In the case of Rang Dong Plastic Company (RDP) vs. Sojitz Corporation of Japan, the Singapore International Arbitration Centre (SIAC) issued a ruling that required the Vietnamese company to compensate Sojitz for approximately VND 157 billion and pay VND 21 billion in costs and interest. Despite the SIAC's decision, Rang Dong Holding (RDP) repeatedly ignored warnings and failed to fulfill its obligations to pay damages, costs, and late payment interest to its former Japanese strategic partner.
In a recent extraordinary meeting, RDP publicly announced its obligation to compensate Sojitz Planet Corporation approximately VND 156.9 billion along with a 10% annual interest rate from April 1, 2020, until the payment date.
In addition to the above-mentioned dispute over share purchase contracts, RDP was also obligated to pay SIAC fees exceeding SGD 370,000, legal costs, and reasonable expenses totaling USD 586,000 and over SGD 7,400 to its former partner, equivalent to more than VND 21 billion with an interest rate of 5.33% per annum until the payment date.
This is the final ruling of SIAC, and it was recently recognized and enforced by the High People's Court of Ho Chi Minh City.
Perspective on the Recognition and Enforcement of SIAC Awards in Vietnam
In the context of international trade development and increasing cross-border investments, resolving international disputes through foreign arbitration has become a common and effective method. Many parties, in addition to choosing domestic arbitration in Vietnam, have opted for the Singapore International Arbitration Centre (SIAC) to resolve their disputes.
However, recognizing and enforcing foreign arbitration awards is not always straightforward. To enforce an award from a foreign institution like SIAC in Vietnam, the award must first be recognized and enforced by a Vietnamese court under Article 425, Section 1 of the 2015 Civil Procedure Code.
During this process, the judgement debtor may attempt to challenge the validity of the enforcement, making it difficult to enforce the award in Vietnam. In such cases, Vietnamese courts primarily focus on the procedural and legal aspects of the enforcement rather than delving into the substance of the dispute.
In addition to the aforementioned case, Vietnam has witnessed a similar case with a different outcome. In the case of SIAC arbitration No. 186 of 2019 (ABB/186/PLN), both the trial and appellate courts in Vietnam did not recognize and enforce the SIAC arbitral award in a dispute between GLOBAL PAYMENT SERVICE and UTC INVESTMENT CO., LTD (judgement creditor) and VMG, a Vietnamese content service provider (judgement debtor).
Given its successful involvement in numerous significant cross-border M&A transactions, as the Vietnam law firm focusing on Vietnam and international arbitration ASL LAW recommends the following measures for Vietnamese businesses tomitigate legal risksin future contracts, especially those with foreign elements:
- Regularly review contracts and update them to reflect relevant Vietnamese and international legal regulations applicable to the business activities of the company.
- Seek independent and specialized legal advice from the negotiation stage when drafting contracts to ensure that contract provisions are well-crafted and comply with the law.
- Include clauses for dispute resolution through commercial arbitration and specify a reputable and experienced arbitral institution within the same industry.
- Strictly adhere to contract agreements to avoid breaches and conflicts. In cases of disputes, prioritize negotiation and mediation before resorting to litigation or arbitration.
- When compelled to resort to SIAC arbitration, follow a suitable legal approach and strategy, including stages like receiving SIAC's notification or the claimant's initiation, the arbitration process, participation, and the recognition and enforcement process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
