Contract Dispute in Vietnam

Disputes in contract performance and solutions

Disputes occur during contract performance are beyond the control of the entity entering contractual relations. In developed countries, lawyers always invited to advise customers to identify potential disputes, and provide solutions, support and provide legal advice and to accompany the enterprises solve disputes in accordance with the provisions of the law, which help businesses to focus on its business activities. Foreign companies when entering Vietnam mostly follow suit to engage dispute or litigation lawyers in Vietnam at early stage of the transactions.

Contract Dispute

Contractual disputes in Vietnam shall be construed as conflicts, disagreements, conflicts between the parties regarding the implementation or non-implementation of rights and obligations in the contract.Disputes could arise in failure to collect the payment from debtor in sales agreement, construction contract disputes between investor and contractor, labour dispute between employer and employee, insurance disputes between ship owner and insurance company.

Contract disputes must satisfy the following factors:

First, there is a contract between the parties. The contract would be in different for ms therefore, there is a need to clearly define if the contractual relationship has been formed or not.

Second, there is a breach of obligations or duties that are in violation of a party in the contractual relationship.

Third, there is disagreement between the parties about the handling of infringement or the consequences of such violations.

It should be noted, the contract disputes arise from the breach. However, not all breaches of contract also lead to disputes.

How to settle the contract disputes in Vietnam

Contractual disputes can be resolved by the following methods:

• Negotiation is the process or behavior in which the two sides conduct exchanges, agreement on common interests and characteristics of disagreement and come to a unified agreement. The negotiation is without the presence of third parties. However, if the lawyers in Vietnam would be involved during the negotiation process, at the role of representing or advising, counseling, then the negotiations tend to be more effective and parties would reach agreement.
• Mediation is one of the options for disputing parties to end the conflict. Mediation is different from negotiating with the intervention of a third party. Mediator will help parties to achieve agreement and resolve conflict.
• Court or arbitration: The settlement of the dispute in court would take time. The court’s ruling can be appealed. It should be noted that, per Vietnam laws, only Vietnam litigation or dispute law firms could represent the client at court. Commercial arbitration is available only in commercial-business sector. The advantage of this method is fast and efficient. However, compare with disputing at court, this method of handling dispute would take higher costs.

Disputes and dispute resolution matters are natural and inevitablein any countries including Vietnam. It is important that parties involved need to identify, anticipate disputes can occur. When there is a dispute, the dispute lawyers will be able to help parties to with advice to reasonable solution to address the disputes effectively.

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Thailand issued the final determination in the antidumping investigation against imports of Certain stainless pipe and tube from certain countries including Vietnam

On 26 September 2016, Vietnam Competition Authority received the information from Vietnam Trade Office in Thailand that the Department of Foreign Trade (DFT) under Ministry of Commerce of Thailand published the final determination of the antidumping investigation against imports of Certain stainless pipe and tube from Korea, China, Taiwan and Vietnam

-  Date of initiation: 17 September 2015

- Subject product: stainless pipe and tube under HS: 7305.31.10.000; 7306.11.10.000; 7306.11.90.000; 7306.21.00.000; 7306.40.10.010; 7306.40.10.020; 7306.40.20.010; 7306.40.20.020; 7306.40.30.010; 7306.40.30.020; 7306.40.90.010; 7306.40.90.020; 7306.61.00.021 and 7306.61.00.022

In the final determination, the antidumping margin applicable to exporters of Vietnam is 310.74%.

Earlier, on 7 July 2016, DFT issued notice of essential facts and announced about holding a public hearing for the case.

Source Vietnam Competition Authority

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For Vietnam legal matters or services, the clients could reach ANT Lawyers, the exclusive Vietnam law firm members via email at ant@antlawyers.vn or call the telephone at +848 35202779.

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Australia Antidumping Commission (Department of Industry, Innovation and Science) initiation of an Investigation into Alleged Dumping and subsidisation on Zinc Coated (Galvanised) Steel Exported from the Republic of India, Malaysia and Vietnam

On October 7, according to the information received by Vietnam Competition Authority from Vietnam Trade Office in Sydney, Australia Anti-dumping Commission (Department of Industry, Innovation and Science) initiation of an Investigation into Alleged Dumping and subsidisation on Zinc Coated (Galvanised) Steel Exported from the Republic of India, Malaysia and Vietnam (Malaysia is subject to the anti-dumping investigation only).

Earlier, on 22 August 2016, an application was lodged by BlueScope Steel Ltd, a manufacturer of zinc coated (galvanised) steel (the goods) in Australia. The application seeks the publication of a dumping duty and a countervailing duty notice in respect of the goods exported to Australia from India, Malaysia and Vietnam.

Background:

1. Petitioner: BlueScope Steel Ltd.

2. Subject product:

- Zinc coated/ galvanized steel

- HS: 7210.49.00, 7212.30.00, 7225.92.00 and 7226.99.00.

3. Period of investigation of dumping and subsidisation: 01/7/2015 – 30/06/2016

4. Period of investigation of injury: từ 01/7/2012

5. Alleged dumping margin: 27,2%

6. Estimated subsidy margin: Above negligible level

7. Investigated subsidy programs: preferential import tariff rates, support for projects manufacturing priority industrial products; incentives contingent upon export performance; incentives for domestic businesses; incentives for foreign invested enterprises; export promotion; trade promotion; preferential credit; assistance for commercial development in mountainous, island and ethnic minority areas;assistance to enterprises facing difficulties due to objective reasons; incentives for investment projects in science and technology; incentives on corporate income tax; incentives on non-agricultural land.

