International Trade and Business Law Review
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Quan Hien Nguyen[1]
After decades as a closed, command economy, Vietnam has committed itself to market reform. On its way to full integration with the global market, Vietnam has signed a bilateral trade agreement with the United States of America. Under this agreement, Vietnam agrees to open its domestic markets for trade with, and investment from, the United States and other countries which have a Most Favoured Nation[2] relationship with Vietnam.
Although Vietnam is accelerating the process of liberalisation, it does not yet have in place the legal principles necessary to support a market economy. Some areas of commercial law in Vietnam still operate according to doctrines and principles native to the command economy. Moreover, many commercial rights, which are well established in traditional market economies, are alien to, or only partially recognised under, Vietnamese law. Nonetheless, after the implementation of the Vietnam-US Bilateral Trade Agreement (hereafter the Vietnam-US Trade Agreement or the Agreement), the volume of cross-border transactions involving Vietnam is expected to increase exponentially. Thus, there is even greater potential for conflict over the recognition of commercial rights in the Vietnamese legal system.
On 3 October 2001, US Congress ratified the Vietnam-US Trade Agreement with an overwhelming majority and a ‘surprising lack of controversy’.[3] After four years of negotiation, this agreement not only completed ‘the process of normalisation, reconciliation and healing between [the] two nations’[4] but also created optimism that the volume of bilateral trade between the two countries would sharply increase. The historic significance of this agreement does not diminish its economic significance: the Agreement will open the Vietnamese domestic market, the fourth largest market in the Asia-pacific region, to American products, as well as the US domestic market—the largest market in the world—to Vietnamese exports.
Historically, cross-border transactions were a rare occurrence in Vietnam. Before the 1992 Constitution was put in place, the state monopolised foreign trade and could therefore limit international transactions to barter arrangements with other socialist countries.[5] Even after the National Assembly promulgated the first law on foreign direct investment in Vietnam in 1987,[6] cross-border trading was still limited to a number of state-owned import-export companies,[7] which collected commissions from local enterprises in return for representation in international contracts. As a consequence of many years of economic isolationism, Vietnamese legislators paid little or no attention to the law of cross-border transactions in Vietnam.
The implementation of the ‘Doi-Moi’ (Reformation) policy as part of the 1992 Constitution provided the legal foundation for comprehensive economic reform in Vietnam.[8] Stimulated by Vietnam’s commitment to an ASEAN Free Trade Area (AFTA),[9] ‘Doi Moi’ also began the process of legal reformation in Vietnam. It generated the Civil Code,[10] which provides the framework for private international law in Vietnam,[11] as well as the Commercial Law[12] and Decree 57/1998/ND-CP, which entitle all business organisations, including foreign invested enterprises, to import and export goods subject only to registration requirements.
One of the most significant changes to result from the ‘Doi Moi’ was the revocation of the import-export licences, which had been a primary mechanism for protectionism in the Vietnamese economy.[13] After the promulgation of the Commercial Law in 1997, the Vietnamese state abandoned licensing of import-export activities, choosing instead to control trade volume by tariffs and quotas for certain categories of goods.[14] Since 1998, the Government has finalised regulations to cancel import-export licensing requirements for virtually all Vietnamese and foreign firms.[15] Most recently, the General Department of Customs issued Circular 07,[16] which further simplifies the registration of import/ export activities. This document implements the recent policy that allows all merchants who have acquired a Customs Duty Code to conduct regular import/ export activities. The provincial customs agency where the merchant’s headquarters are located is authorised to issue a permanent Customs Duty Code to the merchant after receiving from him:
The Customs Duty Code then allows merchants to conduct import/export activities at any port throughout Vietnam.
Despite the significant changes wrought on the Vietnamese legal system in response to ‘Doi Moi’, even more radical adaptations will be required under the US-Vietnamese Trade Agreement. To this end, the Vietnamese government has begun a large-scale investigation into current laws and regulations promulgated by the central authorities. The six categories established by the investigation correspond with the six chapters of the Trade Agreement: (1) trade in goods; (2) intellectual property rights; (3) trade in services; (4) investment; (5) transparency; (6) dispute settlement.17 The investigation has revealed that, amongst the 135 legal documents reviewed, 24 required revision, 29 replacement and six revocation. In addition, the investigation recommended that Vietnam ratify six international conventions.
In keeping with the previous changes, it would seem that further refinement of the rules of private international law in Vietnam will fall to the executive and not to the courts. The Ordinance on Promulgation of Legal Documents18 provides both that precedent is not a source of law in Vietnam, and that Vietnamese courts are prohibited from engaging in interpretation of laws.19 Accordingly, the Vietnamese courts depend almost entirely on administrative bylaws and statements of government policy to guide their decisions. For example, government decrees provide regulations on implementation of laws or ordinances,[20] whilst circulars issued by individual ministries, or jointly by ministries, guide courts as to how a particular ministry will administer laws, ordinances, or decrees.[21] Guidelines of the Prime Minister, although not legal instruments, are nonetheless policy outlines indicating that state agencies and provincial people’s committees should be set up to deal with issues.[22] Without interpretive powers, courts are heavily reliant on these bylaws, especially in regards to areas where there is little or no jurisprudence, such as private international law.
Although Vietnam no longer prohibits domestic Vietnamese entities from participating in import/export activities, the commercial rights of these entities are not well defined.[23] Despite numerous reforms, a legal framework synchronous with the development of a market economy has not yet been established.[24] Two recent cases illustrate how the overlap of old and new laws, as well as doctrines and habits of state management, stymie the recognition of private commercial rights in Vietnam’s transitional legal system.[25]
The facts of the Sadaco v Bao Minh Insurance Co reflect the gradual process of liberalisation in Vietnam. In 1997, Bao Minh Insurance Co issued to Sadaco, a local company trading in agricultural products, a policy covering a $4 million CIF shipment of flour from Bombay, India to Ho Chi Minh city, Vietnam.[27] The policy included a choice of law clause which was in favour of English law. The ship sank during its journey. After fruitless negotiations, Sadaco sued. Bao Minh Insurance applied to set aside the proceedings, arguing that under English law the limitation period for litigation had expired. At first instance the Economic Court of Ho Chi Minh City, and later the Supreme Court on appeal, held that the choice of law clause was void. Although the legal reasons for this finding were not clearly discussed in the judgment, it would seem that the choice of law clause should have been ratified by the Ministry of Finance, of which Bao Minh Insurance was a subsidiary. The choice of law clause being void, Vietnamese law applied by default.
Sadaco v Bao Minh Insurance Company raises two difficult, but important, questions for Vietnam’s transitional economy. First, it problematises the issue of party autonomy in cross-border transactions under Vietnamese civil law. Secondly, it questions the status of state-owned companies as legal individuals under Vietnamese law.
It is a common principle in international trade law that contractual parties to cross-border transactions may nominate the law to govern their contract. In Vietnam, this principle has gained increasing recognition during the reform period. The Civil Code[28] now provides that parties to a civil contract with ‘foreign elements’ may elect to be governed by foreign law if the foreign law is not inconsistent with Vietnamese law,[29] whilst the Commercial Law also recognises choice of foreign law in international sale of goods contracts. Nonetheless, party autonomy is a new and rather uncertain doctrine in Vietnamese law.[30] Lawmakers have conferred on the courts unpredictable discretion to revoke any application of foreign law, with the result that parties may never be completely assured that their choice of law will apply. Indeed, the most important discretionary ground, that of ‘public policy’, is subject to extremely broad interpretation by Vietnamese courts, due to Vietnam’s many years as a central command economy.
