2021 Handouts and Tutorials [PDF]

Zitiervorschau

FOREIGN TRADE UNIVERSITY - HCMC CAMPUS PROFESSIONAL OPERATION FACULTY DEPARTMENT OF LAW

INTERNATIONAL BUSINESS LAW

PART I: HANDOUTS & TUTORIALS

HCMC, 2021

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Jan 19, 2021

CHAPTER 1: INTRODUCTION TO INTERNATIONAL BUSINESS LAW Part 1. Decide if the following statements are TRUE or FALSE 1. Case law and official letters are sources of Vietnam’s law. 2. Case law is source of international business law. 3. Case law is not the source of law in civil law jurisdictions Part 2. Questions and case problems 1. How does international business differ from domestic business? Explain how those differences affect the risk of doing business internationally. What factors influence that risk? 2. What is the importance of international business law? 3. What are the sources of international business law? 4. Distinguish between private law and public law. 4. What are the difference between the civil law and common law system? Part 3. Multiple choice 1. According to Vietnam’s law, which of the following is NOT a type of delegated legislation? A. Decree B. Circular C. Ordinance D. Official letter 1

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2. What is the difference between private law and public law? A. Private law refers to the relationship between individual citizens. Public law refers to the relationship between individual citizens and the state. B. Public law refers to the relationship between individual citizens. Private law refers to the relationship between individual citizens and the state. C. Private law relates to crimes committed inside the home. Public law relates to crimes committed in public places. D. Private law relates to court hearings conducted in private. Public law relates to court hearings conducted in public. 3. Which of the following accurately reflects the distinction between substantive and procedural law? A. Substantive law reflects the rules on procedure and evidence. Procedural law reflects the elements or conditions for the law to apply. B. Procedural law reflects the rules on procedure and evidence. Substantive law reflects the elements or conditions for the law to apply. C. Substantive law and procedural law are synonymous. D. None of the above. CHAPTER 2: PARTIES DOING BUSINESS ABROAD Part 1. Decide if the following statements are TRUE or FALSE 1. A multiple member LLC is considered as a legal person when registering for business. 2. A multiple member LLC is allowed to issue all kind of securities

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3. The time limit for members to contribute the capital to the LLC as committed is agreed upon by all members. 4. Each type of enterprise may have more than one legal representative. 5. Chairman of an LLC may not be the member of such company. 6. A controlling board is compulsory in the organizational structure of an LLC 7. A LLC director must have experience in company management. A voting preference shareholder carries more votes than an ordinary one Part 2. Questions and case problems 1. What are similarities and differences between Representative offices and branches? 2. List forms of business made by foreign traders in Vietnam 3. Company A (Vietnam) entered into a contract with Company B (Japan): Commodity: Chilled Crabs Delivery term: FOB Da Nang Payment: L/C at sight As the contract is silent on the issue of whether the crabs are with or without their claws, the company A further contacted Mr C – Head of the Representative office of Company B in Vietnam for the details. Mr C then revised the contract by adding the wording ‘Crabs without their claws’. Company B then rejected to take the delivery and claimed that Company A delivered non-conforming commodity. Decide if A, B or C is in breach. Explain. 4. Which of the following are confusingly similar to the registered business name, which is Duyên Hải Construction JSC? 3

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1. Duyên Hải JSC 2. Duyên Hải Construction Co.,Ltd 3. Duyên và Hải Construction JSC 4. Duyên & Hải Construction JSC 5. Now that the ‘T&T’ shoes brand is one of the top brand in the Vietnamese shoes market, some shoes traders in Ba Chieu Market together establish a company, whose Vietnamese name and the abbreviated name are ‘Tập thể và tôi’ and ‘T&T’ respectively. Does the newly- established company’s name contravene Law on Enterprises 2020? 6. A, B, C together established D Co.,Ltd. Upon their agreement of capital contribution, A committed to contribute 500 mil, B with 350 mil and C with his factory of 450mil. After that, C wants to contribute his 450-million car instead of his factory as committed. a. Is C allowed to change his type of contributed assets? b. On the due date, B contributed 200 mil (The committed capital amount is 350mil). - How to deal with the unpaid capital amount? - Is B still the member of the company? If yes, what is his liability? 7. X Co.,Ltd: A = 200mil, B=300mil, C=250 mil, D=350 mil, E=150 mil. Charter capital amount = 1.250 bil. C wants to transfer his capital amount: 1/ the 4 remaining members want to purchase b’s capital amount 2/only A and B want to purchase 33/ only E wants to purchase Decide the amount each member could purchase.