8. Injury: The application alleges that the goods have been exported to Australia at prices less than their normal value and were in receipt of countervailable subsidies and that the dumping and subsidisation has caused material injury to the Australian industry through: price suppression, reduced sales revenue, reduced profit and profitability, reduced employment,  reduced return on investment

This is the 7th dual anti-dumping and anti-subsidy cases against exports of Vietnam in recent years since 2009, and the 2nd dual anti-dumping and anti-subsidy investigations by Australia against exports of Vietnam

Source Vietnam Competition Authority

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HCMC customs unlikely to meet tariff collection target

HCMC – The full-year target for import-export tax revenue, VND102.5 trillion (US$4.5 billion), has proven to be an impossible mission for the HCMC Department of Customs as it had collected only VND99.7 trillion as of on December 29.

The figure is expected to reach VND100.7 trillion by 4:30 p.m. on December 30, said Nguyen Quoc Toan, deputy head of the department’s import-export tax division.

The Ministry of Finance and the department have made efforts to boost tax collections such as requesting customs officers to work on weekends and encouraging enterprises to pay taxes earlier than due dates.

Realizing this year’s tax collection target is now a tall order for the department as the goal is much higher than the objective and result of last year, which were VND90 trillion and VND93.93 trillion respectively.

Tax collections have become unpredictable over the past year due to choppy export and import activities.

Import-export tax revenue stayed at VND29.45 trillion by late April, less than 30% of the year’s target, before it grew strongly to VND74 trillion by end-September, 72.2% of the target for 2016, and fell significantly the next month.

Source The Saigon Times

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Special mechanism for Long Thanh airport project gets thumbs-up

HCMC – Prime Minister Nguyen Xuan Phuc has told the Ministry of Transport to design a special compensation, support and resettlement mechanism for the Long Thanh airport project in Dong Nai Province, the Vietnam News Agency reports.

The ministry should coordinate with the Ministry of Natural Resources and Environment, the government of Dong Nai Province, and relevant agencies to map out a plan for compensation, support and resettlement, treat it as a separate component, and report results to the PM.

The special plan should be submitted to the National Assembly (NA) before the NA passes the feasibility study for the big-ticket airport project.

The Transport Ministry will work with authorities of Dong Nai to devise a policy framework for compensation and resettlement assistance.

The project would affect around 4,700 households with nearly 15,000 people in Binh Son, Suoi Trau, Cam Duong, Long An, Long Phuoc and Bac Can communes.

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Around 40 kilometers from HCMC and 30 kilometers from Bien Hoa City, the airport would meet 4F standards of the International Civil Aviation Organization (ICAO).

Phase one of the project is scheduled to get off the ground in 2019, with one runway and one terminal to be put into operation by 2025 to handle 25 million passengers and 1.2 million tons of cargo a year.

One more runway and terminal would be built in the second phase to increase the airport’s annual capacity to 50 million passengers and 1.5 million tons of cargo. The airport would handle 100 million and five million tons a year after phase three is complete.

More than VND336.76 trillion (over US$16 billion) will be needed for the project, including nearly US$5.5 billion for the first phase. The funding will be sourced from the State budget, official development assistance (ODA) loans, investment of enterprises, proceeds from equitization of State-owned enterprises and other sources.

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Chinese contractors sue Vietnam hydropower project owner

HANOI - A consortium of Chinese contractors has filed a case against the Vietnamese owner of the Upper Kon Tum hydroelectric project for termination of the contract, according to a report which the Government has passed to the National Assembly.

The report deals with two hydropower projects – Song Bung 4 and Upper Kon Tum. Vinh Son-Song Hinh Hydropower JSC (VSH) is the owner of the Upper Kon Tum hydropower project on the Dak Nghe River, the upstream tributary of the Sesan River.

The consortium comprising East China Investigation and Design Institute under China Hydropower Engineering Group and China Railway 18th Bureau Group has sent a petition against VSH to the Vietnam International Arbitration Center (VIAC).

This move comes after VSH cancelled the contract with the Chinese contractors and reclaimed the entire contract execution and advance payment guarantees.

The termination of the contract resulted from “serious delays” in the construction of the plant and power lines, as well as from the “unfriendly behavior” of the contractors, says the report.

VIAC set May 23, 2016 as the date for verbal argument, with a ruling by the arbitration council expected to come out by the end of this year.

Due to the complexity of the case, the completion of necessary papers, the gathering of evidence and the addition of legal documents must be sufficiently and carefully done. The verbal argument was rescheduled to April 20, 2017, and the ruling is expected in the middle of next year.

The Government says in the report that after the Chinese contractors filed the case, VSH filed a self-protection statement and a proposal to VIAC seeking arbitration in the consortium’s breach of contract terms.

VSH signed a legal consulting service contract with local and international law firms, namely YKVN Singapore with a branch in Vietnam and EP Legal Vietnam. After a review of the records, the two legal consultants proposed VHS invite Singapore’s Drew & Napier LLC to join the case.

VHS is now working with counsels over evidence and documents to prepare a testimony.

The Government said this case is complex with many potential risks. Since the ruling of the arbitration council is slated for mid-2017, the progress and efficiency of this project will be certainly affected.

The Government report notes that VHS has reassessed the remaining workload for the power transmission lines and hydropower plant, which is actually the job of the Chinese contractors. Currently, new contractors have taken over the job of constructing the transmission lines and plant.

The Government says the total investment cost of this project is VND7.4 trillion.

Source The Saigon Times

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