The second issue raised by Sadaco v Bao Minh Insurance Co is the status of state-owned companies under Vietnamese law in respect of economic rights.[31] The long-standing debate surrounding this issue has its origins in the 1992 Constitution. Under Art 42 of the 1992 Constitution, ‘all individuals are equal in law’. If companies are to be accorded the rights of individuals, as a matter of logic Art 42 would force the Vietnamese government to provide a level playing field for state-owned and private companies alike. Whilst this outcome would vindicate the drafters of the Enterprise Law, who wished to establish one enterprise law for all and thus increase competitiveness in the state sector,[32] it would also defeat the more conservative elements of the Vietnamese government[33] who have defended the operation of state-owned companies under the separate Law on State-owned Enterprises.[34]
Kexim Vietnam Co Ltd v Chi Dat Co Ltd also illustrates the tenuous embrace of commercial rights in transitional Vietnam. In 1997, Chi Dat Co and Phu Tho Tourism Co entered into a joint-venture agreement to operate a bowling centre. Chi Dat’s share in this joint-venture was a $2 million bowling system leased from Kexim Vietnam Co, a wholly foreign-owned company in Ho Chi Minh City. The leasing contract between Chi Dat Co and Kexim Vietnam Co was signed in 1998 for a period of 36 months. The joint-venture was not a success. After several months, Chi Dat stopped paying the rent and Kexim Vietnam sued. At the first instance, the Economic Court in Ho Chi Minh City found that the Business Registration Certificate of Chi Dat Co, issued by the Ministry of Planning and Investment, did not include bowling as one of its registered business activities. However, the court found that the bowling centre set up by the joint-venture between Chi Dat and Phu Tho Tourism was operating under Phu Tho Tourism’s Business Registration Certificate, which did include bowling business activities. The court ruled that as Chi Dat did not have the capacity to enter into a bowling business, the leasing contract between Chi Dat and Kexim Vietnam was void under the Ordinance on Economic Contracts.[36]
Kexim Vietnam appealed. Were that decision sustained, Kexim Vietnam would be forced to take back the bowling system with account for rent, although the bowling system had been in operation for several months.[37] The Court of Appeals reversed the finding of the judge at first instance. It ruled that the Ministry of Planning and Investment’s approval of the joint-venture between Chi Dat and Phu Tho Tourism automatically extended Chi Dat’s business registration to the bowling business. Accordingly, the leasing contract between Chi Dat and Kexim Vietnam was enforceable. However, in July 2001, the Supreme Court overturned the decision of the Court of Appeals on the ground that the Court of Appeals erred in application of laws.[38] The case is now pending in the Supreme Court awaiting the final decision of the judges’ panel. Meanwhile, dissatisfaction and protests increase within the business community. It hoped that, in line with recent trends, these protests will influence the judges’ panel in interpreting the old-fashioned laws in accordance with market principles. Yet, even if the judges’ panel were to rule in favour of Kexim Vietnam, such a decision may prove a shallow victory. It will not override the Ordinance on Economic Contracts, which provides that economic contracts must be within the registered business activities of contractual parties to be enforceable.
Chi Dat Co v Kexim Vietnam Co thus represents the clash between the ‘old’ and ‘new’ thinking as to commercial capacity in reformation Vietnam. Under the principles of the command economy, which previously dominated Vietnam, commercial capacity was a privilege, not a right.[39] Accordingly, companies were only permitted to do what was not prohibited by the state. By contrast, the principles of the open market which are now gaining force in Vietnam, hold that companies may engage in whatever is legitimate and profitable.[40] Indeed these new principles find support in the 1992 Constitution.[41]
Nonetheless, it seems unlikely that this debate will be resolved by reference to the 1992 Constitution through cases such as Chi Dat Co v Kexim Vietnam Co. The Vietnamese Supreme Court lacks the mandate to decide on constitutional rights of individuals. Moreover, the National Assembly,[42] the only authority with this power, has been hampered in its constitutional functions by its heavy schedule of law making.[43]
Chi Dat v Kexim Vietnam also raises two important issues regarding the capacity of Vietnamese companies to enter into cross-border transactions. First, Chi Dat v Kexim Vietnam indicates that cross-border transactions between a local company and a foreign partner may be unenforceable under the Ordinance on Economic Contracts, if the business activity is interpreted as being outside the registered business activity of the Vietnamese company.[44] This contrasts to the situation in most market economies where companies may enter into any transaction not prohibited by law.[45] Secondly, Chi Dat v Kexim Vietnam creates uncertainty as to whether Vietnamese courts will recognise foreign judicial decisions by enforcing cross-border contracts between local companies and foreign partners if the local company does not have contractual capacity under Vietnamese law.
Many of the problems associated with cross-border transactions in Vietnam may be circumvented if the parties successfully nominate foreign law as the law of their agreement. This next section deals with the indigenous Vietnamese law on contract as well as the Vietnamese conflict of laws rules which may cause foreign law to be applied to a cross-border contract.
Any discussion of the Vietnamese contract law must start with Vietnam’s system of contract classification. Under Vietnamese law, contracts will fall into
one of three distinct categories of contract, each of which corresponds with a substantive contractual law. The system of classification results in different substantive provisions on formal validity, essential validity and the capacity to contract.
The first category of contract, the Civil Contract, is governed by the Vietnamese Civil Code. Civil Contracts are intended to satisfy living or consumption requirements of the contractual parties.[46] Parties to a Civil Contract may be:
The third and final category of contract is the Commercial Contract. Commercial Contracts are governed by the Commercial Law. They are identified in the Commercial Law as including contracts for the purchase of goods, process agent contracts, brokerage contracts, sales agent contracts, goods-processing contracts, contracts on freight and forwarding of goods, contracts on advertising of goods and contracts for the exhibition of goods. A Commercial Contract is formally valid when signed between merchants.56
Under the rules of private international law contained in the Vietnamese Civil Code, it is possible that a cross-border transaction involving Vietnam will be governed by a foreign law and not by Vietnamese domestic contract law. In keeping with Vietnam’s civil law tradition, the Civil Code provides the original source of law on civil and commercial matters. The Seventh Part of the Civil Code, Civil Relations with Foreign Elements, provides definitions and basic legal principles for cross-border transactions.[57] It defines civil transactions with foreign elements as civil relations where any of three following elements are present:[58]
In the absence of specific regulations governing different types of cross-border transactions, the 13 Articles contained in the seventh Part are widely interpreted as governing all international commercial and civil transactions, including the very technical fields of banking, transfer of high technology, copyright and trading of general goods and services.
Article 834(1) of the Civil Code stipulates that the law of the country where the contract is made governs the formalities of cross-border contracts. In other words, the lex contractus governs formal validity of cross-border contracts. An exception to the lex contractus principle arises where a contract which is formally invalid under the lex contractus is formally valid under the laws of Vietnam. In such a case, the contract will be valid in Vietnam.[59] The same is not true in reverse, however. Problems may arise when a cross-border contract is formally valid under the lex contractus, but formally invalid under Vietnamese law.
Foreign law may also apply to a cross-border transaction under Art 834(2) of the Civil Code. Article 834(2) sets out that the law of the place of performance of the contract will govern contractual rights and obligations, that is, the lex solutionis governs the essential validity of a cross-border contract. There are two qualifications to this principle, however. First, Vietnam has no jurisprudence on the ‘place of performance’ in relation to cross-border contracts or contracts performed in several countries.[60] Article 834(2) of the Civil Code does provide that contractual parties may nominate the place of performance in their contracts. However, where contractual parties have failed to indicate the place of performance in their contract, Vietnamese law will apply to determine the place of performance.[61] Secondly, Art 834(3) of the Civil Code provides an exception to the lex solutionis where a cross-border contract concerns immovable property located in Vietnam.[62] Where foreign individuals and organisations have been granted land use rights to implement investment projects in Vietnam,[63] Vietnamese law will govern formal validity as well as essential validity of the contract.
