Decision No. 02/2023/QD-PQTT

Claimant: Entertainment Investment Services Company Limited D.

Related party: Joint Stock Company V.

Regarding: Request to annul the arbitral award due to violation of the arbitration agreement principle

Case Summary

On 28/04/2017, D Entertainment Investment Services Co., Ltd. (Company D) and V Joint Stock Company signed Contract No. 01/2017 – BCC cooperates in trading electronic games with prizes for foreigners, trading electronic games with prizes at Hotel I; Address: No. 159 T, V City, Ba Ria – Vung Tau Province.

On 25/11/2022, Company A sent Letter No. to Company V on settling Business Cooperation Contract No. 01/2017-BCC. Accordingly, Company A agrees to terminate Contract No. 01/2017-BCC and requests the two parties to agree in writing to deal with the consequences of the termination of Contract No. 01/2017-BCC. Company A proposes that Company V must re-agree on the form of arbitration and organize specific arbitration to resolve the dispute before initiating litigation through arbitration by the provisions within applicable laws. Company A selects the arbitrator and requests Company V to comment; if Company V cannot choose, the two parties shall comply with the provisions of the law pertaining to Commercial Arbitration.

On 07/12/2022, Company D received Letter No. 52-22/CV-LV dated 06/12/2022 from Company V agreeing to terminate Contract No. 01/2017-BCC from 31/11/2022. However, Company V did not agree to the selection of the Arbitration Centre as mediator proposed by Company D. Company V filed a lawsuit against Company A at the V2 Arbitration Center.

Arbitration Award No. 09/22 dated 01/03/2023 of the V2 Arbitration Center. The award calls for a termination of the Foreigner Bonus Video Game Business Cooperation Contract No. 01/2017 – BCC dated 28/04/2017 between V Joint Stock Company and Entertainment Investment Services Company Limited, from 30/11/2022. The deposit of VND 11,380,000,000 belongs to Company V. Compel Company D to pay Company V its revenue share and ground advantage for months 9, 10, and 11, 2022, for VND 13,288,307,783. Company A must coordinate the implementation of the works and procedures required by V Company to handle the property and machinery at the Club in accordance with the Cooperation Agreement within 15 days from the date of the request of V Company. After this time limit, if Company A fails to perform or fulfill its obligations as mentioned above, Company V is fully entitled to dispose of assets and machinery according to its decision in accordance with the procedures and procedures prescribed by law and Company A shall bear all related costs, damages, and liabilities. Compel Company A to pay Company V arbitration fees of VND 578,024,617.

In disagreement with the above terms and conditions,, on March 10, 2023, Company A filed a petition to the People’s Court of Ba Ria – Vung Tau province to cancel all of Arbitration Award No. 09/22 dated March 1, 2023, of V2 on the following grounds: Contract No. 01 has not specified which Arbitration Center to resolve disputes arising between Company A and Company V and the composition of the Arbitration Council is specified and clearly stated. In case the parties cannot agree on the arbitration center and the composition of the arbitral tribunal, it will be based on the provisions of Clause 5, Article 43 of the Law on Commercial Arbitration 2010 to continue settling. Company V filed a petition against Company A at V2 and V2 accepted Company V’s petition on December 5, 2022, before Company V signed Official Letter No. 52-22 regarding the termination of Contract No. 01 and the settlement of the dispute with Company D. Company V’s lawsuit file does not contain an arbitration agreement and no documents proving the failure of the parties to reach an agreement on a specific arbitration institution to resolve the dispute. Thus, V2 accepts the petition.

Company V’s lawsuit is a violation of Clause 5, Article 43 of the Law on Commercial Arbitration 2010. Before Company V initiated a lawsuit against Company A at V2, Company V, and Company A agreed to terminate contract No. 01/2017- BCC. Arbitration Award No. 09/22 re-decided to accept the request of Company V to unilaterally terminate Contract No. 01/2017- BCC from November 30, 2022, due to Company D’s violation of Article 10 and Article 11 of the 2005 Commercial Law. Between Company A and V2, there is no choice with respect to the agreement to use electronic means to carry out the transaction. V2 unilaterally choosing the form of sending documents to Company A by electronic transaction is not legal. Company A filed a complaint against the jurisdiction of the arbitral tribunal established by V2 but was not resolved by V2 as contrary to the provisions of Clause 2, Article 43 of the Law on Commercial Arbitration 2010. Arbitral award No. 09/22 is therefore contrary to fundamental principles of Vietnamese law.

A representative acting on behalf of the People’s Procuracy of Ba Ria – Vung Tau province deemed the arbitration award in dispute No. 09/22 dated 01/03/2023 of V2 between V Joint Stock Company and E Entertainment Services Company Limited is backed by the force of law. The People’s Procuracy would not accept the request of Entertainment Investment Company Limited D.

Judgment Of The Court

Company D’s letter No. 60/dated 25/11/2022 to Company V agrees with Company V’s opinion stated at the meeting on 16/11/2022 regarding the termination of the Contract 01/2017; request for a settlement of business cooperation contract No. 01/2017-BCC; propose an agreement to select 01 of 04 arbitration centers, and request Company V to respond in writing to Company A by 08/12/2022. Clause 1, Article 43 of the Law on Commercial Arbitration stipulates: Before considering the content of the dispute, the arbitral tribunal must consider the validity of the arbitration agreement, whether the arbitration agreement can be implemented or not, and consider its competence.. When Company V filed a petition against Company A at V2, these two companies did not have an arbitration agreement and had not completed the arbitration re-agreement, but V2 accepted Company V’s petition to settle and issue a Judgment that violated Clause 1, Article 43 of the Law on Commercial Arbitration 2010. Thus, it is sufficient to conclude that the arbitral award in dispute No. 09/22 dated 01/03/2023 of V2 between V Joint Stock Company and E Entertainment Services Co., Ltd. has been issued in the absence of an arbitration agreement and is not within the jurisdiction of the arbitral tribunal as stipulated in Points a, c, Article 68 of the 2010 Law on Commercial Arbitration. Therefore, accepting the request of Entertainment Investment Company Limited D, to cancel the Arbitration Award in dispute No. 09/22 dated 01/03/2023 of V2 between V Joint Stock Company and Entertainment Services Company Limited D.

Court Decision

The Court accepts the request of Entertainment Investment Services Co., Ltd. to settle the civil matter of Entertainment Investment Services Co., Ltd. on the cancellation of the arbitration award. Cancellation of Arbitration Award No. 09/22 dated 01/03/2023 of V2 established in Ba Ria -Vung Tau province between V Joint Stock Company and Entertainment Investment Service Company D. Cooperation in Video Game Business with Prizes for Foreigners No. 01/2017-BCC between V Joint Stock Company and Entertainment Investment Services Company D.

Legal basis

Articles 31, 37, 39, 458 of the Code of Civil Procedure; Articles 7, 43, 68 of the 2010 Law on Commercial Arbitration; Articles 4, 6 and 39 of Resolution No. 326/2016/UBTVQH14.