Unusual lawsuit between Posco VST and Thanh Nam Group

The prolonged dispute is about a VND58 billion debt from 2013

A prolonged dispute

In May 2018, the Hanoi People’ Court has announced that it was unlawful for the South Tu Liem Court to dismiss the lawsuit between Posco VST and Thanh Nam on the ground that the statutory limitation has expired.

According to the Hanoi People’ Court, the statutory limitation has yet to expire because there were debt reconciliation minutes between the two companies in 2015. Thus, the Hanoi People’ Court overruled the verdict of the South Tu Liem Court and returned the documents for further consideration.

The lawsuit gained public attention because of its duration. The case was brought to the municipal court to resolve rather than the district court as prescribed by the regulations.

Thanh Nam is a major steel supplier in Vietnam with products available in overseas markets such as South Korea, Malaysia, India, Bangladesh, and Pakistan, among others.

Thanh Nam conducted numerous transactions with Posco VST. The two companies signed a contract under which Posco VST was to supply stainless steel to Thanh Nam in 2010-2013. However, Thanh Nam could not meet the payment planby the end of 2013, so Posco VST filed a lawsuit over a debt of more than VND58 billion ($2.52 million).

Up to now, Posco VST has sued Thanh Nam three times. Posco VST first sued on March 2014 at the South Tu Liem Court to ask for VND58 billion in payment. The petition was returned due to insufficient documentation.

In March 2015, Posco VST filed for the second time. However, the case was suspended because the representative of Posco VST was absent from court twice without justifiable reasons.

In November 2016, Posco VST once again sued Thanh Nam. This time, the South Tu Liem Court dismissed the lawsuit on the grounds that the statutory limitation has expired. The judgement was overruled by the Hanoi People's Court in the appellate hearing in May 2018.

During the appellate hearing, Posco VST said that bringing a lawsuit was made difficult by the court. Meanwhile, Thanh Nam Group was furious because Posco VST, as the plaintiff, was absent from court several times. Therefore, the trial has yet to actually hear the contents of the lawsuit after being filed four years ago.

How to calculate the debt?

According to Posco VST, the debts come from the purchasing and selling of goods between Thanh Nam and Posco VST during 2010 and 2013. Looking at the cumulative payments, the two companies would compare and determine their debt figures.

On March 6, 2013, Posco VST and Thanh Nam Group made the debt reconciliation minutes. On November 27, 2013, the chief accountants of the two sides confirmed that Thanh Nam Group would pay Posco VST an amount of VND58 billion in total.

Meanwhile, Thanh Nam said that Posco VST often makes invoices before delivery. In the debt reconciliation minute, it specifies “the debt created by the sales invoice” and that the “two sides continue to clarify the figures.” This means that the debt was only recorded on Posco VST's invoices but it was not based on goods delivered.

According to Thanh Nam Group, there is no debt because the company has not received the number of goods delivered by Posco VST. Also, the two companies have yet to determine the actual amount of debt, hence the “continue to clarify the figures.”

Awaiting a fair and equitable trial

According to the representative of Thanh Nam, the company expects a fair and equitable trial to solve the roots of the problem soon. The prolonged dispute not only affects the company’s business, but also its prestige and image in the market.

Thanh Nam said the VND58 billion debt is not based on any contract or specific invoice. In fact, the company has not received the agreed volume of goods from Posco VST. Even more, Posco VST cannot determine which contract and invoice the debt comes from.

The representative of Thanh Nam said, “Posco VST cannot submit the goods delivery receipt as requested by Thanh Nam. Where are the goods they delivered?”