In the case of arbitration agreements, the parties’ choice of law will be excepted as the proper law of a cross-border transaction. The Ordinance on Recognition and Enforcement of Foreign Arbitral Awards in Vietnam[64] provides that parties to an international arbitration agreement can choose a law governing their arbitration agreement.[65] If the parties fail to validly chose a law under Art 16(1)(a), the law of the seat of the arbitration will govern their arbitration agreement.[66]
The most important, and perhaps the most controversial, means by which foreign law will apply to cross-border contracts, arises where parties positively elect a foreign law in a choice of law clause. Article 827(3)(2) of the Civil Code deals with choice of law clauses for cross-border transactions. It states:
Foreign law is also applicable if parties to a civil contract so agree in their contracts, and if such agreements are not inconsistent with provisions of this Code and other legal documents of the Socialist Republic of Vietnam.
This Article indicates that Vietnamese law generally recognises that choice of law clauses override the place of performance in determining the applicable law of a cross-border contract. The provision that the choice of law clause ‘must not be inconsistent’ with Vietnamese laws, whilst a potential restriction, also means that foreign law are not ipso facto illegal under Vietnamese law and that application of the foreign law is authorised under Vietnamese law.
A discussion of the developments in Vietnamese private international law in response to ‘Doi Moi’ would not be complete, however, without an equally thorough analysis of the problems facing foreign litigants who seek to have foreign law applied as the substantive law of their contracts. These difficulties include undue judicial deference to the executive, unintended application of the foreign private international law rule through the doctrine of renvoi, and problems of proof and public policy. The following section will address each potential complication in turn.
As Sadaco v Bao Minh Insurance Company67 illustrates, it is still far from automatic that a choice of law clause will be found valid in the Vietnamese legal system, even when it meets the statutory requirements under Art 827(3)(2) of the Civil Code. Without a clear answer on the nature of commercial rights, conservative judges will tend to seek authorisation from administrative agencies before upholding foreign choice of law clauses. Indeed the government has gone so far as to officially recognise this conservative direction in the area of Built-Operate-Transfer (BOT) projects. Government Decree 62[68] on BOT contracts for infrastructure projects only allows parties to a BOT contract, as well as parties to any contract that requires a guarantee by authorised state agencies, to choose foreign law to govern their contract. It provides that the foreign law will only apply where the choice of law agreement is not inconsistent with Vietnamese law and the Ministry of Justice gives its approval to the choice of law agreement.
Interestingly, by nominating the place of performance of the contract, parties may circumvent the restrictions on choice of law clauses, as Art 834(2) of the Civil Code stipulates that the law of the place of performance governs contractual rights and obligations.[69]
The second complicating factor arises from the application of the theory of renvoi in the Vietnamese private international law. In common law, this theory establishes that where the forum’s choice of law rules require the forum court to apply a foreign law, the forum court should apply the foreign law as a whole legal system, including the foreign choice of law rules.[70] In Vietnamese law, renvoi is provided for under Art 827(3) of the Civil Code, which stipulates:
In situations where the application of foreign law is stipulated by this Code, other legal documents of the Socialist Republic of Vietnam or international conventions of which Vietnam is a member state, then foreign law is applicable on civil relations with foreign elements; if foreign choice of law rules refer to the law of the Socialist Republic of Vietnam, then the law of the Socialist Republic of Vietnam is applicable.
Thus, unlike the common law systems where the theory of renvoi is not applicable in the commercial area, Vietnamese private international law recognises renvoi in all circumstances where foreign law is applied. According to Decree 60-CP, renvoi is applicable:[71]
From these provisions, it appears that Vietnamese private international law follows the single theory of renvoi.[72] Accordingly, when Vietnamese private international law choice of law rules refer to ‘foreign law’, the foreign system’s rules of private international law are included.[73] This offers considerable scope to contracting parties who may wish the entire body of a foreign law to govern their transaction. However, the application of renvoi also poses serious risks for
the reason that if the choice of law rules of the foreign law refer back to the law of Vietnam, Vietnamese law will apply to the entire transaction. In addition, if the choice of law rules of the foreign law refer to the law of a third country, then the third country’s laws will govern the contract.
Thirdly, in all conflict of laws cases pleaded under Art 827(3) of the Civil Code, that is, all conflict of laws cases involving choice of laws clause or claims of renvoi, a broad discretion is conferred on the court under Art 828 of the Civil Code. Article 828 provides:
In situations provided in Article 827 paragraph 3 of this Code, foreign laws and international practices are applicable only if the consequences of such applications of foreign laws and international practices are not inconsistent with basic principles of the law of the Socialist Republic of Vietnam [emphasis added].
Although a major variable in any Art 827(3) case, the exact meaning which will be given to ‘basic principles of the law’ is extremely difficult to predict. The specific factors which will inform the courts’ judgment of public policy have never been formulated into one consistent principle or theory.[74] ‘Basic principles of the law’ is merely the latest reflection of a concept of public policy which has been present but changing in Vietnamese law since the economic reformation began.[75] Indeed, when Vietnam was a command economy, public policy meant that any commercial transaction inconsistent with any administrative decree was void.[76] As Vietnam changes from a command to a market economy, ‘basic principles of Vietnamese laws’ is undoubtedly a less onerous formulation of public policy, although the precise meaning of this phrase is still unclear.
Even if it is argued that ‘basic principles’ of Vietnamese law are found in Arts 2–14 of the Civil Code, it is unclear how these basic principle map onto the three categories of contract into which cross-border contract may fall. In the absence of any clear provision stating how Arts 2–14 of the Civil Code are to be applied to Economic, Civil and Commercial Contracts respectively, it would seem that determination of ‘basic principles of Vietnamese law’ will fall to the Vietnamese Courts and other authorities.[77]
The final difficulty in interpreting ‘basic principles of law’ arises from the fact that these basic principles of law can extend to political and social values, as well as to legal principles.[78] Examples of ‘political and social values’ can be found in the Vietnamese Civil Code.[79] However, their content is to a greater or lesser extent unknown. As a consequence, Vietnamese Court have conferred another wide ground of discretion when interpreting the contents of a disputed agreement or when deciding whether to apply foreign law to a cross-border contract.
Even where foreign law is otherwise applicable to a cross-border transaction, a plaintiff may be unable to establish this as a matter of evidence. Although Art 827(3) of the Civil Code provides that the contractual parties must establish that they agreed that a foreign law should govern their contract,[80] Vietnamese private international law does not indicate how the choice of the foreign law can be proved. Moreover, the absence of a law on evidence in civil and commercial matters,[81] as well as the requirement of an exequatur on all foreign legal documents,[82] means that agreement on foreign law may be difficult to prove or to rebut. In relation to this last point, the Ordinance on Consular Service,[83] at Art 26(2), states:
State agencies of Vietnam only accept for examination foreign papers and documents that have been legalized unless otherwise provided by Vietnamese laws and international conventions of which Vietnam is a contracting state.
As a consequence of this provision, Vietnamese courts are unlikely to accept evidence on foreign law which is not official, in writing and legalised.[84] Thus, expert testimonies may only be used to prove a foreign law if they are made in writing, certified or notarised in the countries of origin and legalised by Vietnamese consular agencies. In practice, the requirement of exequatur proves to be difficult for foreign litigants. Vietnamese law on notarisation and legalisation requires certification as to the contents of foreign legal documents. However, consular officers and notaries from the United States and some common law countries will only certify the signature of the declarants, and not the contents of the document.
