Decision No. 12/2023/QD-PQTT

Claimant: AO Water Joint Stock Company and Mr. Do Tat T

Stakeholder: WP PTE

Regarding: Request to annul arbitral award due to tampered evidence

Case Summary

On August 9, 2019, WP PTE and Mr. T entered into a share purchase and sale agreement in which Mr. T transferred back to WP PTE 33,986,774 shares, equivalent to 34% of the total issued and voting shares of Surface Water Joint Stock Company. The purchase and sale price agreed upon by the parties is 61,000 Vietnamese dong/share. The total purchase price including all share taxes is VND 2,073,193,214,000, divided into 03 installments. Phase I: VND 1,131,759,574,200, Phase 2: VND 754,506,382,800, Phase 3: VND 186,927,257,000. At this time, AO Water Joint Stock Company is a major shareholder of SĐ Water Surface Joint Stock Company, owns 40,984,051 ordinary shares equivalent to 41% of the total issued and voting shares of SD Water Surface Joint Stock Company, wishes to conclude and perform the contract as a guarantor for the performance of obligations and the commitment of Mr. T and the Surface Company under the contract to ensure the successful completion of the share transfer transaction.

During the performance of the contract, disputes arose between the parties. On September 30, 2021, WP PTE initiated a lawsuit against Mr. T and AO Water Joint Stock Company to the Vietnam International Arbitration Center (VIAC), asking the arbitral tribunal to: Declare the defendants’ failing to fulfill their obligations to pay the plaintiffs in full. The defendants are jointly liable and under the share purchase transferred from the plaintiff at the option price on September 30, 2021, of VND 2,175,252,237,316. The defendants shall jointly and in accordance with the indemnification and payment to the claimant of all legal costs and related arbitration costs of the claimant, including all attorneys’ and experts’ fees and expenses as well as the claimant’s arbitration fees and expenses, and consider additional liabilities deemed by the arbitral tribunal to be compatible.

Arbitration Award in Dispute 79/21 dated 16/12/2022 of the VIAC Arbitral Tribunal:

The Defendants failed to fulfill their obligation to pay the Claimant Sale Price in full. The Defendants shall jointly and severally purchase the shares transferred from the plaintiff at an option price consisting of the sum of the following:

(a) First payment of VND 1,131,759,574,200

(b) The Second Payment is 754,506,382. 800 Vietnamese dong

(c) The Cost of Execution for the First Payment is equal to VND 277 823 720,132 (for the period from October 25, 2019, to November 17, 2022); and VND 1,131,759574,200 × 8%/365 x the number of days from November 18, 2022 to the actual full payment date.

(d) The Cost of Execution for the Second Payment is equal to VND 181,908 388,182 (for the period from November 14, 2019 to November 17, 2022). The amount of VND 754,506,382,800 × 8%/365 x the number of days from November 18, 2022, to the actual full payment date.

The defendants shall jointly and separately reimburse the plaintiff for all arbitration fees paid by the plaintiff to VIAC for VND 5,190,611,000 and a portion of the legal costs incurred by the claimant in this arbitration of US$100,000 and S$12,923.

Disagreeing with the above-mentioned arbitration award, on January 11, 2023, AO Company and Mr. Do Tat T submitted a request to cancel VIAC’s Dispute Arbitration Award No. 79/21 and accompanying documents to the People’s Court of Hanoi. AO Company and Mr. Do Tat T give grounds for their dissatisfaction: The evidence provided by the parties that the arbitral tribunal bases for issuing the arbitral award is fake. There is no arbitration agreement between the parties. The dispute is not within the jurisdiction of the arbitral tribunal. And the arbitral award is contrary to fundamental principles of Vietnamese law.

Stakeholder: WP PTE. In the opinion dated 10.03.2023, the opinion dated 28.04.2023, and the opinion dated 14.06.2023, the respondent’s request to vacate the arbitral award is without merit. The parties have an arbitration agreement in Article 16 of the Share Purchase and Sale Contract. This arbitration agreement is valid and not void. The composition of the arbitral tribunal and arbitral proceedings are consistent with the arbitration agreement in Article 16 of the share purchase and sale contract and are not contrary to the provisions of the Law on Commercial Arbitration. The Dispute is allowed to be settled by Vietnamese arbitration under Article 14 of Law No. 61/2020/QH14 on Investment. The evidence submitted by the Party concerned which is the basis for the arbitral tribunal to issue an arbitral award is valid. The arbitral tribunal has issued an objective and fair Arbitral Award. The content of the Arbitral Award is not contrary to the basic principles of Vietnamese law and complies with Vietnamese law and the agreement of the parties in the Share Purchase and Sale Contract.

