Decision No. 587/2022/QD-PQTT

Claimant: V- HCM Investment and Development Company Limited

Persons with related interests and obligations: N Consulting Joint Stock Company

Regarding: Request to annul the arbitral award in the dispute over late payment of construction contracts

Case Summary

On 21/12/2016, V-HCM Investment and Development Co., Ltd. (V Company) and N Consulting Joint Stock Company (N Company) jointly signed the Construction Design Contract No. 7/2016/HDKT-N. According to the contract, Company N will design and construct factory V in Cau Tram Industrial Park, Can Duoc district, Long An province for Company V. The total value of the design and construction contract is VND 10,300,000,000. The contract payment is made according to the schedule, only 5% of the contract value will be retained and paid after the acceptance work is completed. Company N has completed the construction design. The parties made a Record of acceptance and completion of the construction work to put into use, but Company V did not pay the remaining 5% of the value of the Contract. Company N initiated a lawsuit demanding that Company V pay the remaining 5% of the contract value of VND 515,000,000.

Arbitration Award No. 134/20 HCM dated 08/11/2021 of the Arbitration Council of the Vietnam International Arbitration Center (VIAC) established in Ho Chi Minh City. Acceptance of Company N’s request to sue. Compel Company V to pay Company N the amount of VND 515,000,000, corresponding to 5% of the remaining value of the Contract, and reimburse Company N for the arbitration fee of VND 48,455,000. A period of 30 days from the date the Judgment is made. In the event of late payment, Company V must additionally pay Company N interest due to late payment as stipulated at 10% per annum.

Disagreeing with the arbitral award, on 06/12/2021, V Company filed a petition at the People’s Court of Ho Chi Minh City requesting a consideration to cancel the entire contents of VIAC’s Arbitration Award No. 134/20 HCM dated 08/11/2021. The reason given by V Company is that the case was settled by the Ho Chi Minh City Commercial Arbitration Center by Judgment No. 06/2019/PQ-TT dated 11/12/2019. Then annulled by the People’s Court of Ho Chi Minh City by Decision No. 851/2020/QD-PQTT when V Co., Ltd. made a petition requesting the cancellation of the arbitral award because: According to the provisions of Clause 8, Article 71 of the Law on Commercial Arbitration, “In case the Council considers the application for a decision to annul the arbitral award, the parties may re-agree to bring that dispute to arbitration or a party has the right to initiate a lawsuit in court. This requires the parties to reach a new agreement to bring the dispute to arbitration in order to establish jurisdiction for resolution. In fact, the two parties did not agree on bringing the dispute to arbitration and did not choose VIAC to settle.

Judgment of the Court

Considering the reasons given by V Co., Ltd. for requesting the cancellation of the arbitral award that Company N and Company V do not have a re-agreement on bringing the dispute to arbitration and also do not choose VIAC for settlement, therefore the VIAC settlement is a violation of point a, c, Clause 2, Article 68, Article 32 of the Law on Commercial Arbitration. The session panel found:

In Clause 10.3 Article 10 of the design contract 07/2016/HDKT-N dated 21/12/2016, the parties agree: “In case both parties cannot resolve the conflict within 30 days after trying, these conflicts will be referred to Economic Arbitration or the Economic Court of Ho Chi Minh City for resolution. The decision of the Economic Arbitrator (Economic Court) is final…”, because the parties did not agree clearly on the arbitration terms, on August 11, 2018, Company N issued a letter requesting Company V to choose a jurisdiction and informing Company V that Company N chose VIAC to resolve the dispute. Upon receiving the documents sent by VIAC, on 22/12/2020, V Company issued a letter No. 17/VB-VP-2020 responding to VIAC requesting to wait for law enforcement agencies to reconsider the decision to annul the arbitral award No. 851/2020/QD-PQTT of the People’s Court of Ho Chi Minh City without objecting to the non-acceptance of VIAC’s jurisdiction. Under Point dd, Clause 2, Article 16 of the Law on Commercial Arbitration, Company V has been deemed to agree that VIAC has jurisdiction to settle the lawsuit.

In Self-Protection Document No. 17/VB-VP-2020 dated 22/12/2020, Company V did not object or nominate arbitrators. At the meeting on 26/5/2021, the parties met unanimously and signed “… agree that VIAC has jurisdiction to settle dispute No. 134/20 HCM; … agree with the composition and competence of the Arbitral Tribunal, the order and procedure of the dispute, without any objections to the proceedings”. From the above analysis, there is no basis to cancel the Arbitration Award No. 134/20 HCM dated 08/11/2021 of the Vietnam International Arbitration Center (VIAC) established in Ho Chi Minh City.

Court Decision

Refusing to accept the request of V Investment and Development Co., Ltd. to cancel the Arbitration Award No. 134/20 HCM of the Arbitration Council of the Vietnam International Arbitration Center (VIAC) established on 08/11/2021 in Ho Chi Minh City.

Legal basis

Clause 2, Article 31, Point A, Clause 3, Article 38, Clause 3, Article 414, and Article 415 of the Code of Civil Procedure; Clause 1, Article 5, Point G, Clause 2, Article 7, Clause 2, Article 16, Clause 2, Article 68, Clause 1, Article 69, Article 71, Article 72 of the Law on Commercial Arbitration; 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.