The burden of proof can be relieved somewhat if contractual parties choose harmonised laws to govern their contracts. Where the cross-border transaction involves the sale of goods, the United Nations Convention on the International Sale of Goods 1980 (CISG) is a particularly apt choice. Although Vietnam has not ratified the CISG, the CISG enjoys much popularily amongst Vietnam’s legal community. Consistent with Vietnam’s ‘Doi-Moi’ policy of integration with world markets, Vietnam’s Commercial Law 1997 resembles the CISG.[85] Moreover, books on the CISG by Vietnamese authors are available in Vietnam and are familiar sources for Vietnamese authorities when dealing with cross-border transactions. In addition choice of harmonised commercial laws can also relieve parties to cross-border transactions in Vietnam from the ubiquitous doctrines of public policy which may override the party autonomy principle.
Where the parties to a cross-border transaction are a Vietnamese company and a US company or national, or a Vietnamese company and a company or national of a state with a most favoured nation relationship to Vietnam, the Vietnam-US Trade Agreement overcomes many of the problems identified above. According to Art 827(2) of the Vietnamese Civil Code, international agreements to which Vietnam is a party will override the Civil Code’s rules of private international law. Thus, Art 7 of Chapter 1 of the Trade Agreement, which provides for arbitration of disputes, will supersede the Civil Code provisions which govern the application of foreign law under a cross-border contract. Art 7 of Chapter 1 reads:
The parties encourage the adoption of arbitration for the settlement of disputes arising out of commercial transactions concluded between nationals or companies of the United States of America and nationals or companies of the Socialist Republic of Vietnam. Such arbitrations may be provided for by agreements in contracts between such nationals and companies, or in separate written agreements between them.
The parties to the dispute, unless otherwise agreed between them, should specify as the place of arbitration a country other than the United States of America or the Socialist Republic of Vietnam, that is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958.
Nothing in this article shall be construed to prevent, and [the US and the Social Republic of Vietnam] shall not prohibit, the parties from agreeing upon any other form of arbitration or on the law to be applied in such arbitration, or other form of dispute settlement which they mutually prefer and agree best suits their particular needs.
Thus where a cross-border agreement falls within the scope of the Vietnam-US Trade Agreement, the parties may provide for dispute settlement by any means they see fit, including by arbitration. Moreover, parties to such transactions may agree to arbitration under any internationally recognised set of arbitration rules and may make any modifications to those rules as they apply to their agreement. The only restriction is that the parties designate an Appointing Authority in a country other than the United States or the Socialist Republic of Vietnam. Consequently, it is unlikely that Vietnamese law will apply to the transaction and more likely that the parties’ choice of foreign law will be respected. It is only where the successful party wishes to enforce the award in Vietnam that potential problems arise, since is not clear whether provisions of public policy in the Civil Code[86] override the principle of party autonomy under the Vietnam-US Trade Agreement.
A further crucial issue for cross-border litigants is the forum in which disputes will be heard. Since ‘Doi Moi’, there has been a rapid upsurge in the number of market-oriented institutions in Vietnam which provide for dispute resolution.[87] Further developments in this area are likely, following the Vietnam-US Trade Agreement, which stipulate that nationals and companies of each party are to be accorded national treatment in respect of access to ‘all competent courts and administrative bodies in the territory of the other Party, as plaintiffs, defendants or otherwise’.88 The following section will look first at the grounds upon which a Vietnamese court will have jurisdiction over disputes arising from cross-border transactions. Secondly, it will examine any possible grounds for judicial discretion upon which Vietnamese courts could refuse jurisdiction to an applicant.
Under Vietnamese law, both the civil and the economic provincial courts of Vietnam have jurisdiction to hear disputes arising from cross-border transactions.[89] In both cases, the courts will only have jurisdiction to hear the dispute when either general or specific jurisdictional grounds are established. Notably, where an action may be pleaded on either a general or a specific ground, the general ground will prevail. Thus, if a plaintiff may sue in the specific jurisdiction of the court of Danang province or in the general jurisdiction of the court of Ho Chi Minh City, the court in Danang will decline jurisdiction.
Vietnamese courts will have general jurisdiction over a cross-border dispute where:
1 the domicile of the defendant is in Vietnam, or if the defendant is a judicial person, then where the head office of the defendant is in Vietnam;[90] or 2 immovable property is located in Vietnam if the subject of the dispute is immovable property.[91] They will have specific jurisdiction where:
1 the cross-border agreement is performed in Vietnam;[92] or 2 the defendant has assets in Vietnam; or 3 the defendant company has a branch in Vietnam and the dispute arises from
operations of the branch in Vietnam.[93] The first general ground of jurisdiction is invoked if the defendant is domicile in Vietnam.94 Article 48 of the Civil Code 1996 clarifies that a person will be domiciled:
(a) in the location where he is registered with the local registrar as a household resident. If he is not registered as a household resident, then he is domicile where he is registered as a temporary resident;[95] or
(b) in the location where he works or where he has his assets, if he is not registered as either a household or a temporary resident.96
The first arm of this definition presents prima facie difficulties when applied to foreigners living in Vietnam. In the first place, it is not possible under Vietnamese law for a foreigner living in Vietnam to be classified as a ‘household resident’. In addition, Vietnamese law provides two forms of residency for foreigners living in Vietnam, rather than just the one classification of ‘temporary’ resident cited in the section.[97] Foreigners working, or carrying out an investment project, in Vietnam may be issued with a temporary residence visa for a period of up to one year and a certificate of temporary residence. However, they may also become permanent residents. As general jurisdiction is even more applicable to permanent residents, it may be presumed that ‘domicile’ includes all foreigners living in Vietnam, whether temporarily or permanently. On a comparative analysis, the emphasis under Vietnamese law on the ‘domicile’ of the defendant under Vietnamese law resonates with European concepts.
The Vietnamese courts will also have jurisdiction to hear disputes under the first general ground of jurisdiction where the defendant is a juridical person whose head office is located in Vietnam. Under Vietnamese private international law, the location of the head office is adduced from the company charter or from other legal documents which constitute the company. If those documents indicate that the head office is located in a country other than Vietnam, Vietnamese courts will have no jurisdiction over the dispute, even though the company was originally incorporated in Vietnam.[98] Concepts such as ‘the seat of business’ or ‘central management and control’ do not apply under Vietnamese law.
