Decision No. 08.2022.QD-PQTT. A Request for Annulment of the Arbitral Award in a Dispute Concerning the Termination of a Commercial Contract Due to a Breach of the Payment

Decision No. 08/2022/QD-PQTT

Claimant: H.I LTD.

Stakeholders: B.H Joint Stock Company

Regarding: A request to annul the Arbitral Award in a dispute concerning the termination of a commercial contract due to a breach of the payment agreement.

Case Summary

On 13/5/2020, B.H Joint Stock Company and H.I LTD Company signed a commercial contract with the Pro20/119/VN symbol. On 14/5/2020, B.H Joint Stock Company transferred 10% of the contract value totaling 8,369.98 USD to H.I LTD. On 15/5/2020, H.I LTD received the full amount. On 16/6/2020, H.I LTD lined up to disembark and sent the original set of documents scanned in color to B.H. Joint Stock Company. On June 18, 2020, after receiving the documents, B.H Joint Stock Company was obligated to immediately pay the remaining 90% to H.I LTD. On 23/06/2020, B.H Joint Stock Company paid a portion of the fees stipulated in the contract. On 24/6/2020, H.I LTD sent an email notifying B.H. Joint Stock Company of the violation and requested B.H Joint Stock Company to pay the remaining amount in full. On 26/06/2020, B.H Joint Stock Company sent an email requesting to postpone payment until 01/7/2020 which was subsequently agreed upon by H.I LTD. On 02/7/2020, B.H Joint Stock Company again sent an email requesting to continue the payment extension until 03/7/2020. H.I LTD did not agree and requested B.H Joint Stock Company to respond before a 14h deadline on the same day, otherwise the contract would be terminated. On July 3, 2020, B.H Corporation transferred to the defendant the remaining amount of the Pro20 contract in the amount of USD 39,093.47. On 06/07/2020, H.I LTD received the above amount and announced that it would terminate the Pro20/119/VN contract with B.H. Joint Stock Company. Due to the failure of negotiations between the two parties, on 17/12/2020, B.H Joint Stock Company sent a petition to the Vietnam International Arbitration Center (VIAC) requesting dispute resolution.

Dispute Arbitration Award No. 67/20 dated 30/12/2021 of the Vietnam International Arbitration Center (VIAC). The Center accepted the request of B.H. Joint Stock Company to force H.I LTD. to pay B.H Joint Stock Company the following amounts: The purchase amount of Pro20/119/VN contract is 83,528.34 USD equivalent to 1,942,869,188 VND. The interest amount of the purchase amount under the Pro20/119/VN Contract is VND 246,717,772. The fine for breach of the Pro20/119/VN Contract is 6,682.27 USD equivalent to 155,429,600 VND. The cost of a lawyer’s assistance is VND 250,000,000. The arbitration fee in the dispute is VND 143,476,000. The payment period is 30 days from the date of the Arbitral Award. In case of late payment, late payment interest rates must be paid at the rate of 9% / and 10% per year corresponding to the time and amount of late payment based on the accepted lawsuit request.

Disagreeing with the arbitral award, on 24/01/2022, H.I LTD initiated a lawsuit requesting cancellation of the arbitral award because the arbitral proceedings were not following the parties’ agreement, contrary to the Law on Commercial Arbitration 2010 provisions, violating the time limit for notifying the petition, seriously affected the legitimate interests of H.I LTD. The arbitral tribunal’s failure to apply the Vienna Convention on Contracts for the International Sale of Goods 1980 (CISG) to settle disputes is contrary to the principle of priority in the application of international treaties and the 2005 Commercial Law. The Arbitral Award is contrary to the principle of respect for freedom of agreement of the parties.

Stakeholders: B.H. Joint Stock Company did not agree to cancel the judgment, therefore the reasons for requesting to cancel the judgment of H.I LTD are groundless. The submission of VIAC’s notice of dispute settlement to H.I LTD shall comply with Article 8 of the Rules of Arbitration Procedure. At the award, the Arbitrator applied the provisions of the Commercial Law and the Civil Code in accordance with the agreement of the parties. On the other hand, the National Law and the Vienna Convention 1980 both stipulate that the terms of contract renewal are not different, so the Arbitral Tribunal applied the National Law to settle properly within the statutes of the law. 02 written request for extension of payment term by email with vi by confirmation. The Arbitral Tribunal considered documents as evidence to issue the award. H.I LTD states that the opinion without this document is unfounded.

A Statement from a representative of the People’s Procuracy of Hanoi: The Arbitration Award in Dispute No. 67/20 is in accordance with the provisions of law, consequently the case falls under the jurisdiction of the Vietnam International Arbitration Center. The People’s Procuracy of Hanoi refuses to accept H.I LTD.’s request to annul the judgment.

Judgment of the Court

H.I LTD believes that the Arbitration Center seriously violated the time limit for notifying the petition, seriously affecting the legitimate rights of H.I LTD due to the lack of timely access and preparation of documents. Accordingly, evidence for the lawsuit is unfounded.

H.I LTD considers that priority must be given to the application of the Vienna Convention 1980 (CISG) as stipulated in Article 665 of the Civil Code 2015 and Clause 1 Article 5 of the Commercial Law 2005 because Vietnam and Singapore are both States Parties to this Convention. On the basis that the parties agreed to apply the Law of Vietnam at the settlement meeting, H.I LTD did not request priority in the application of the Vienna Convention 1980. Therefore, the Arbitral Tribunal pursuant to the 2005 Commercial Law and the 2015 Civil Code settled in accordance with Article 14 of the Law on Commercial Arbitration and Article 24 of the Rules of Arbitration Procedure disputes involving foreign elements, and the arbitral tribunal correctly applied laws chosen by the parties. The provisions of the arbitral tribunal applied in Resolution No. 67/20, in comparison with those provided for in the Vienna Convention 1980, are not fundamentally contradictory. Therefore, the opinion of H.I LTD that the Vienna Convention 1980 (CISG) should be applied is not accepted.

With regard to the opinion of H.I LTD on the Arbitral Award being contrary to the principle of respect for freedom of agreement of the parties, the termination of the contract of the party stemming from the buyer’s breach of payment is fully in accordance with the provisions of Article 1 and Article 3 of the Pro20 contract. This is the content of the dispute and the evidence presented by the parties was considered and resolved by the Arbitral Tribunal in Arbitral Award No. 67/20. Therefore, this opinion of H.I LTD does not fall within the purview of the Petition Review Board.

Court Decision

The request for cancellation of Arbitration Award No. 67/20 was made on 30/12/2021 by the Arbitration Council of Vietnam International Arbitration Center of H.I LTD.

Legal basis

Article 14 ; Clause 4, Article 71 of the Law on Commercial Arbitration; Article 68 of the Law on Commercial Arbitration.