Decision No. 01/2018/QD-PQTT: Request to Annul the Arbitral Award Due to Improper Application of The Law on The Statute of Limitations for Initiating Lawsuits   

Decision No. 01/2018/QD-PQTT 

Claimant:  Ke Company. Ltd 

StakeholdersSyalie Company, Syalie 2 Company 

Regarding: Request to annul the arbitral award due to improper application of the law on the statute of limitations for initiating lawsuits 


Case Summary  

On 22/01/2009, KE Company. Ltd (KE Company) is the main contractor of Keangnam Hanoi Landmark Tower Project which has signed a contract for the design, engineering, supply and installation of the outer aluminum layer with the Consortium of Subcontractors, Syalie Company and Syalie 2 Company. The total contract value is USD. On 30.12.2012, based on the work completed, the parties signed a Provisional Certificate (PAC).  The contents of the PAC are KE Company. Ltd shall pay the Subcontractors on such terms and conditions as on the basis of the Certificate of Completion of the Basic Work and on the provision of “Warranties” by the Subcontractors. KE Company paid the Subcontractors a total amount of $16,624,106.45 and owed the Subcontractors the sum of $1,782,193.55. The Subcontractors subsequently failed to provide the Warranty Guarantee set forth in the PAC. Then, by KE Company. Ltd was in financial difficulties and did not make any further payments to the Subcontractors. 

On 07/04/2015, the Bankruptcy Court of Seoul-Korea Court (Bankruptcy Court) decided to start business recovery proceedings against KE. Ltd. The Bankruptcy Court ordered the creditors of KE Company. Ltd registered to record debts before 13/05/2015. After the business recovery procedure began, KE Company. Ltd is prohibited from making payments that are not part of the business recovery plan and are not approved by the Bankruptcy Court.

On 15/9/2015, the subcontractors issued a letter announcing that they would bring the case to settlement at the Vietnam International Arbitration Center (VIAC). On 10/08/2016, Vietnam International Arbitration Center received a petition from subcontractors requesting KE Company. Ltd pays the amount of USD 1,782,139.55 and accompanying interest. 


Arbitration Award No. 28/16 dated 01/07/2017 of the Vietnam International Arbitration Center (VIAC). Request KE Company. Ltd must pay the Subcontractors the outstanding amount of USD 1,782,139.55. The full interest payment is $266,188.38 due to the amount owed. Payment of arbitration fees is VND 958,064,062.   

Disagreeing with the ruling, dated July 31, 2017, KE Company. Ltd filed a petition for annulment of the arbitral award on the grounds that the arbitral tribunal violated the provisions of applicable law. The arbitral tribunal has incorrectly determined the statute of limitations for initiating lawsuits under arbitration proceedings, contrary to the Law on Commercial Arbitration, and contrary to fundamental principles of Vietnamese law. The arbitral tribunal recognized that SYAIE 2’s status to initiate lawsuits when this Company does not have a bidding license as prescribed is contrary to the basic principles of Vietnamese law stipulated in Article 3 of the Regulation on Management of Foreign Contractors’ Activities in Vietnam issued together with Decision 87/2004/QD-TTg dated May 19, 2004 of Prime Minister Chinh “Foreign contractors may only operate in Vietnam after being granted a bidding license by a competent state agency of Vietnam.” 


Stakeholders: Syalie Company, Syalie Company 2The arbitral tribunal has carefully analyzed the determination of the time to start calculating the statute of limitations for initiating lawsuits and the legal documents to be applied to settle the case. The provisions of the Civil Code on the statute of limitations for initiating lawsuits to calculate the statute of limitations are strictly in accordance with the law, the Civil Code is generally applicable to both the Court and the Arbitrator when settling a case, but there is no separate law for Arbitration as presented by the requesting Party. 


Representative of the People’s Procuracy.  The arbitral award complied with the provisions of the law.  The contents of the Judgment are not contrary to fundamental principles of law. There are no grounds for granting the requesting Party’s request to annul the arbitral award. 


Judgment Of The Court 

KE Company. Ltd held that the arbitral tribunal had determined that the statute of limitations for initiating lawsuits was inconsistent with Article 33 of the Law on Commercial Arbitration.  Letter No. VLT 14- 14 dated 13/6/2014 KE Company. Ltd has submitted to Subcontractors the basis for determining the statute of limitations for initiating suits. In Document No. VLT 14-14 Company KE. Ltd has pledged to pay 50% of the debt by August 10, 2016, and the rest by August 30, 2016. Thus, the statute of limitations commences from the date after August 30, 2016, that KE Company. Ltd undertakes to pay Subcontractors.  The arbitral tribunal’s application of Article 162 of the 2005 Civil Code is completely justified when the Company KE.  Ltd has acknowledged its obligations to its Subcontractors.  This is also fully consistent with Article 23, Clause 5. c of Resolution No. 03/2012/NQ-HDTP of the Council of Judges – Supreme People’s Court.   

On 09.08.2016, the Subcontractors filed a Petition against KE Company. Ltd to the Vietnam International Arbitration Centre is within the statute of limitations.  Therefore, KE Company. Ltd held that the arbitral tribunal settled the dispute when the statute of limitations had expired as unfounded.  Moreover, the statute of limitations for initiating a lawsuit is not one of the grounds for annulment of an arbitral award as stipulated in Article 68 of the Law on Commercial Arbitration.  

KE Company. Ltd contended that the arbitral award was contrary to fundamental principles of Vietnamese law because the arbitral tribunal recognized Plaintiff 2’s status as SYAIE 2 Company when the Company did not have a contractor license as prescribed by law.  At the meeting, KE Company. Ltd withdrew this submission because on 29/12/2017 the Ministry of Construction issued Official Letter No. 193/BXD- HDXD responding to this issue, so the Application Review Board did not consider it. 

Decision of the Court  

Do not accept the request of KE.Ltd. Company KE. Ltd on requesting cancellation of the Disputed Arbitration Award No. 28/16 dated 01/07/2017 issued by the Vietnam International Arbitration Council – VIAC. KE Company. Ltd must bear VND 500,000 in fees requesting the annulment of the arbitral award. 


Legal basis  

Pursuant to Clause 2, Article 31, Article 414, Article 415 of the Code of Civil Procedure; Article 3, Article 68, Article 69, Article 71 and Article 72 of the Law on Commercial Arbitration;  Resolution No. 326/2016/UBTVQH14.