Decision No. 1024.QD-PQTT. Request for Annulment of Arbitral Award in a Dispute Over Transfer of Contributed Capital

Decision No. 1024/2022/QD-PQTT

Claimant: Mrs. N, Mr. D

Persons with related rights and obligations: Mr. N

Regarding: Request to annul arbitral award in contributed capital transfer dispute

Case Summary

Ms. N and Mr. N jointly signed the Capital Contribution Transfer Contract No. 01/2020/HDCNVG. According to the contract, Mr. N will transfer the 50% charter capital that Mr. N owns in T Co., Ltd. to Ms. N at a transfer price of VND 25,000,000,000. Ms. N is responsible for paying Mr. N in 4 installments of VND 5,000,000,000 each between the date of signing the contract and the end of May 30, 2022. On 27/01/2021, after Ms. N paid the 1st installment amount of VND 5,000,000,000, T Co., Ltd. held a meeting of the members’ council to change capital contributors from Mr. N to Ms. N with the participation of Mr. N, Ms. N and Mr. D. Change the name of capital contributors in the Company’s Charter from Mr. N to Ms. N. On 02/02/2021, T Co., Ltd. completed the procedures for transferring contributed capital from Mr. N to Ms. N at the Business Registration Office of Province B. When the payment of the 2nd installment was due, Mrs. N still did not comply despite Mr. N’s repeated requests. Due to Ms. N’s breach of contract, Mr. N initiated a lawsuit at the Vietnam International Arbitration Center (VIAC) – Ho Chi Minh City Branch as agreed in the contract.

Arbitration award dated 25/11/2021 of the Arbitration Council of the Vietnam International Arbitration Center (VIAC) in Ho Chi Minh City: Partially accepted Mr. N’s request to initiate a lawsuit. Compel Ms. N to pay Mr. N the following amounts: The transfer of contributed capital is VND 20,000,000,000, the fine for violation of the payment schedule is VND 1,600,000,000, the late payment interest as of November 5, 2021 is VND 432,880,500 and the refund of arbitration fees to Mr. N is VND 597,842,528. The time limit for payment of all amounts is 30 days from the date of the Judgment.

Disagreeing with the Judgment of the Vietnam International Arbitration Center, on 28/12/2021, Ms. N and Mr. D filed a petition at the People’s Court of Ho Chi Minh City requesting to consider canceling the entire contents of Arbitration Award No. 70/21 HCM dated 25/11/2021 of the Vietnam International Arbitration Center – Ho Chi Minh City branch (VIAC).

Representative of the People’s Procuracy of Ho Chi Minh City. The judge has strictly complied with the provisions on competence to settle the case, on time and at the right level of jurisdiction and delivered the documents under the provisions of the law. The session proceeded in accordance with the Civil Procedure law. Request not to accept the request to annul Arbitration Award No. 70/21 HCM dated 25/11/2021 of Vietnam International Arbitration Center (VIAC) – Ho Chi Minh City Branch.

Judgment Of The Court

Ms. N and Mr. D filed a petition at the People’s Court of Ho Chi Minh City requesting consideration of canceling the entire contents of Arbitration Award No. 70/21 HCMC dated 25/11/2021 of the Vietnam International Arbitration Center – Ho Chi Minh City Branch (VIAC) because the arbitration agreement is void; the dispute is not within the jurisdiction of the arbitral tribunal; the arbitration procedure is contrary to the provisions of the Law on Commercial Arbitration; the evidence provided by the plaintiff on which the arbitral tribunal based its award was forged or improper; the arbitral award is contrary to fundamental principles of Vietnamese law.

The dispute between Mr. N and Ms. N, Mr. D is a dispute over the Contract for transfer of contributed capital. This dispute is defined as a dispute between a person who is not a member of the company (Mrs. N) but has a transaction on the transfer of contributed capital and a company member (Mr. N). Pursuant to Clause 3, Article 30 of the Civil Procedure Code, this is classified as a business or commercial dispute. Between the parties, there is a signing of the Contract for transfer of capital contribution. There were two contracts signed. Capital contribution transfer contract No. 01/2020/HDCNGV dated 18/12/2020 including the terms of agreement to settle disputes at arbitration. The second contract is the Contract for transfer of contributed capital No. 02/2020/HDCNGV dated 27/01/2021 agreed to settle disputes at the Court. However, based on the Memorandum of confirmation of the signing of the contract and payment of the purchase of contributed capital of T Co., Ltd. dated 27/01/2021, it is noted that: “The parties confirm that, on January 27, 2021, Party A and Party B signed the Contract for transfer of contributed capital No. 02/2020/HDCNVG is only a non-legally binding contract, having contents at the request of Party B to carry out business registration procedures. The contents of this contract will not be used to confirm payment of money nor to resolve disputes.” Therefore, the Capital Contribution Transfer Contract No. 01/2020/HDCNGV dated 18/12/2020 is the main contract with binding content for the parties to exercise rights and obligations. Mr. N initiated the lawsuit and provided evidence that the Contract 01/2020/AGCNGV for the arbitral tribunal to settle is following the parties’ agreement in the contract. The arbitral tribunal of the Vietnam International Arbitration Centre – Ho Chi Minh City branch (VIAC) settles as competent. There is no basis for granting Ms. N and Mr. D’s request to annul and invalidate the Arbitral Award. The procuratorate’s recommendation is consistent with the judgment of the application board and should be accepted.

Court Decision

Do not accept the request of Ms. N and Mr. D to cancel the Arbitration Award No. 70/21 HCM of the Arbitration Council of the Vietnam International Arbitration Center (VIAC) established on 25/11/2021 in Ho Chi Minh City.

Legal basis

Pursuant to Clause 2, Article 31, Point a Clause 3, Article 38, Clause 3, Article 414 and Article 415 of the Civil Procedure Code 2015; Pursuant to Clause 1, Article 43, Article 68, Clause 1, Article 69, Article 71, Article 72 of the Law on Commercial Arbitration; Pursuant to Resolution No. 01/2014/NQ-HDTP dated 20/3/2014 of the Council of Judges of the Supreme People’s Court guiding the implementation of several provisions of the Law on Commercial Arbitration.