Three qualifications to this ground of general jurisdiction should be noted, however. First, the Vietnam-US Trade Agreement provides that ‘company of a Party’ to the trade agreement means a company constituted or organised under the law of that contracting state.[99] Secondly, laws on foreign investment in Vietnam provide that fully foreign-owned companies or joint-ventures established in Vietnam are considered Vietnamese entities.[100] Thirdly, Vietnamese courts may assume specific jurisdiction where a defendant has a branch office located in Vietnam,[101] so long as the cause of action arises from the acts or omissions of the branch office which is located in Vietnam.[102]
Where a defendant has assets located in Vietnam, the second ground of specific jurisdiction will be triggered. Under Vietnamese law, ‘assets’ are defined as ‘tangible property, money, papers with money value and property rights’.[103] Assets may also be classified as movable and immovable property.[104]
In addition, there are subordinate classifications such as consumables and inconsumables,[105] general and specific,[106] income and revenue,[107] public property and private property.[108] Classification of movable property and immovable property is based on the physical characteristic of the property,[109] although all intangible property rights can be classified as movable property.[110] As ‘assets’ include ‘immovable property’, there would seem to be some overlap between this ground of specific jurisdiction and the second ground of general jurisdiction, which provides that the Vietnamese courts will have jurisdiction where ‘the subject of the dispute is immovable property’ and the ‘immovable property’ is located in Vietnam.[111]
Under Art 833(3), a conflict of laws will be resolved in favour of the jurisdiction where the property in located, whether that property is movable or immovable (lex situs).[112] However, if the cross-border transaction is considered to be a civil transaction, then the Vietnamese courts will only have jurisdiction to hear the dispute where the defendant is domicile in Vietnam. Similarly, in an economic action the Vietnamese courts will only entertain the matter where the defendant’s address is unknown.113
Finally it should be noted that, under Vietnamese law, the nationality of the contracting parties is not a jurisdictional ground. This contrasts to the position under French law, where the courts will assume jurisdiction with respect to contracts between a French national and a foreigner.114
Once the criteria for specific or general jurisdiction have been met, it would seem that Vietnamese courts have no discretionary power to refuse an exercise of that jurisdiction. In contrast to common law systems, where courts may decline jurisdiction of grounds of forum non conveniens or lis alibi pendens, Vietnamese courts are required to abide strictly by statutory provisions. A violation of procedure will result in the judgment being annulled by the Court of Directorate Review.[115] In relation to disputes between companies and nationals of Vietnam and the US, this issue has potential to be especially problematic, since American private international law provides for open-ended jurisdiction of American courts.
The doctrines of forum non conveniens and lis alibi pendens allow the courts to decline jurisdiction at common law. In Australia, forum non conveniens allows the forum court to decline jurisdiction where the court finds that it is a clearly inappropriate forum.[116] Similarly, lis alibi pendens permits a forum court to stay proceedings if the forum court is a clearly inappropriate forum for the dispute and there are related proceedings between the same parties pending in another jurisdictions.117 Whilst the doctrine of forum non conveniens has no obvious equivalent under Vietnamese law, lis abili pendens is reflected under Art 38 of the Ordinance on Economic Procedure. This Article provides that a court may stay proceedings if the same case or a related cause of action is brought before another court and it is more convenient for the other court to decide the case.[118]
In practice, it seems highly unlikely that Vietnamese courts will cede jurisdiction to a foreign court by upholding a claim under Art 38 or by recognising a doctrine of forum non conveniens. Indeed, it does not appear that a Vietnamese court has ever denied jurisdiction to a case which falls squarely within its general or specific jurisdiction. Moreover, Vietnamese private international law is strongly influenced by concepts of territoriality,[119] meaning that deference to a foreign court is regarded as a breach of sovereignty. Also, the doctrine of lis alibi pendens is inconsistent with the Vietnamese stance towards recognition and enforcement of foreign judgments. Generally, Vietnam only recognises foreign judgments which have been rendered in a state which is party to a bilateral agreement with Vietnam on reciprocal recognition and enforcement of judgments. If a Vietnamese court were to halt proceedings to await the result of a proceeding abroad, it would appear that Vietnamese courts were recognising the foreign court’s decision.
An exception to the general position on lis alibi pendens may arise in regards to arbitrations covered by the Vietnam-US Trade Agreement. The Agreement provides that Vietnamese courts will recognise the jurisdiction of an international arbitration agreed upon by contractual parties to hear their disputes. It is likely that lis alibi pendens will stay proceedings before a Vietnamese court if the Vietnamese-US contractual dispute is also being heard before an international arbitral tribunal.
Despite the generally liberal provisions of the Vietnam-US Trade Agreement in regards to choice of law clauses, arbitration and lis abili pendens, it is uncertain whether US judgments will be recognised and enforced in the Vietnamese Courts. The Vietnam-US Trade Agreement does not provide for the mutual recognition and enforcement of foreign judgments.[120] Indeed, US courts generally recognise and enforce foreign judgments on the grounds of reciprocity and jurisdiction. However, Vietnamese law provides only limited circumstance in which foreign judgments will be enforced in Vietnam. The Ordinance on Foreign Judgments[121] provides that foreign judgment on civil matters will be recognised and enforced in Vietnam where:
1 the foreign judgment is of a country which is a member state of an international
agreement on foreign judgment of which Vietnam is also a member state;[122] or 2 the foreign judgment is one which Vietnamese law stipulates is to be recognised
and enforced in Vietnam.[123] As Vietnam and the United States are not member states of any multilateral agreement on mutual recognition and enforcement of foreign judgments, it is unlikely that a US judgment will be recognised and enforced on the first ground. Also, following the Inter-Sectoral Circular No 04/TTLN, jointly promulgated in 1993 by the Ministry of Justice, the Supreme Court and the Supreme Bureau of Prosecution, it would seem that the Ordinance on Foreign Judgments[124] will be narrowly construed. The Circular states that Vietnamese courts could only examine, recognise or enforce foreign judgments on civil matters from states which had signed with Vietnam a judicial co-operation agreement on civil, matrimonial and criminal matters and which provides for mutual recognition and enforcement of judgments. This document listed seven countries which had such bilateral agreements with Vietnam;[125] however, the US was not included.
Furthermore, the Vietnamese Ministry of Foreign Affairs has refused to legalise judgments by American courts, or documents of the courts of any country which has not signed a bilateral judicial co-operation agreement with Vietnam. The Ministry of Foreign Affairs and the Ministry of Justice have legalised the use of certain American judicial documents in Vietnam. However, this recognition is only intended to accommodate matrimonial and civil relations between the two countries, given the large Vietnamese-American community living in the US.[126] Thus it would appear that, generally, Vietnam does not automatically recognise the legitimacy of foreign judgments in Vietnam unless there is an agreement between Vietnam and the country concerned.
International arbitration in Vietnam has developed in pace with the influx of foreign investment. As foreign investment has increased, so has the demand for independent dispute settlement institutions to supplement the newly established civil and economic courts and the transitioning legal system.[127] However, it is unlikely that foreign parties trading with Vietnamese individuals or companies will elect to settle their disputes except through international arbitration institutions operating outside the Vietnamese legal system. The awards of such institutions are both more impartial and more enforceable than those rendered in Vietnam itself.
First, the only international arbitration institution presently operating in Vietnam, the Vietnam International Arbitration Centre,[128] will almost inevitably apply Vietnamese law to cross-border transactions. The Centre’s jurisdiction extends to all disputes arising from international economic relations[129] where one of the parties is a foreign national or a foreign corporation or all the parties are foreign nationals or foreign corporations.[130] As the Centre’s Charter stipulates that arbitration must take place in Vietnam,[131] it is most likely that Vietnamese law will be applied as the law of the seat of arbitration.
Secondly, it is unclear when an arbitration agreement is validly concluded under Vietnamese law. Formation of an arbitration agreement under Vietnamese law is governed by general principles of Vietnamese contract law, rather than by a specific law on arbitration. Thus, an arbitration agreement will be categorised as a civil, commercial or economic transaction depending on the type of contract of which it is a term. Nonetheless, it is unclear whether an arbitration agreement must conform to the same conditions for formal validity as its ‘host’ contract. The Vietnam-US Trade Agreement avoids this ambiguity by providing that an arbitration agreement must be in writing.
Thirdly, and similarly, there is no general legal mechanism for the enforcement of arbitral awards rendered by Vietnamese arbitrators in Vietnam. However, it would seem that arbitral awards rendered by Vietnamese arbitrators in Vietnam may be enforceable as contracts if parties to the arbitration agree in advance that they are bound to the decision of the arbitration.
