the gravity of legal documents.

The $163,000 contract features delivery terms CIF Vladivostok with payment made through telegraph transfer reimbursement.

The buyer paid $60,000 in advance with the remainder paid within three working days after the buyer got the bill of lading, according to VIAC chairman Tran Huu Huynh. Problems arose when the Vietnamese firm neither responded to calls from the buyer nor delivered the goods and the buyer sued  the seller with VIAC support.

When working with VIAC, the local firm argued it could not handle the contract because of unclear contract terms, mostly because the contract signatory representing the Vietnamese side was the company’s general director who was dismissed before the contract was inked.

Hence, the Vietnamese firm required the arbitrators to declare the contract void and pay the deposit back. The arbitrators later found that the general director was dismissed one day after he signed the contract with the buyer. Hence, the Arbitration Council decided the Vietnamese firm had to return $60,000 deposit to the buyer and incur all arbitration charges.

The case cast a big dent on the reputation of the Vietnamese firm. Le Quang Manh, head of Ministry of Planning and Investment’s  Business Registration Agency  said the national business registration system would be completed in 2012, paving the way to press it into service from 2013’s first quarter to avoid litigation between firms.

By that time, the national business registration database built by the MPI will become accessible by not only state management agencies, but also businesses as well as local residents.

“The system will enable online information exchanges about business registration among diverse state agencies operating in business registration, market management, tax, customs, statistics and inspection areas, ensuring information accuracy. From  there, relevant stakeholders will get the right to participate in enterprise supervision,” said Manh.

The national business registration system test run will reportedly take place in October 2012 primarily in some localities before the entire system is pressed into service nationwide.