Filing a lawsuit is the initial step in the litigation proceedings to protect the violated rights and benefits. Elaborate preparation for the litigation lays a solid foundation for effectively performing litigation strategies throughout the entire litigation proceedings, and helps you to achieve the purpose of the litigation at minimum costs. Therefore, you should carefully consider the following factors:
In order to construct a well-drafted statement of claim, you should carefully consider the following factors.
Who should you sue?
To protect your legitimate rights and benefits, bringing actions against individuals or organizations in breach of the law is a need. However, there may have been multiple people or entities who committed violations of your rights in a specific case. Some may have directly done so while others may only have been indirectly involved in the wrongdoing. Should the lawsuit be solely against the one person or business who you believe to be primarily at fault in causing damage to you? In most cases, this is not the most prudent course of action. Often, litigation is more about obtaining compensation than punishing the wrongdoer. It follows that in order to maximize your compensation, and your statement of claim should name the person or entity with deep pockets that can fully pay your damages in the event you are awarded a favorable judgment.
For instance, A and B (both are foreigners) enter into a business cooperation agreement to establish and operate a hotel in Vietnam. Under the agreement, each person will be responsible for 50% of the investment in the hotel. However, in practice, A was the one who leased a house, renovated and re-constructed it into a hotel and purchased all the furniture; while B failed to make his investment as agreed. Following this, B uses his relationship with the landlord to take over the hotel and block A from entering the premises. In this case, the most obvious option is to sue B for breaching the business cooperation agreement. However, B is a foreigner that has almost no assets under his name in Vietnam. As such, suing B will not result in any collectible judgment. On the other hand, suing the landlord may be a viable alternative option. The landlord is the owner of the house used for the hotel business, so he is certainly capable of paying A from his income or assets. Nevertheless, suing the landlord means that A needs to structure the claim in a different way than that which was originally intended (e.g. suing the landlord for breaching the lease agreement instead of suing B for breaching the business cooperation agreement).
Thus, identifying the deep pocket is very important and may significantly alter your litigation strategies and the final outcome of the lawsuit.
Where should you submit your statement of claim?
Usually, the court where the head office of the defendant is located (if the defendant is an organization) or the residence of the defendant (if the defendant is an individual) will have jurisdiction over the lawsuit. However, in some cases, you may also be allowed to file a lawsuit in:
- The court where a branch of the defendant is located, when the dispute relates to the activities of the branch;
- The court situated in the location where the contract was performed.
Choosing the court that is near to you is quite important. It will not only save expenses and travel time but may also enable you to timely monitor developments of the case. For instance, assuming that Company A has its headquarters located in Ho Chi Minh City and entered into a contract with Company B having its headquarters located in Ha Noi City to carry out a project in Ho Chi Minh City, Company A may have the option to file a lawsuit in Ho Chi Minh City or Ha Noi City. If Company A files the lawsuit in Ha Noi City, Company A may put itself at a disadvantage from the outset as it will be very inconvenient for Company A to attend and react to proceedings in a court located so far away.
What should you request in the statement of claim?
The strategies for making requests in the statement of claim will depend on whether you file the lawsuit in the court or an arbitration center.
If you file the lawsuit with the court
You should take into consideration that:
- Court fees are low, e.g. for a commercial dispute valued at VND1,000,000,000 (around USD43,966), the first-instance court fee will be VND42,000,000 (around USD1,847) and the appellate court fee will be VND2,000,000 (around USD88).
- Refunding the court fee is a simple process:
- The first-instance court fee will not be charged on claims that are withdrawn before or at the first-instance trial;
- 50% of the appellate court fee can be refunded if the appeal is withdrawn before the appellate trial.