By contrast, arbitral awards rendered by international arbitrators (either in Vietnam itself or overseas) in accordance with the New York Convention will be enforceable in Vietnam under the Ordinance on Recognition and Enforcement of Foreign Arbitral Awards in Vietnam 1995 (the Ordinance of Foreign Arbitral Awards). The Ordinance of Foreign Arbitral Awards establishes a procedure of exequatur whereby an application for recognition or enforcement of foreign arbitral awards submitted to the Ministry of Justice may only be examined for formalities of the application before being transferred to provincial court. Generally, in enforcing the award, the courts may not consider the reasons behind the decision, only the conformity of the award with Vietnamese laws and the New York Convention. However, there is some potential for judicial interference, since Vietnamese courts can refuse to recognise or enforce a foreign arbitral awards in Vietnam where:[132]
1 The arbitral agreement is void under the governing law of that agreement or the law of the seat of the arbitration.
2 The arbitral procedure does not provide the defendant appropriate opportunities to defend himself.
3 The arbitration does not have jurisdiction on the cause of action under Vietnamese law or the law governing the arbitration.
4 The arbitral procedure does not conform to the arbitration agreement.
5 The arbitral award is not binding.
6 The arbitral award is not effective under the law governing the award.
7 The recognition and enforcement of the arbitral award is not inconsistent with basic Vietnamese legal principles. In addition to these seven grounds, a defendant may appeal a decision to recognise or enforce the foreign arbitral award against him.[133] Finally, arbitral awards rendered by the Vietnam International Arbitration Centre may not be enforced under the Ordinance on Recognition and Enforcement of Foreign Arbitral Awards in Vietnam, as there is no provision in Vietnamese law that a Vietnamese arbitration award may be enforced in the same manner as a Vietnamese civil judgment.
The Vietnam-US Trade Agreement offers the greatest potential for international arbitration in cross-border disputes involving Vietnam. The Agreement ‘encourages the adoption of arbitration for the settlement of disputes arising out of commercial transactions concluded between nationals or companies of the United States of America and nationals or companies of the Socialist Republic of Vietnam’.[134] It provides that the seat of arbitration may be any country other than the Socialist Republic of Vietnam or the United States of America.[135] In addition, parties to a cross-border transaction governed by the Agreement are free to agree upon any other form of arbitration or on the law to be applied in such arbitration.[136]
The decision of the Vietnamese Government to open Vietnam to foreign trade and investment has required considerable adaptations in many areas of Vietnamese law. After years as a closed command economy, Vietnam did not have in place the legal principles necessary to support cross-border transactions. Since ‘Doi Moi’, Vietnamese law makers have instituted a swathe of reforms in the areas of private international law. Nonetheless, principles of the command economy still hinder the recognition of individual commercial rights. In particular, principles of party autonomy in choice of law, forum and method of dispute resolution are still to be fully recognised in Vietnam.
Against this background, the implementation of the Vietnam-US Trade Agreement marks a considerable step towards open market principles in Vietnam. Although it will only apply to certain cross-border transactions between Vietnamese and certain foreign entities, the Agreement requires radical changes in the problematic areas of choice of laws and dispute resolution. Thus there is ample reason to except that Asia’s fourth largest nation will continue to move, both legally and commercially, towards a profitable commercial relationship with the rest of the world.
[1] BCom, LLB, Master of Comparative Law. Quan Nguyen worked as a legal expert at the Consular Department of the Ministry of Foreign Affairs of Vietnam until January 2001 when he came to Australia to undertake a Masters Degree in law. He is currently working as a consultant for eBusiness Management Consulting Ltd in Brisbane in the area of electronic commerce.
[2] Most Favored Nation status is incorporated into bilateral investment agreements between Vietnam and Algeria, Argentina, Armenia, Australia, Austria, Belarus, Belgium, Bulgaria, China, Cuba, the Czech Republic, Denmark, Egypt, Finland, France, Germany, Hungary, India, Indonesia, Italy, Laos, Latvia, Lithuania, Luxembourg, Malaysia, Netherlands, Philippines, Poland, Romania, Russia, Singapore, South Korea, Sweden, Switzerland, Taiwan, Tajikistan, Thailand, Ukraine and Uzbekistan.
[3] The US Senate approved the House Joint Resolution with a vote of 88 to 12.
[4] Remarks by President Bill Clinton on the announcement of the Vietnam-US Trade Agreement on 13 July 2000 at the Rose Garden.
[5] The Constitution 1980, Art 21, provides that ‘The State monopolizes foreign trade and all other economic relations with foreign states’.
[6] Law on Foreign Investment in Vietnam.
[7] The state controlled direct international transactions by licensing import-export activities. Most licensed importers and exporters were state-owned enterprises: Decree 114-HDBT dated 7 April 1992.
[8] The phrase ‘The State monopolies foreign trade and all other economic relationships with foreign countries’ in Art 21 of the Constitution 1980 was replaced by ‘The State administers and extends foreign trade activities, develops various ways of economic relationships with all nations and international organisations’ in Art 24 of the Constitution 1992. However private commercial rights in foreign trade were not fully elaborated upon until the Commercial Law promulgated by the National Assembly on 10 May 1996, effective on 1 January 1997, and Decree No 57/1998/ND-CP promulgated by the Government on 1 January 1998 to give instruction on implementation of the Commercial Law.
[9] Decree No 09/2000/ND-CP of government dated 21 March 2000.
[10] Civil Code promulgated by the National Assembly on 28 November 1995, effective 1 July 1996 is the first civil code of Vietnam. See Ministry of Justice of the Socialist Republic of Vietnam, Commentaries on Some Fundamental Issues of the Civil Code (1997).
[11] Ministry of Justice, ibid, 364–65.
[12] Commercial Law promulgated by the National Assembly on 10 May 1997, effective 1 January 1998.
[13] The Ministry still retains licences for certain categories of goods, although the general licencing requirement was repealed by Decree 89/CP dated 15 December 1995.
[14] Under the Vietnam-US Trade Agreement, quotas for imports from the US will be eliminated over a period of three to seven years.
[15] ‘With an eye on WTO, Vietnam to relax trade’ (2001) Australian Financial Review, 14 February.
[16] Circular No 07/2001/TT-TCHQ promulgated by the Department of Customs on 18 October 2001.
[17] Memo from the Office of the Vietnamese Prime Minister, ‘Re: preparatory tasks after the US and Vietnam Agreement’, 21 November 2000.
[18] Ordinance on Promulgation of Legal Documents, promulgated by the National Assembly on 12 November 1996.
[19] Ordinance on Promulgation of Legal Documents, Art 52 provides that the Standing Committee of the National Assembly will interpret unclear provisions in laws or ordinances. Entities that can request interpretation by the Standing Committee on unclear provisions include the President, the Standing Committee, sub-committees of the National Assembly, the Government, the Supreme Court, the Supreme Bureau of Prosecution, the Vietnam Fatherland Front and its sub-agencies and members of the National Assembly.
[20] Ordinance on Promulgation of Legal Document, Art 15.
[21] Ibid, Art 18.
[22] Ibid, Art 15.
[23] Le Dang Doanh, ‘Economic reformation in Vietnam: legal and social aspects and impacts’ (1996) 6 Australian Journal of Corporate Law 14 at 30.
[24] Ibid at 16.
[25] John Gillespie, Private commercial rights in Vietnam: a comparative analysis’ (1994) 30 Stanford Journal of International Law 325 at 346.
[26] ‘Nua phu ky hop dong, 5 nam doi tien bao hiem’ (half a minute to sign a contract, five-year litigation for insurance compensation), Thanh Nien Newspaper, 14 July 2001. Visited at http://vnexpress.net/ Vietnam/Phap-luat.
