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Vietnamese Court Refuses to Recognize Chinese Judgment for the First Time

Sat, 11 Feb 2023
Categories: Insights

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Key takeaways:

  • In December 2017, the Hanoi High People’s Court of Vietnam rendered a ruling (No. 252/2017/KDTM-PT) against the enforcement of a judgment made by China’s Beihai Maritime Court, marking the first known case in the field of China-Vietnam judgments recognition and enforcement.
  • In this case, the Vietnamese court refused to recognize and enforce the Chinese judgment based on due process and public policy, two refusal grounds listed in the bilateral treaty on judicial assistance between China and Vietnam.
  • China and Vietnam are neighbouring countries and have very close economic and trade ties. Though there is only one publicly known case, given the China-Vietnam bilateral treaty, mutual recognition and enforcement of judgments are to be expected.
  • The database of Vietnam’s Ministry of Justice is a wonderful tool, providing predictability for foreign judgment recognition and enforcement in Vietnam.

This is the first case we have collected concerning the recognition and enforcement of Chinese judgments in Vietnam, although the case resulted in a refusal of recognition and enforcement.

On 9 Dec. 2017, the High People’s Court in Hanoi, Vietnam, rendered the ruling No. 252/2017/KDTM-PT, refusing to recognize and enforce the civil judgment “Bei Hai Hai Shi (2011) No.70” (北海海事(2011)第70号, hereinafter the “Chinese Judgment”) made by China’s Beihai Maritime Court (the “Chinese Court”) on 22 Apr. 2013.

Thanks to our friend Béligh Elbalti, Associate Professor at Osaka University, we came to know about this case, and obtained valuable case information from the Database for RECOGNITION AND IMPLEMENTATION OF FOREIGN COURT’S JUDGMENTS AND DECISIONS, FOREIGN ARBITS (in Vietnamese: CSDL CÔNG NHẬN VÀ CHO THI HÀNH BẢN ÁN, QUYẾT ĐỊNH CỦA TÒA ÁN NƯỚC NGOÀI, PHÁN QUYẾT CỦA TRỌNG TÀI NƯỚC NGOÀI) on the website of Vietnam’s Ministry of Justice.

However, we have not found the original judgment of the Vietnamese court, nor the original Chinese Judgment.

It is also notable that China and Vietnam have entered into a bilateral treaty on the recognition and enforcement of judgments, i.e. the “Treaty Between the People’s Republic of China and the Socialist Republic of Vietnam on Judicial Assistance in Civil and Criminal Matters” (See Chinese Version) (hereinafter the “Treaty”). For more about China’s bilateral treaties with other countries on the recognition and enforcement of judgments, please click here.

I. Case overview

The applicant in the case was TN . Co., Ltd (in Vietnamese: Công ty TNHH TN) and the respondent was TT Joint Stock Company (in Vietnamese: Công ty CP TT).

  • The case went through two instances:
  • The court of first instance was the People’s Court of Nam Dinh province (in Vietnamese: Tòa án nhân dân tỉnh Nam Định);
  • The court of second instance was High People’s Court in Hanoi (in Vietnamese: Tòa án nhân dân cấp cao tại Hà Nội).

On 23 Nov. 2015, the court of first instance accepted the applicant’s application for recognition and enforcement of a Chinese Judgment, and the case number was 02/2015/TLST-KDTM.

On 7 Nov. 2016, the court of first instance heard the case.

On 14 Nov. 2016, the court of first instance ruled to refuse to recognize and enforce the Chinese Judgment in accordance with Article 439 (3) of the 2015 Civil Code and the Treaty between Vietnam and China.

The court of first instance refused to recognize and enforce the Chinese Judgment on the grounds that:

Firstly, the applicant entered into a contract for the sale of goods with another entity, TP company. The respondent was the carrier of the goods but failed to enter into a contract for the carriage of goods with the applicant and TP company. Therefore, both the initiation of the lawsuit by the applicant and the adjudication of this dispute by the Chinese Court at the request of the applicant did not comply with Vietnam’s legal principles.

Secondly, the respondent did not receive a summons from the Chinese Court and therefore did not attend the hearing before the Chinese Court on 22 Apr. 2013. This is in violation of Article 439 (3) of Vietnam’s Civil Code.

Thereafter, the applicant appealed to the court of second instance and the case number is 252/2017/KDTM-PT.

On 9 Dec. 2017, the court of second instance issued a final ruling, upholding the decision of the trial court.

The court of second instance also held the same view as the trial court:

Firstly, the respondent was not properly summoned, and neither were Chinese court documents served on the respondent within a reasonable time in accordance with Chinese law. This prevented the respondent from exercising his right of defense.

Secondly, given that there was no civil relationship between the applicant and the respondent, the lawsuit brought by the applicant against the respondent in the Chinese Court was unfounded, which violated Vietnam’s legal principles.

II. Our comments

1. Milestone

This is the first case we have found involving Vietnamese recognition and enforcement of Chinese judgments.

China and Vietnam are neighbouring countries and have very close economic and trade ties. According to Vietnam Customs, trade between Vietnam and China reached USD 165.8 billion in 2021, an increase of 24.6% year-on-year. According to Chinese Customs, bilateral trade between China and Vietnam exceeded USD 200 billion for the first time in 2021, reaching USD 230.2 billion, up 19.7% year-on-year in USD terms.

As of now, unexpectedly, there is only one publicly known case in this field.

However, given the Treaty between China and Vietnam, mutual recognition and enforcement of judgments are to be expected.

2. Refusal grounds

In accordance with Article 17 and Article 9 of the Treaty between China and Vietnam, there are four circumstances under which the court of the requested Party may refuse to recognize and enforce the decisions made by the other Party:

  1. the foreign judgment is not effective or is not enforceable in accordance with the laws of the Party in which the decision is rendered;
  2. the foreign judgment is rendered by a court without jurisdiction in accordance with the jurisdiction provisions of Article 18 of the Treaty;
  3. the foreign judgment is made in absentia and the defaulting party has not been properly served or the party who lacks the legal capacity in litigation has not been duly represented in accordance with the laws of the Party in which the judgment is rendered;
  4. the court of the requested Party has rendered an effective decision or is holding a hearing in respect of the same dispute involving the same subject matters between the same parties or has recognized an effective decision on the same rendered by the court of a third State; or
  5. recognition and enforcement of the judgment concerned will violate the basic principles of the laws of the requested Party or the sovereignty, security, and public interests of the state

Vietnamese courts of the first instance and the second instance both invoked ground iii (due process) as the refusal ground. Vietnam is similar to China in this regard. Chinese courts also pay close attention to due process in cases involving the recognition and enforcement of foreign judgments.

It should be noted that the Vietnamese court examined the merits of the case, and concluded that there was no civil relationship between the plaintiff and the defendant, which violated Vietnam’s legal principles – a refusal ground (public policy) adopted by the Vietnamese courts. This is not similar to the current practice in China. Chinese courts generally do not examine the merits of foreign judgments, and apply public policy ground in a very prudent manner.

3. Database

Information about the case came from the database of Vietnam’s Ministry of Justice.

We believe that this database of Vietnam’s Ministry of Justice can work as a wonderful tool. It enables foreigners to easily understand the attitude and practice of Vietnam’s judicial system in relation to foreign judgments and arbitration awards, and also makes them more predictable for international investors.

 

Photo by Silver Ringvee on Unsplash

Contributors: Guodong Du 杜国栋 , Meng Yu 余萌

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