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8. The B.M has 5 members: A (Chairperson), B, C, D, E. 4 members attend the meeting to vote on the dismissal of General Director H and G’s appointment as new G.D. Results: A, B agree to dismiss H and appoint G C,D object to the dismissal and appointment E sends the vote by mail: “Object to the dismissal of Mr H” Who is the G.D? H or G? 9. I am currently a director of a jsc located in hcm city. I plan to establish a subsidary company located in Hanoi. Am I allowed to be the director of this newly-established company? 10. Mr A is the owner of the sole proprietorship B specialized in trading construction materials. Mr A plans to expand its business into construction and determines to run his business alone as he has complete control and decision-making power over the business. Which of the following are legal? 1. Mr A plans to establish another sole proprietorship specialized in construction. 2. The sole proprietorship B plans to establish a 1-member LLC and authorize Mr A to act concurrently as both the President and Director of this company. 3. The sole proprietorship B plans to mobilize capital by issuing 1000 enterprise’s bonds. 4. The sole proprietorship B plans to establish its branches based in Ha Noi and Can Tho specialized in construction. 5. Mr A plans to establish 1-member LLC whose business line is construction. Mr A is the owner of this company.

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11. Duong, Thanh, Trung, Hai established the Pacific Co., Ltd specialized in export and export promotion. The company has registered the charter capital of 5 VND billion. The capital contribution of each member is as follows: - Duong contributed 800 million in cash (16% of charter capital) - Thanh contributed via the debt certificate of Thanh My company of 1.3 VND billion. It is agreed by all members that this certificate is valued at 1.2 billion (24% of charter capital) - Trung contributed capital by his house whose value at the time of the capital contribution is 700 million. However, all the members agreed to evaluate it at 1.5 billion (30% of charter capital) as they all believe that the house price will be significantly increased given that the road in front of the house may be expanded in the near future. Hai committed to contribute VND 1.5 billion in cash (30% of chartered capital) but initially contributed only 500 million VND. The rest 1 billion will be paid under the company’s request. After 3 months of its operation, Hai failed to contribute the rest capital amount as committed and the company has a net profit of 800 million. 1. Does Hai receive the profit in the proportion to his contributed capital (500 million) or his committed capital amount (1.5 billion)? 2. Is it legal to contribute capital by a debt certificate? Thanh My company paid off only 600 million because it went bankrupt. Does Thanh have to contribute the rest? How will the profit be distributed? 3. Is it legal if the house was overvalued compared with its actual value at the time of capital contribution? 12. Which of the following are entitled to establish and manage the enterprises?

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1- Mrs C – Head of the HCMC Department of Industry and Trade 2- Mr A – Lecturer of FTU 3- Mr Y – Head of Representative office of foreign trader in VN 4- The Sole proprietorship B CHAPTER 3: INTERNATIONAL SALE OF GOODS CONTRACT Part 1. Questions and case problems 1. A Co.,Ltd – A Vietnamese seller whose headquarter in District Binh Thanh entered into a sale of garment contract with B SJC – A Vietnamese buyer located in District 1. The two parties chose the Korean law as the applicable law for contract as both legal representatives of such companies are Korean. This choice of law provision is valid? If not, which law would be applied to settle the dispute? 2. Should Hong Kong (or Macao) acquire an effective Convention status by reason of being a territorial unit of China? 3. The contract No.170211 VCT-FETA concluded on 17/1/2011 b/w VIET COTTON YARN INVESTMENT TRADING JSC & FETA TEKSTIL SAN.TIC.LTD.STI: “ALL OTHER CONDITIONS, WHICH NOT STATED IN THIS CONTRACT, WILL REFER TO INCOTERMS 2000’’. What do you think about this choice of law? 4. An Ecuadorian company (the Buyer) entered into a contract with a Texan company (the Seller) for the sale of gasoline. The requirement of the buyer is to opt out of the CISG and choose Ecuadorian domestic sales law as the applicable law for the contract. Which of the following choice of law clause meets the buyer’s requirements? OPTION 1: ‘CISG SHALL NOT BE APPLICABLE FOR THIS CONTRACT’ OPTION 2: ‘THE APPLICABLE LAW: THE LAWS OF THE REPUBLIC ECUADOR’ 7

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5. On 25 Feb 2003, Metal Construction JSC (A) (VN), represented by Mr Ngô Văn Kèn entered into a contract with Mechel Metal Supply Ltd (Lichtenxtain) (B). A failed to open the L/C within the time limit. The goods were made available at destination port but A failed to take delivery. B then sold the goods to another company at a lower price. B brought A to the ICC. A’s arguments: -

The contract is invalid as Mr Ken is not the legal representative. He is merely the director of the dependent unit of company A.