[27] Since 1993, the Vietnamese government has been experimenting with foreign investment in the domestic insurance market. Traditionally this market was a monopoly of the state-owned Bao Viet Insurance Company. However under Decree 100, foreign insurance companies may establish joint-ventures with Vietnamese insurance companies or wholly foreign-owned insurance companies in Vietnam: Decision No 16/2001/QD-TTg of the Prime Minister promulgated on 2 May 2001. As a result of this decree, the market has been growing at around 40% since 1994 and out of the 20 insurance companies operating in Vietnam, two-thirds are joint-ventures with foreign insurance companies or are wholly foreign-owned. The Vietnam-US Trade Agreement promises further liberalisations in favour of insurance companies from the US or other ‘most-favored-nations’. Indeed, Annex G of the Trade Agreement provides that Vietnam will not limit cross-border supply of insurance services to enterprises with foreign invested capital, foreigners working in Vietnam; reinsurance services; insurance services in international transportation; insurance brokering and reinsurance brokering services; advisory, claim settlement and risk assessment services.
[28] Civil Code, promulgated by the National Assembly on 28 October 1995, effective 1 July 1996.
[29] Ibid. Art 827.
[30] John Gillespie, op cit, fn 25, 346.
[31] Nguyen Quan, ‘Cai Nhin Moi Ve Phap Nhan Va Su Binh Dang Trong Kinh Doanh’ (a new point of view on enterprise and equality in business), Thoi Bao Kinh Te Saigon (Saigon Economic Times) (Ho Chi Minh City, Vietnam) 25 June 1998, 11.
[32] Corporate laws in Vietnam distinguishes in matters of taxation, commercial rights and administration among three kinds of corporations. State-owned enterprises operate under the Law on state-owned Enterprises, promulgated by National Assembly on 20 April 1995; private enterprises operate under the Law on Enterprises, promulgated by 12 June 1999, effective 1 January 2000; and foreign invested enterprises operate under the Law on Foreign Investment, promulgated by the National Assembly on 12 November 1996.
[33] Mr Le Dang Doanh, Director of the Institute of Economic Management Research, one of the chief drafters of the Law on Enterprises, explained that delay in achieving a single corporations law was due to economic and social conditions of Vietnam’s transition. See Nguyen Quan, op cit, fn 31, 11.
[34] Nguyen Quan, op cit, fn 31.
[35] Lao Dong Newspaper, ‘Quyet dinh khang nghi gay xon xao gioi thue mua tai chinh’ (Supreme Court’s revocation worries financial leasing companies), Lao Dong Newspaper, 26 October 2001, http:// vnexpress.net/Vietnain/Phap-luat/2001/10/3B9B5BA9.
[36] Ordinance on Economic Contract, promulgated by the Standing Committee of the National Assembly on 25 September 1989.
[37] Kexim Vietnam Company may start civil proceedings against Chi Dat Company to claim for damages for ‘Liabilities out of contracts’ in Chapter V of the Civil Code, which parallels tort in the common law system, albeit less fully developed.
[38] Ordinance on Economic Procedure, promulgated by the Standing Committee of the National Assembly on 29 March 1994, effective 1 July 1994, Art 75(3).
[39] In the past Vietnamese lawmakers and bureaucrats insisted that any activity, particularly any commercial activity, is unlawful unless expressly authorized by law. See John Gillespie, op cit, fn 25.
[40] See Le Dang Doanh, op cit, fn 23; John Gillespie, op cit, fn 25.
[41] Article 21 of the 1992 Constitution provides that: ‘In the private individual and private capitalist sectors people can adopt their own ways of production and trading; they can set up enterprises of unrestricted scope in fields of activities which are beneficial to the country and the people’.
[42] The Constitution 1992, Art 84(2).
[43] Recent reforms to the National Assembly’s functions stress supervision of individual rights by members of the National Assembly. See John Gillespie, op cit, fn 25.
[44] Ordinance on Economic Contract, Art 8(1)(b).
[45] John Gillespie, op cit, fn 25.
[46] This is inferred from the different jurisdictions of the Economic Contract and those Commercial Contracts which are engaged for commercial purposes. Ordinance on Economic Contract, Art 1; Commercial Law, Arts 1–6.
[47] Civil Code, Arts 16–22.
[48] Ibid, Arts 116 and 120.
[49] Ibid, Art 826.
[50] Ibid, Art 400(1).
[51] Ibid, Art 400(2).
[52] Ordinance on Economic Contract, promulgated by the state Council on 25 September 1989.
[53] Ibid, Art 1.
[54] Ibid, Art 11: exchange of documents can be inferred from official letters, telegrams, offers, purchase orders, etc.
[55] Ibid, Art 2.
[56] Merchants may be individuals, juridical persons, co-operatives, and households with commercial capacity: Commercial Law, Art 5(6).
[57] Ministry of Justice, op cit, fn 10.
[58] Civil Code, Art 826.
[59] Ibid, Art 834(1).
[60] The jurisdiction of Vietnamese courts on contracts performed partly in Vietnam and partly abroad was discussed in Inter-sectoral Circular No 04/TTLN, jointly promulgated by the Supreme Court and the Supreme Prosecution Bureau on 7 January 1995 to give instruction on implementation of some provisions of the Ordinance on Economic Contract. In this document, the Supreme Court instructed that if an economic dispute arises from a contract performed partly in Vietnam and partly abroad, Vietnamese courts only have jurisdiction to hear claims on the part of the contract performed in Vietnam. However, this document did not touch the issue of the law governing the contract.
[61] Civil Code, Art 834(2).
[62] Generally, Vietnamese law does not recognise foreign ownership of immovable property in Vietnam. However, in the area of foreign investment, foreign commercial interests may be granted land use rights in Vietnam to implement their project: Amendment to Land Law (1993), promulgated by National Assembly on 2 December 1998, Art 1.
[63] Amendment to Land Law (1993), promulgated by the National Assembly on 2 December 1998, Art 1.
[64] Ordinance on Recognition and Enforcement of Foreign Arbitral Awards in Vietnam, promulgated by Standing Committee of National Assembly on 14 September 1995.
[65] Ordinance on Recognition and Enforcement of Foreign Arbitral Awards in Vietnam 1995, Art
[66] Ibid, Art 16(1)(a).
[67] Thanh Nien Newspaper, op cit, fn 26.
[68] Decree No 62/1998/ND-CP on BOT contracts, promulgated by the government on 15 August 1998.
[69] Civil Code, Art 834(2).
[70] Collier v Rivaz 2 Curt 855 at 858, per Sir Herbert Jenner that, ‘Every nation has a right to say how far the general law shall apply to its born subjects, and the subject of another country; and the court sitting here to determine it, must consider itself sitting in Belgium under the particular circumstances of the case. In that sense, the forum court applying foreign law in cases of renvoi should also apply choice of law rules of the foreign law as the foreign court would do if the case comes before the foreign court’.
[71] Decree 60-CP dated 06/06/1997 by the government to give instructions on the application of the Civil Code in civil relations on foreign matters, at Art 5(3).
[72] See JHC Morris, The Conflict of Laws (3rd ed, 1984) 469.
[73] Ministry of Justice, op cit, fn 10, 374.
[74] Ministry of Justice, op cit, fn 10, 374.
[75] For example, at the beginning of the reform process, the Law on Civil Aviation provided for ‘public interest and public order’: Law on Civil Aviation, promulgated by the National Assembly on 26 December 1991, effective 1 June 1992.
