Decision No. 11/2023/QD-PQTT: Request to Annul Arbitration Award Related to Cooperation Contract Dispute 

Decision No. 11/2023/QD-PQTT   

Claimant: T Investment Joint Stock Company 

Stakeholders: ABSOLUTE HOTEL SERVICE 1  

Regarding: Request to annul Arbitration award related to cooperation contract dispute 

 

Case Summary 

According to the case file, Absolute Hotel Service 1 (referred to as A) is an overseas hotel brand management enterprise, established under Hong Kong regulations and a subsidiary of Group A, a hotel management group that operates a major hotel brand in Thailand. T Investment Corporation (T Company) is the investor of a hotel building.  The hotel invested by T Company is a mixed-use building with both residential and business functions, with about 350 rooms, developed according to the model of a resort hotel (condotel). On 25/01/2018, T and A Investment Joint Stock Company signed a contract for hotel management services together. After that, the two parties also signed an overall service contract dated 19/9/2019, and a consulting service contract dated 1/12/2019.  In the process of cooperation, conflicts arise between the two parties. When conducting business activities and providing services in Vietnam, A must comply with international treaties to which Vietnam is a signatory, Trade Agreements between Vietnam and Hong Kong – China, and comply with the provisions of Vietnamese law. To provide hotel management services in Vietnam, A must ensure that there are professional departments in the management, operation of condominiums including engineering, service, security, sanitation, and environment protection, trained staff, and professional certificates of operation management from the Ministry of Construction. Company T believes that A is incompetent to meet the conditions to provide hotel management services in Vietnam. Litigation goes to the commercial arbitration center to resolve the dispute. 

 

Arbitration Award No. 64/20 dated 11/08/2021 of Vietnam International Arbitration Center (VIAC) resolved the contract dispute between Company T and A. Disagreeing with the award, on 06/04/2022, Company T initiated a lawsuit requesting cancellation of the Arbitral Award on the grounds: The authority to enter into contracts is improper. Disagreeing with the arbitral tribunal’s finding that T Company was at fault for the performance of the disputed Contracts. Concrete: 

 

The arbitrator does not consider the provisions of the Law on Real Estate Business and the Law on Housing when commenting on the validity of contracts. According to the Enterprise Law 2014 provisions in effect when the parties sign the contract, the Enterprise Law does not require A to register a business. However, in the field of specialized management, the Law on Real Estate Business and the Law on Housing require A to meet certain conditions to operate hotel management services and other consulting services in Vietnam.  Arbitral award 64/20 When considering the validity of signed contracts, the arbitral tribunal did not consider the provisions of the Housing Law 2014  to assess the capacity and competence of A when signing these contracts is flawed, not objective, and not in accordance with the provisions of Vietnamese law. To provide hotel management services in Vietnam, A must ensure that there are professional departments in the management and operation of condominiums including engineering, service, security, sanitation, and environment protection, trained staff, and professional certificates of operation management from the Ministry of Construction. Furthermore, after meeting the conditions of capacity, A is responsible for notifying the Department of Housing and Real Estate Market Management (because A is not headquartered in Vietnam) to publicly announce information about the operation management unit. Therefore, A may not have sufficient functions and authority to sign and perform hotel management contracts according to the criteria and conditions of the hotel service business.  

 