-

Mr Ken failed to advise the Board of Management of the existence of contract.

B’s arguments: -

In the past, Mr Ken, acting as an authorized legal representative, used to conclude the contract with Company B.

-

Mr Ken declares that he advised the Director of the contract by phone.

Decide if A or B is in breach. Explain. 6. A requests B to set out the conditions for the renewal of a contract for the supply of wine, due to expire on 31 December. In its offer B includes a provision stating that “if we have not heard from you at the latest by the end of November, we will assume that you have agreed to renew the contract on the conditions indicated above”. Discuss. 7. Under a long-term contract for the supply of wine B regularly met A’s orders without expressly confirming its acceptance. On 15 November A orders a large stock for New Year. B does not reply, nor does it deliver at the requested time. Discuss whether B is in breach. 8. The Polish seller (Y) sent an offer to the Vietnamese buyer (X). The offer is valid until 30th May. 8

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26/5: X accepted the offer on one condition –that Y might reduce the price 29/5: X accepted the entire content of the initial offer 27/5: Y concluded the contract with another buyer. X claims for damages. Decide if Y is in breach. Explain. 10. Plaintiff, a Swiss corporation, entered into contracts to purchase chicken from B.N.S. International Sales Corporation. Defendant was a New York corporation. The English language contracts called for the delivery of “chicken” of various weights. When the birds were shipped to Switzerland, the 2-lb. sizes were not young broiling chickens as the plaintiff had expected, but mature stewing chickens or fowl. The plaintiff protested, claiming that in German the term chicken referred to young broiling chickens. The question for the court was: What kind of chicken did the plaintiff order? Was it “broiling chicken,” as the plaintiff argued, or any chickens weighing 2 lbs., as the defendant argued? Frigaliment Importing Co., Ltd. v. B.N.S. International Sales Corp., 190 F. Supp. 116 (S.D.N.Y. 1960). What could the parties have done to avoid this misunderstanding? 11. A, a manufacturer in country X, sells a nuclear power station to B, a utility company in country Y. Under the terms of the contract A undertakes to supply all the power station’s requirements of uranium for ten years at a price fixed for that period, expressed in US dollars and payable in New York. The following separate events occur: (i)

After five years the currency of country Y collapses to 1% of its value against the dollar at the time of the contract.

(ii)

After five years the Government of country Y imposes foreign exchange controls which prevent B paying in any currency other than that of country Y.

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After five years the world uranium market is cornered by a group of speculators. The price of uranium on the world market rises to ten times the contract figure. Decide if aforementioned events are force majeure.

12. Lucent Technologies International, Inc., subcontracted with a Saudi Arabian company, National Group, for work that Lucent was doing as part of a $4 billion telecommunications project for the Saudi government. National Group sued Lucent for damages for terminating the contract. The damages included an amount for lost profits. The contract contained no choice of law provision and Saudi law applied. The U.S. court had to decide if recovery of lost profits was prohibited as gharar. After all, gharar prohibits gambling, or the sale of the “calf while still in the womb” or of “fish in the sea.” What is gharar, and how does this Islamic law principle affect calculation of damages for breach of contract under Islamic law? Would this decision have been different under the CISG? National Group for Communications and Computers, Ltd. v. Lucent Technologies International, Inc., 331 F. Supp. 2d 290 (D.N.J.2004). 13. Bende had a contract to sell boots to the government of Ghana for $158,500. Bende promised to deliver the boots “as soon as possible.” Bende then contracted with Kiffe, who agreed to make the boots in Korea and to deliver them in Ghana within sixty to ninety days at a price of $95,000. The contract contained no force majeure clause. Kiffe knew that Bende was going to resell the boots. Kiffe failed to deliver the boots on the agreed date because a train carrying the boots had derailed in Nebraska. Bende brought this action against Kiffe for breach of contract. Bende and Sons, Inc. v. Crown Recreation and Kiffe Products, 548 F. Supp. 1018 (E.D.N.Y. 1982). a. Kiffe claimed that the contract had been rendered commercially impracticable and that performance was excused. Do you agree? Why or why not? Was the train wreck foreseeable or unforeseeable?

