Decision No. 04/2023/QD-PQTT

Claimant: Company A

Stakeholder: Company D

Regarding: Request for annulment of arbitral award in logistics lease dispute

Case Summary

On 24/4/2019, Company D and Company A entered a lease agreement for premises No. PVMS.0119005, amended for the first time on 22/5/2019, the second amendment on 26/6/2019 (Contract 05), and the Contract for logistics services for yard construction No. PVMS.011900, amended for the first time on 22/5/2019, the second amendment dated 1/7/2019, the third amendment dated 24/4/2020, the fourth amendment 2020, the fifth amendment dated 1/10/2020) (Contract 06). On 08/07/2019, Company D handed over to Company A the construction yard according to the minutes No. 01/19/A. During the performance of the contract, Company A repeatedly violated its payment obligations and failed to comply with the payment agreement in the contract.

On April 27, 2022, Company D initiated Company A to Center V, demanding payment of the sum of VND14,329,351,772 as principal and late interest on Contract 05 and Contract 06 and termination of the contract ahead of schedule. Forcing Company A to relocate the property, returning Company D to the original construction yard. Company A has the right to dismantle Company A’s assets. Company D is not responsible for damage to Company A’s property. Company A must bear the full cost of dismantling, relocating assets, and any liabilities before taking the assets out of Company D’s port base. During the relocation, Company A shall bear the rent of the yard according to the unit price in the signed Contract No. 05 until the handover to the construction site is completed as it was received.

On September 20, 2022, Company D superseded the lawsuit claims, namely: To compel Company A to pay the amount of VND 14,329,351,772 as principal and late payment interest in respect of Contract 05 and Contract 06. The yard rent and penalty interest shall be paid following the unit price in Contract 05 till the completion of the handover to the Plaintiff as it was received in the amount of VND 2,025,817,155 as of August 31, 2022. To bear all arbitration costs and legal costs related to dispute No. 28/22, including arbitration fees: VND 466,026,000 and advance arbitrator fees paid by Company D of VND 12,000,000.

Arbitration Award in Dispute No. 28/22 dated 19/10/2022. Accept Company D’s request to compel Company A to pay the principal amount under Contract 05: VND 3,682,674,596 and late interest under Contract 05: VND 855,239,906. The principal amount under Contract 06 is: VND 7,837,335,583 and late payment interest under Contract 06 is: VND 2,196,419,959. The arbitration fee is VND 444,215,000, within 30 days from the date of the award. Disagreeing with the arbitral award, Company A filed a request to annul the arbitral award on the grounds that: The arbitral award is contrary to fundamental principles of Vietnamese law; evidence provided by the parties on which the arbitral tribunal bases its award includes a document that has no provable value. Specifically: Contract 05, Company A will only have use of the actual premises until 30/6/2021 and has sent Official Letter No. 43/2021/CV-A requesting to hand over all items at the leased premises. Company D has received exclusive access to the premises, workshops, and equipment used from 1/7/2021. Thus, Company A has not used the premises since July 1, 2021, so they do not have to pay rent as of July 1, 2021. In fact, Company A did not receive invoice No. 216,217, because the photo of the message on Zalo is not legitimate evidence, and consequently it is not recognized as a basis of proof in the settlement.

Stakeholders: Company D. From August 2020 to January 2022, the two parties drafted and shared many documents and particpated in meetings to agree on the content of Company A to pay Company D, but Company A did not implement the agreed upon contents originating from documents and discussions. Due to Company A’s failure to perform its obligations as stipulated in the contract, negotiations after the dispute did not achieve meaningful results even though the contents agreed upon in writing by the two parties were not carried out by Company A. Therefore, Company D filed a petition at Center V which is in accordance with the law. Company D did not agree to annul the judgment and argued that the petitioner’s reasons for requesting cancellation of the judgment were groundless, in order to extend the repayment period.

People’s Procuracy of Hanoi. In Arbitration Award No. 28/22, the claimant party gave grounds for annulment of the award by not accepting evidence and documents through Zalo. The document was not sent to the address agreed in the contract. Additionally, the charge that the arbitral award violates fundamental principles of Vietnamese law is unfounded. The judgment of Center V at the arbitral award pronouncement and the evidence on which the arbitrator bases the issuance of the award are collected in the correct order and valid as evidence to prove in accordance with Vietnamese law.

Judgment Of The Court

During the settlement process, the Arbitral Tribunal has also deemed that the parties are entitled to equal rights, are entitled to send documents, present opinions to protect their legitimate rights and interests, agree on the settlement of the case, and provide evidence to prove their claims. Company A failed to recognize the opinion of the Arbitral Tribunal when settling violated the provisions of Article 3 of the Civil Code 2015: The basic principles of civil law are that all individuals are equal before the law and have the responsibility to implement, prohibit termination of obligations based on freedom, voluntarily commit to agreement, exercise and forfeit their civil rights and obligations in good faith and honestly, must not infringe upon national and international interests, public interests, legitimate rights and interests of others. At the arbitral award, it was decided that Company A was designated as the party to make the payment under Contracts 05.06. The signing of the contract by the parties is voluntary, under the provisions of law. Therefore, the parties are responsible for non-performance or improper performance of civil obligations under Clause 5, Article 3 of the 2015 Civil Code. Therefore, Company A’s opinion is that the arbitral award is contrary to the basic principles of Vietnamese law but does not demonstrate any fundamental violation. Regarding Company A’s contention that the evidence provided by the parties on which the arbitral tribunal relied to render the award is a document that has no probative value, within Dispatch No. 43/2021. CV-A is the notice of contract termination. Although Invoices No. 216, 217 are transacted via Zalo, Company A did not receive these 02 invoices at the address agreed upon by the parties in the contract. Accordingly, it does not have to fulfill payment obligations.

The panel shall consider the petition based on the provisions of Article 68 of the Law on Commercial Arbitration and accompanying documents for consideration and decision; not to re-adjudicate the content of the dispute settled by the arbitral tribunal. Therefore, this opinion of Company A is not within the purview of the Application Board.

Court Decision

The request for Cancellation of Arbitration Award No. 28/22 dated October 19, 2022, by the V Central Arbitration Council on the settlement of Company D and Company A disputes is not accepted.

Legal basis

Clause 4, Article 71 of the Law on Commercial Arbitration; Clause 5 Article 3 of the 2015 Civil Code; Article 39 of the Law on Commercial Arbitration and Article 11, Article 12 of the Rules of Arbitration Procedure.