The arbitral award contains contents that are not true to objective facts in the application of Hotel management standards and business plans under the Hotel Management Contract. Regarding Comanche software, Company T has made it very clear that this software does not meet the management and operation of the hotel, causing serious reputational damage to the Company. The arbitral tribunal found that management software (including Comanche software and MyHR software) are management tools of A, used by A to perform the Management Contract signed with Company T. Therefore, during the period of the Managment Contract is in effect, any changes to the management instruments must be consulted with and approved by A, the manager employed  by Company T under the contract. The fact that the arbitral tribunal did not consider the evidence supporting the thesis of T Company but held that T Company breached the Management Contract is not objectively true and inappropriate.  With regard to the Management Authorization and the Annual Business Plan, the Arbitral Tribunal held that T Company was at fault due to the delay in responding to the Annual Business Plan as well as the delay in issuing the Hotel Management Authorization which was not objectively true, because right after A submitted the Annual Business Plan on 12/05/2020, A and Company T held a lot of online meetings to discuss this very issue. Company T has been very clear that Company T did not approve the annual business plan submitted by A, the reason was not suitable for the new business conditions and situation, not ensuring feasibility and efficiency. A’s unilateral termination of the Hotel Management Contract with Company T is unsubstaniated. The two parties had not yet agreed upon and established the Hotel Management Authorization and the Annual Business plan. A’s allegation that Company T violated the Standards defined by the Manager and intervened, leading to A’s complete termination of the hotel’s management and operation, lacks a solid basis.  

 

Stakeholder: Absolute Hotel Service 1 

A disagrees with Company T’s request to annul the arbitral award in dispute No. 64/20 because the time limit for requesting cancellation of the award has expired as stipulated in Article 69 of the Law on Commercial Arbitration. VIAC has also confirmed that the bill of lading has been successfully issued, and the arbitral award of case No. 64/20 has been sent in accordance with the provisions of Article 12 of the Law on Commercial Arbitration and Article 3 of the Rules of Procedure arbitration of VIAC. 

 

Representative of the People’s Procuracy of Hanoi City The panel considered the application in accordance with the procedural law. Based on the documents on file, it is determined that VIAC has assigned Arbitration Award No. 64/20 dated 11/8/2021 to T Company on 17/8/2021 in accordance with the VIAC Arbitration Procedure Rules, therefore, on 6/4/2022 T Company filed a Petition for Cancellation of the Arbitral Award as overdue as stipulated in Article 69 of the Law on Commercial Arbitration. Therefore, it is recommended that the Session Board suspend the settlement of Company T’s request to annul Dispute Arbitration Award No. 64/20 dated 11.08.2021. 

 

Judgment Of The Court

This 15/10/2021 Company T sent a Document to VIAC arguing that it was appropriate not to receive the Arbitration Award in Dispute No. 64/20. Based on the documents on file, VIAC’s Written Reply shows that dated 17/3/2022 T Company received a Copy of the Arbitration Award of Dispute No. 64/20 dated 11/8/2021 sent by VIAC, therefore, on 6/4/2022 T Company sent a Request for Cancellation of Arbitration Award in Dispute No. 64/20 dated 11/8/2021 to the People’s Court of Hanoi City as in The time limit is specified in Clause 1, Article 69 of the Law on Commercial Arbitration. Company T believes that VIAC violated the basic principles of Vietnamese law when settling the case, however, Company T cannot show that the arbitral award violates any fundamental principles of Vietnamese law, so Company T’s request to annul the arbitral award is not accepted. At the meeting, all parties acknowledged that during the settlement process at VIAC, all parties were presented and given views to protect their legitimate rights and interests. All claims of the parties are considered and resolved by the arbitral tribunal. At the meeting, neither party had a request to object to the entire settlement process of the arbitral tribunal, finding that the arbitral tribunal accepted and settled the case in accordance with the provisions of articles 68 and 71 of the Law on Commercial Arbitration, so the request to annul the arbitral award of Company T was not accepted. 

 

Court Decision

Do not accept the request of T Investment Joint Stock Company to cancel the Arbitration Award in dispute No. 64/20 dated 11/8/2021 of the Arbitration Council under the Vietnam International Arbitration Center (VIAC).  

 

Legal basis

Clause 2, Article 31, Clause 3, Article 414, Article 415 of the Code of Civil Procedure. Articles 13, 68, 69, 71, and 72 of the Law on Commercial Arbitration. Clause 2.3 Article 3 of the VIAC Rules of Arbitration Procedure.  Point dd, Clause 2, Article 14, Clause 2, Article 15 of Resolution 01/2014 of the Council of Judges of the Supreme People’s Court. Clause 3 Article 39 of Resolution No. 326/2016/UBTVQH14.