The Supreme People’s Court (SPC) of Vietnam has made a historic decision by recognising and enforcing an arbitration award issued by a Chinese arbitration institution. This marks the first time that such an award has been acknowledged and implemented by the Vietnamese judiciary.
The arbitration award in question was rendered by the arbitration tribunal of the Shanghai International Arbitration Centre (SHIAC). It pertained to a cross-border goods trade dispute between a Chinese and a Vietnamese enterprise, which was previously discussed in a China Business Law Journal article (see HERE) that delved into the specifics of the case and how the tribunal arrived at its decision.
This article will lay out the turbulent court procedures in Vietnam that eventually led to the groundbreaking recognition and enforcement of the award in the country.
The Ho Chi Minh City People’s Court ruled to recognise and enforce the arbitration award of SHIAC. On 25 September 2020, the Ho Chi Minh City People’s Court ruled on the recognition and enforcement in Vietnam of the arbitration award made by the SHIAC. The judgement number is 1603/2020/QDST-KDTM.
In the course of the first instance, the respondent argued that the company had not received the arbitration notice sent by the SHIAC secretariat, the notice on the appointment of arbitrators, the notice on the SHIAC arbitration proceeding and other arbitration documents.
Therefore, the respondent did not know whether the arbitrator appointed, or the SHIAC arbitration procedure, complied with the laws of the country where the arbitration award was made, nor did it know the validity of the arbitration award made by the SHIAC.
The Ho Chi Minh City High People’s Court ruled against the recognition and enforcement of the arbitration award. On 7 October 2020, the respondent filed an appeal with the Ho Chi Minh City High People’s Court against decision No. 1603/2020/QDST-KDTM recognising and enforcing the arbitration award of the SHIAC. The trial was held on 24 May 2021.
At the hearing, the respondent’s legal representative acknowledged that he had received the Notice of Arbitration, the Notice of Composition of the Arbitral Tribunal, the Notice of Hearing and other arbitration case material forwarded by the SHIAC secretariat, and confirmed that the notice of arbitration proceedings he had received was made in Chinese and English but, due to his frequent business trips, by the time they were translated into Vietnamese and read, it had already exceeded the prescribed procedural period.
On 27 May 2021, the Ho Chi Minh City High People’s Court issued Appeal Decision No. 39/2021/QD-PT, overruling the first instance decision of the Ho Chi Minh City People’s Court and deciding not to recognise and enforce the arbitration award made by the SHIAC in accordance with articles 16 and 17 of the Mutual Legal Assistance Treaty entered into by the Chinese and the Vietnamese governments in 1998.
The president of the Vietnam’s SPC lodged a protest against the ruling of the second instance. After the ruling of the second instance was made, the applicant applied to the SPC of Vietnam for review and cancellation of the ruling of the second instance made by the Ho Chi Minh City High People’s Court.
On 22 September 2022, the president of the SPC of Vietnam filed a protest against the ruling of second instance made by the Ho Chi Minh City High People’s Court, requesting the SPC to review the ruling of appeal, revoke the decision not to recognise and enforce the arbitration award of the SHIAC, and uphold the ruling of the Ho Chi Minh City People’s Court in its first instance.
The Supreme People’s Procuratorate of Vietnam, in accordance with its authority, then submitted to the trial committee of the SPC to accept the protest of the president.
The SPC of Vietnam reviewed and decided to recognise and enforce the arbitration award of the SHIAC. In its review proceeding, the SPC of Vietnam held that both Vietnam and China were signatories to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) and that the two countries had also signed the Treaty on Judicial Assistance in Civil and Criminal Matters.
In the present case, the documents and materials accompanying the Application for Recognition and Enforcement of Foreign Arbitral Awards in Vietnam submitted by the applicant were made in accordance with article 4 of the New York Convention and article 453 of the Vietnam Civil Procedure Code (2015).
Although the respondent objected to the request for recognition and enforcement of the arbitral award of the SHIAC, it failed to provide evidence to prove that the arbitral award involved in the case should not be recognised and enforced due to the reasons provided for in article 5 of the New York Convention and article 453 of the Vietnam Civil Procedure Law (2015).
Therefore, the Ho Chi Minh City High People’s Court’s decision not to recognise and enforce the arbitration award of the SHIAC in accordance with articles 16 and 17 of the 1998 Treaty on Mutual Legal Assistance contained errors in the application of law and should be corrected.
In the end, the SPC of Vietnam, in accordance with the provisions of the Vietnam Civil Procedure Law (2015), decided to accept the protest filed by its president, revoke the second instance ruling made by the Ho Chi Minh City High People’s Court, and uphold the decision made by the Ho Chi Minh City People’s Court on the recognition and enforcement of the arbitration award of the SHIAC in Vietnam.