Procuracy representative. The respondent suspected the resolution dated 12/7/2021 of the Board of Directors to be a forgery but the arbitral tribunal still accepted it, Awarder No. 79/21 violates Points b and dd, Clause 2, Article 68 of the Law on Commercial Arbitration, so the request to annul the arbitral award of the requesting party is grounded.

Judgment Of The Court

In the share purchase and sale contract dated 09/8/2019, the parties agreed that if any dispute arises, it will be resolved by the Vietnam International Arbitration Center. This agreement between the parties is voluntary and lawful, thus it is valid and binding..

Considering the legality of the plaintiff’s authorization to initiate lawsuits and authorization to participate in proceedings at VIAC, the Panel found that: The parties to the dispute as well as the arbitral tribunal focused on analyzing, countering, and emphasizing their views on the provisions of Article 478 of the Civil Procedure Code 2015 and Decree No. 111 of the Government dated 05/12/2011 on consular legalization certification. Accordingly, the arbitral tribunal has observed that the arbitral tribunal as the agency receiving the authorized documents of the plaintiff does not require these documents to be consular legalized, so these documents do not need to be consular legalized to be used in these arbitration proceedings under Article 2 of the Article 4 and Clause 4 Article 9 of Decree 111.

The panel found that: The Law on Commercial Arbitration and documents guiding the Law on Commercial Arbitration do not contain any specific provisions that documents authorizing lawsuits as well as authorizing participation in proceedings from abroad must be consular legalized for use in arbitration proceedings. However, this does not imply that acceptance constitutes full eligibility to participate in arbitrations proceedings or excludes consideration of legality, legality of the petitioner’s status as well as the eligibility to participate in the proceedings by law. The parties to the dispute have a contractual agreement governed by and interpreted in accordance with the laws of Vietnam. In this case, it is understood that the Law on Commercial Arbitration and guiding documents of the Law on Commercial Arbitration do not stipulate, that the provisions of the Code of Civil Procedure shall apply. Accordingly, article 478 stipulates that “Notarized and certified Vietnamese papers, documents and translations have been consular legalized”. Therefore, VIAC accepted the plaintiff’s claim and accepted the eligibility of the plaintiff’s authorized representative to participate in the proceedings when these documents had not been consular legalized while the defendant objected as improper. The law stipulates that documents sent from abroad to Vietnam must be consular legalized, so the arbitral tribunal has accepted and settled the case when the plaintiff’s documents are not legal, especially in the event the defendant objects or disagrees with the legal validity of these resolutions and where power of attorney is a serious violation in the proceedings in determining the eligibility to sue.

On the legality of documentary evidence. During the proceedings at VIAC, the plaintiff submitted to the Arbitral Tribunal the Resolutions dated 12.07.2021 and the Board Resolution 2022 which were both consular legalized. The respondent claimed that there was a forgery of the member’s signature, however, the arbitral tribunal accepted it. Considering that the arbitral tribunal of award 79/21 was not objective when settling the dispute, violating Clause 2, Article 4 of the Law on Commercial Arbitration stipulating the principle of dispute settlement by arbitration, the request for cancellation of the arbitral award of the requesting party is grounded in accordance with the provisions of Point dd, Clause 2, Article 68 of the Law on Commercial Arbitration.

The views of the Procuracy are consistent with the documents contained in the case file and in accordance with the provisions of the law. The request to annul the arbitration award in dispute No. 79/21 dated 16/12/2022 of AO Water Joint Stock Company and Mr. Do Tat T is grounded.

Court Decision

Accept the request of AO Water Joint Stock Company and Mr. Do Tat T on the proposal to cancel the Arbitration Award in dispute No. 79/21 dated 16/12/2022 of Vietnam International Arbitration Center VIAC. Cancellation of Arbitration Award in Dispute No. 79/21 dated 16/12/2022 of Vietnam International Arbitration Center VIAC between Plaintiff: WP PTE and Defendant: AO Water Joint Stock Company and Mr. Do Tat T.

Legal basis

Clause 2, Article 31, Article 37, Article 414, Article 415 of the Code of Civil Procedure; Point dd, Clause 2, Article 68, Article 69, Article 71 and Article 72 of the Law on Commercial Arbitration; Resolution No. 326/2016/UBTVQH14.