Local courts rejected some international arbitration rulings

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Russia’s state-owned SouJzplodoimport Company authorised its representative in Vietnam, the Pham & Associates Company, to submit its application to a Vietnamese court for recognising and enforcing a Dutch arbitral award against the Netherlands’ Spirit International N.V which had no address in Vietnam.

Under the award, the Ministry of Science and Technology’s National Office of Intellectual Property of Vietnam was asked by SouJzplodoimport to recognise that Vodka brand belonged to it.

However, during its resolution of the Dutch arbitral award, the court found that Spirit International had no address in Vietnam and that SouJzplodoimport’s legal representative Pham & Associates’ involvement in the case was contrary to Vietnam’s legal regulations.

In February 2013, the office issued some decisions accepting the annulment of the recognition of SouJzplodoimport as the owner of the label.

“Based on these foundations, the court has suspended the consideration of SouJzplodoimport’s application,” said Hanoi’s People’s Court judge Nguyen Huyen Cuong.

In another case, in May 2009, US-backed Strategic Think Tank (STT) and Vietnam’s Song Da Urban and Industrial Zone Investment and Development Joint Stock Company (Sudico) signed a contract, with STT providing design consultancy for a Sudico urban development project.

However, Sudico violated the contract by refusing to pay STT for the work it completed.

Under this contract’s Article 25, if a dispute was failed to be resolved via negotiation, within 30 days as of the day the dispute arose, either or both sides could bring the dispute to Singapore International Arbitration Centre (SIAC) for settlement. SIAC’s decision would be the final ruling and mandatory for both sides. However, Vietnamese law would monitor this contract.

Then STT sued Sudico at SIAC in November 2011. In April 2013, SIAC accepted STT’s application and forced Sudico to pay money for the partnership plus interest and arbitral costs.

Based on the ruling, STT submitted its application for recognition and enforcement of SIAC’s arbitral award against Sudico in Vietnam.

However, Sudico rejected this award, arguing that SIAC’s ruling had violated the basic principles of Vietnam’s law. Specifically, the ruling failed to recognise and protect legal agreement that the two companies voluntarily made earlier. Even the ruling went against the companies’ agreement. Thus such ruling had violated Vietnam’s Civil Code and Law on Commerce.

Sudico also claimed it owed the US firm nothing despite the work being completed because the foreign company did not have a vital check-and-take-over certificate from an authorised agency. During the dispute settlement, Sudico explained how this meant STT’s complaints were invalid, but SIAC’s arbitrators either did not understand or failed to accept Sudico’s argument.

SIAC’s decision supposedly violated Vietnam’s Law on Construction, two government decrees and a Ministry of Construction circular, according to Cuong.

After careful consideration of all documents, the local court finally rejected STT’s application, because the law to monitor this contract is Vietnamese law, including the constitution, laws and sub-law documents. Thus the signing, implementation and settlement of all disputes must be subject to Vietnamese law.

According to the People’s Supreme Court, the number of applications for recognition and enforcement of the international arbitral awards has strongly increased over the past years, with two in 2011, 16 in 2012 and 26 in 2013. Of which 30 cases have been resolved.

Between January 2005 and June 2014, there were 52 applications in Hanoi and 52 in Ho Chi Minh City, and about two in other localities each.