- Withdrawing the claims is uncomplicated and usually, you just need to submit a written confirmation to the court. Nevertheless, adding more claims requires you and the court to repeat almost the entire litigation proceedings, including (i) filing an additional statement of claims, (ii) considering the additional claims and issuing a notice on advance court fee, (iii) paying the advance court fee for the additional claims, (iv) officially accepting the additional claims, and (v) holding a mediation meeting pertaining to the additional claims. In these proceedings, holding another mediation meeting is the most time-consuming step since the court must plan a reasonable schedule to notify and summon all involved parties. Going through such proceedings again may significantly prolong the case and as a result, cost you more time and expenses. Furthermore, if you request for adding new claims after the opening of the hearing, the court may reject your request.
Therefore, when filing a lawsuit in a court, you should make as many claims as possible at the beginning and then gradually withdraw the ones that have a low chance of winning. Moreover, it may gain an advantage for you in the negotiation prior to the hearing (note that there are some lawsuits filed for the purpose of negotiation, not the court’s settlement).
If you file the lawsuit with an arbitration center
You should take into consideration that:
- The arbitration fee is quite high, e.g. for a commercial dispute valued at VND1,000,000,000 (around USD43,966), the arbitration fee at the Vietnam International Arbitration Center (“VIAC”) will be VND85,800,000 (around USD3,772);
- The arbitration fee is not fully refunded when withdrawing requests, e.g. for VIAC:
- Before the arbitral tribunal is established: 70% of arbitration fee can be refunded;
- After the arbitral tribunal is established, but before the hearing schedule is created: 40% of arbitration fee can be refunded;
- After the hearing schedule is created, but before the hearing: 20% of arbitration fee can be refunded.
- Similar to the litigation proceedings in court, withdrawal of claims is uncomplicated and usually, you only need to submit a written confirmation to the arbitration center. However, the litigation proceedings in the arbitration center are often simpler, faster than in court and mediation meeting is not a compulsory step before the hearing. Thus, adding more claims may be proceeded quickly and may not create any significant adverse effect to the litigation process. Apart from that, adding more claims during the hearing may also be accepted, if (i) the claims are added before the closing of the last hearing, (ii) the additional claims are within the arbitration jurisdiction and (iii) it is not an abuse of the process aimed at causing difficulties or delaying the Arbitral Award (e.g. the plaintiff shows signs of deliberate delay when filing additional claims to prolong the proceedings, adding claims irrelevant to the issues that has been under discussion and settlement so far, etc.).
Therefore, when filing a lawsuit in the arbitration center, you should be selective when making claims, i.e. only making the claims that have a significant chance of winning to keep the arbitration fee reasonable. Then, depending on the course of the litigation proceedings, you may consider whether you should add more claims or withdraw the submitted claims.
How much evidence and arguments should you present in the statement of claim?
If you have a strong case, identifying all of your arguments and evidence in the statement of claim may be good strategy in order to pressure the opposing party. However, doing so may not be wise in all cases, because:
- It may disclose your strategies too soon and, as a result, give your opponent the time to prepare counter measures;
- It may unnecessarily waste your time. You will always have the opportunity to supplement arguments and evidence in later proceedings. Thus, spending too much time in preparing the statement of claim may not be an efficient allocation of resources, especially when time is of the essence (e.g. you may need to file the lawsuit quickly to meet the statute of limitations).
Furthermore, with regard to evidence, you should only submit evidence that can significantly support your arguments. You should not submit anything unnecessary because:
- It will waste the time of the judge(s) or arbitrator(s) and distract them from focusing on the relevant evidence. It is unrealistic to submit everything you have and expect the judge(s) or arbitrator(s) to read them for you and sort out your claim; they will not do so.
- It may provide the opposing party with information that is necessary for their counter-strategies, i.e. the opposing party may use your own evidence against you. It is critical that, before submitting any evidence, you should check carefully whether such evidence contains any information that may adversely affect your case; and if it does, whether you can replace it with different evidence.
If you want to discuss with us about the litigation process under the Vietnam labor law, our Litigation Lawyers are always available at email@example.com.