AGREEMENT ON DISPUTE SETTLEMENT COURT IN VIETNAMESE LAW

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Agreement on jurisdiction of the Court to settle disputes is a very important clause in the contract. It is agreed that this clause determines the victory of the lawsuit in the event of a dispute. This article focuses on explaining the issues of (I) the role of the agreement on the jurisdiction of the Vietnamese Court to resolve the dispute, (ii) which agreement shall be accepted or not by the Vietnamese Court and (iii) advise the parties to draft this clause.

THE ROLE OF COURT AGREEMENT IN THE VIETNAMESE COURT

Firstly, an agreement on the jurisdiction of the Court dispute resolution to help the plaintiffs reduce travel time, reduce the cost of litigation and gain certain advantage in the lawsuit. You try to imagine that your company is headquartered in Hanoi and the disputing party is based in Ho Chi Minh City. In general, you must file a lawsuit where the defendant’s head office is located in Ho Chi Minh City. If you can sue in Hanoi now, the time and cost will be greatly reduced. Furthermore, in practice, the local courts are generally “more sympathetic” to local businesses, so you have a slight advantage in the lawsuit. Therefore, the agreement on the jurisdiction of the Dispute Resolution Court should be carefully drawn up by you.

WHICH AGREEMENT IS OR NOT BY VIETNAMESE COURT

The second content in this article is that which is accepted or not by the Court and which is not. In fact, the Court will not accept agreements that are incorrect, unclear or inconsistent with the provisions of the Vietnamese Civil Procedure Code. On the contrary, the Court shall accept it if it complies with the provisions of the Civil Procedure Code. The following are some of the judgments of the Court.

Unclear and inconsistent. Judgment 108/2017/KDTM-ST dated 11/08/2017 on dispute in the logistics service contract of People’s Court of Tan Binh District (HCMC): At the logistics service contract signed by the two parties on 12/7/ 2016, Clause 7.3, Article VII, part of the common section, the two parties agree: “If there is any dispute or disagreement arising or related to this contract… the parties have the right to submit the dispute to the Economic Court of Ho Chi Minh City to settle…”. The agreement on the dispute settlement jurisdiction of the parties is unclear and inconsistent with the provisions of the law as prescribed in Articles 35, 37, 39 of the Civil Procedure Code. This agreement is void. Therefore. Now Company T sues at the People’s Court of Tan Binh District where C Food Import and Export Limited Liability Company has its head office registered, so the lawsuit is under jurisdiction by the People’s Court of Tan Binh District based on Clause 1, Article 30, Point b, Clause 1, Article 35, Point a, Clause 1, Article 39 of the Civil Procedure Code  

Incorrect and unclear. Judgment 151/2020/KDTM-PT dated August 27, 2020 on the construction contract dispute of the Hanoi People’s Court: The agreement on the jurisdiction to settle disputes under the contract is void due to of incorrect and unclear. There is no Economic Court – Ho Chi Minh City People’s Court, but only Economic Specialized Court – Ho Chi Minh City People’s Court. Moreover, the lawsuit falls under the jurisdiction of the District Court, not the Provincial People’s Court. Therefore, MB’s claim that the People’s Court of HK District does not have jurisdiction to deal with it is not in accordance with the Civil Procedure Code.

Incorrect. Judgment 17/2017/ KDTM – ST dated September 22, 2017 on the dispute over the sale and purchase contract of the People’s Court of Nam Dịnh city, Nam Dịnh province: at point 6.4 of the economic contract between the parties prescribed: “…if no agreement can be reached, the dispute will be brought to the Economic Court of Vung Tau City for settlement”. However, in the court system, there is no economic court of Vung Tau city but only the People’s Court of Vung Tau city, so this agreement on the jurisdiction to resolve this dispute has no legal value. According to the enterprise registration certificate of the company, the company DK2 has its head office at the address: 1 Dong Tien Street, industrial cluster A, N city, Nam Dinh province. Therefore, based on point a, clause 1, article 39 of the 2015 Civil Procedure Code, the People’s Court of Nam Dinh city intends to accept and settle the case according to its competence.   

Inconsistent. Judgment 151/2020/KDTM-PT dated 09.26.2017 disputing purchase contract goods, the People’s Courts Tan Binh District, Ho Chi Minh City: In Article V of the Sales Contract No. 02 -09/MAT-NH/2009 dated December 22, 2009 stipulates that “all disputes arising from the performance of this contract that cannot be resolved by the two parties will be brought to the Economic Court – the People’s Court of Ho Chi Minh City to solve”. The agreement on the dispute settlement jurisdiction of the parties is not in accordance with the provisions of law as prescribed in Articles 35, 37 and 39 of the Civil Procedure Code, so the agreement is invalid. . Therefore, now that the lawsuit that plaintiff is suing at the People’s Court of District X falls under the jurisdiction of the People’s Court of District X according to the provisions of Clause 1, Article 30, point b. Clause 1, Article 35, Point a, Clause 1, Article 39 of the Civil Procedure Code 2015.   

Consistent and accepted. Judgments 02/2019 / MLM -ST dated 07/02/2019 on the credit contract dispute of Court of Haiphong city: On the view resolution of the lawsuit: In the credit contract, the two parties have agreed that the dispute settlement jurisdiction is “The Court where Party A (Bank P-Bank P Hai Phong Branch) is located”, so the case falls under the jurisdiction of the People’s Court of District N under Haiphong city..  

DRAWING THE AGREEMENT TO BE COMPATIBILITY WITH LAW

The last paragraph of the article suggests drawing the agreement in accordance with the provisions of the Code of Civil Procedure. The Code stipulates that the plaintiff may choose a court to settle a dispute in a contract. Accordingly, if a contractual dispute occurs with respect to a branch (as in the example above), the plaintiff can choose where he or she is headquartered or where the branch is located to resolve the dispute. On the other hand, other case the plaintiff can choose court is court of place of performance of the contract. “Place of performance” means the place where all or part of the obligation is performed. The “place of performance” shall be agreed upon by the parties or, if the parties do not agree, shall be prescribed by law. Thus, the best way to draw an agreement on the jurisdiction of the Court to settle the dispute is to specify the Court where the contract is performed to resolve the dispute. At the same time, the agreement should clearly state on where the contract is performed.

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