[76] See Civil Code, Art 828. See also Le Dang Doanh, op cit, fn 23.
[77] Jurisprudence says that basic principles of Vietnamese laws may include political and social principles. See Ministry of Justice, op cit, fn 10, 376.
[78] Ministry of Justice, op cit, fn 10, 375.
[79] For instance, the Civil Code provides that a contract will be void if it violates social morals: Civil Code, Art 395(1), or if any contractual party lacks ‘good will, co-operation, faith and honest’: Civil Code, Art 395(2).
[80] Civil Code, Art 827(3).
[81] The Vietnamese courts are civil courts with an inquisitorial trial procedure. There are some provisions on evidence in the Ordinance on Civil Procedure (Arts 38–40) and the Ordinance on Economic Procedure (Art 35). The absence of a law on evidence in Vietnam reflects the arbitrary trials in Vietnamese courts at the beginning of economic reformation.
[82] Ordinance on Consular Service, promulgated by the Standing Committee of the National Assembly on 24 November 1990, effective 1 January 1991.
[83] Ibid.
[84] Legalisation of foreign documents to be used in Vietnam is conducted at consular sections of the Ministry of Foreign Affairs in Ha Noi and Ho Chi Minh City or at Vietnamese Diplomatic Missions abroad: Ordinance on Consular Service, Art 26.
[85] The influence of harmonized commercial laws on Vietnamese domestic laws may be attributed to two main forces: (1) Vietnam’s attempts to integrate into the world economy and (2) conditioned aid from international institutions such as the World Bank, the Asian Bank for Development, the International Monetary Fund, etc. See generally Claude Rower, ‘Progress and problems in Vietnam’s development of commercial law’ (1997) 15 Berkeley Journal of International Law 275.
[86] Civil Code, Arts 827, 828.
[87] Civil courts in the Supreme Court and provincial people’s courts were established by the Amendment to the Law on Organization of the People’s Court (1982), promulgated by National Assembly on 22 December 1988; the Economic Courts in the Supreme Court and in provincial people’s courts were established by Amendment to the Law on Organization of the People’s Court (1992), promulgated by National Assembly on 28 December 1993, Arts 4 and 12.
[88] Vietnam-US Trade Agreement, Chapter 1—Trade in Goods, Art 7(1).
[89] Ordinance on Civil Procedure, Art 11(2)(a); Ordinance on Economic Procedure, Art 13(2).
[90] Ibid, Art 13(1); Art 14.
[91] Ibid, Art 13(2); Art 14.
[92] Ibid, Art 14(5); Art 15(3).
[93] Ibid, Art 14(2); Art 15(2).
[94] Ibid, Art 13(1); Art 14.
[95] In Vietnam, the District Administrative Police are the Registrar for household or temporary residence within the district.
[96] Civil Code 1996, Art 48.
[97] Ordinance on Entry, Exit and Residence of Foreigners in Vietnam, promulgated by the Standing Committee of National Assembly on 1 August 2000. 98 There is no requirement that foreign invested companies must have their head office in Vietnam.
[99] Vietnam-US Trade Agreement, Chapter 4, Art 1(3).
[100] Decree No 24/2000/ND-CP of the government dated 31 July 2000 to elaborate on the Law on Foreign Investment in Vietnam 1996.
[101] Beatrice Favarel-Veidig, ‘France’, in Carel JH Baron Van Lynden (ed), Forum Shopping (1998), 89.
[102] In this sense, Vietnamese law has more in common with German rather than French law: Christian
Breitzke, ‘Germany’, in Van Lynden, ibid at 99.
[103] Civil Code, Art 172.
[104] Ibid, Art 181.
[105] Ibid, Art 1185.
[106] Ibid, Art 186.
[107] Ibid, Art 182.
[108] See also NN Dien, A Study on Property in Vietnamese Civil Law (1999), 26.
[109] Ibid at 28.
[110] Ibid at 34.
[111] Ordinance on Civil Procedure, Art 13(2); Ordinance on Economic Procedure, Art 14.
[112] Civil Code, Art 833(3).
[113] Ordinance on Civil Procedure, Art 14(1); Ordinance on Economic Procedure, Art 15(1). There is no jurisprudence on why Vietnamese lawmakers put more restriction on the plaintiff in economic cases. In some situations, a plaintiff in an economic dispute can transform its action into a civil action to enjoy wider international jurisdiction of the Civil Court.
[114] New Code of Civil Proceedings, Art 14.
[115] Ordinance on Civil Procedure, Art 71; Ordinance on Economic Procedure, Art 75.
[116] The doctrine of forum non conveniens in Australian law means that the forum court has power to decline jurisdiction where the court finds that it is the clearly inappropriate forum. See PE Nygh, Conflict of Laws in Australia (6th edn, 1995), 102.
[117] ‘Clearly inappropriate forum’ is the Australian test of lis alibi pendens. See Reid Mortensen, Private International Law (2000), 69.
[118] Ordinance on Economic Procedure.
[119] Ministry of Justice, op cit, fn 10, 375.
[120] Hilton v Guyott [1895] USSC 185; (1895) 159 US 113, per Gray J; Restatement (Third) of Foreign Relations Law, s 481.
[121] Ordinance on Recognition and Enforcement of Foreign Judgments in Vietnam, promulgated by Standing Committee of National Assembly on 17 April 1993.
[122] Ordinance on Recognition and Enforcement of Foreign Judgments in Vietnam, Art 2(1)(a).
[123] Ibid, Art 2(1)(b).
[124] Ordinance on Recognition and Enforcement of Foreign Judgments in Vietnam, promulgated by the Standing Committee of the National Assembly on 17 April 1993.
[125] The following countries have all signed an agreement on mutual recognition and enforcement of judgments with Vietnam: Belarus, China, Cuba, Bulgaria, France, Germany, Hungary, Laos, Mongolia, Poland, Russia, Sec, Slovakia and Ukraine. Since 1993, the number of states on this list has doubled.
[126] In 1999, the Committee for Vietnamese Oversea estimated that there were around 1.3 million Vietnamese in the US.
[127] The separation of the Civil Court from the People’s Court in 1989, followed the recognition in Vietnam of civil transactions under the Ordinance on Civil Contract 1989. The Economic Court was subsequently established in 1994 to replace the arbitrary administrative procedures of the Economic Arbitration Institution.
[128] Decision of the Prime Minister of the Government No 204/TTG, 28 April 1993. Although Vietnam does not prohibit foreign arbitral organisations from operating in Vietnam, no international arbitral organisation has its representative office in Vietnam.
[129] Economic relations include foreign trade contracts and contracts concerning investment, tourism, international transportation and insurance, transfer of technology, services, international credits and payments.
[130] Initially, the Centre’s jurisdiction was limited to disputes arising from international economic relations although since 1996, the Centre’s jurisdiction has been extended to disputes arising from domestic economic transactions.
[131] Article 18 of the Arbitration Rules of the Vietnam Arbitration Center at the Chamber of Commerce and Industry of Vietnam. These Rules of Arbitration are formulated in accordance with Art n of the Statutes of the Vietnam International Arbitration Centre issued in conjunction with Decision No 204/ TTg dated 28 April 1993 of the Prime Minister of the Government of the Socialist Republic of Vietnam. This Rules can be accessed at http://www.jurisint.org/pub/03/en/F_7005.htm.
[132] Ordinance on Foreign Arbitral Awards, Art 16.
[133] Ibid, Art 18.
[134] Vietnam-US Trade Agreement at Chapter 1, Art 7(2).
[135] Ibid, Art 7(3).
[136] Ibid, Art 7(4).
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