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b. What could Kiffe have done in negotiating the contract to protect itself from this contingency? c. If Bende would have incurred an additional $18,815 in freight charges and miscellaneous costs had the breach not occurred, what would be its measure of damages? Is Bende entitled to lost profits? How are damages measured in a case such as this? d. In this case, the risk of damage or loss to the boots while in transit remained with the seller, Kiffe. How would the case differ if the parties had agreed that Kiffe would merely ship (not deliver) the goods by a certain date and that Kiffe would bear the risk of loss during transit? ( 14. Rotorex, a New York corporation, agreed to sell air compressors to Delchi, an Italian company. The compressors were for use in producing Ariele air conditioners. The first shipment reached Delchi, and Delchi paid $188,000. In preparation, Delchi had spent 39 million lire for special tooling, and 27 million lire for special insulation and tubing for use in making Arieles. Delchi expended 18 million lire in shipping and customs duties. Delchi then paid $130,000 to Rotorex for a second shipment. While the second shipment was enroute, Delchi discovered that the first lot was nonconforming. It rejected the compressors and canceled the contract. Delchi spent several million lire to replace problem grommets, inspect, repair, and retest the compressors in an effort to make them usable. During this time, Delchi’s assembly line shut down, incurring unproductive assembly worker wages. Delchi was able to obtain some substitute compressors from other sources in time for the selling season, which it had to adapt for Ariele units at additional expense. It arranged to have a shipment of Sanyo compressors, which it has previously ordered, sent to it by air freight so that it could fill someorders. Delchi was also unable to fill some orders, amounting to millions of lire in lost profit. Delchi brought this action for damages. What expenses should Delchi be allowed to recover from Rotorex as a result of its delivery of nonconforming and why? How should the court

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measure each element of damages? Delchi Carrier, SpA v. Rotorex Corp., 1994 WL 495787 (N.D.N.Y. 1994). 15. Your company, Acme Widgets, sells its widgets worldwide. Acme has a contract for 250,000 widgets to be shipped to the Czech Republic. The price stated in the offer and acceptance is $1 per widget, C.I.F. Prague. During the production of the widgets, the price of one component increases 250 percent due to a shortage. In addition, these widgets are due for shipment on June 15 and arrival in Prague no later than July 1. On June 15, a stevedores’ strike begins, which lasts for 60 days. Are either or both of these factors—the material price increase and the stevedores’ strike—an excuse for Acme’s nonperformance? What legal theory might Acme use under U.S. common law as an excuse? Under the CISG? 16. A German seller sued a Russian buyer because the buyer failed to pay for the equipment supplied to the buyer pursuant to their contract. The buyer acknowledged it had received the goods but said its nonpayment should be excused because it was due to the failure of the bank responsible for the buyer’s foreign currency transactions to make payment to the seller. The buyer claimed the bank’s lack of the available currency resources should be regarded as a force majeure, discharging it from liability for nonpayment to the buyer. The contract did include a force majeure clause, but it did not refer to the buyer’s lack of foreign currency. Do you agree with the buyer? Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry 17 October 1995. (See case law on UNICTRAL texts Abstract No. 142; reproduced with permission on Pace University’s CISG Website.) 17. A U.S. software manufacturer sold software for processing credit card charges to a U.S. limited liability company that was a wholly-owned subsidiary of a German corporation. The software did not function properly and generated erroneous reports of charges. The U.S. buyer and its German parent sued the software manufacturer for breach of contract. The plaintiffs asserted that the CISG was 12

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applicable to the transaction as the head of the German parent company signed the purchase and sales contract. The software manufacturer alleged that the CISG was inapplicable as the contract was addressed to the U.S. limited liability company, and the purchase price was paid with a check tendered by the U.S. purchaser. Is the CISG applicable to this transaction? Why or why not? American Mint LLC v. GOSoftware, Inc., 2006 U.S. Dist. LEXIS 1569 (M.D. Pa. 2006). 18. A Canadian seller sued a U.S. purchaser for the purchaser’s refusal to pay for concrete light poles utilized in a construction project in Florida. The purchaser counterclaimed that it had sustained damages because the poles had not been delivered on time. The seller admitted that it had problems with production and was unable to ship a truck load of poles every two weeks as it had done in the past. Nevertheless, the purchaser accepted the poles that had been shipped. Applying the CISG, the court interpreted Article 39 to encompass not only nonconforming goods but also goods that were not shipped in a timely manner pursuant to the contract. Thus, the light poles could be deemed nonconforming based not on their performance but rather on their untimely delivery. As the purchaser had given notice of the untimely delivery of the light poles within two years from their delivery, it was free to pursue its counterclaim. Do you agree with this result? Is the court’s interpretation of Article 39 too expansive? Was Article 39 intended to include untimely delivery as well as nonconforming goods? Sky Cast, Inc.v. Global Direct Distribution, LLC, 2008 U.S. Dist. LEXIS21121 (E.D. Ky. 2008). 19. A U.S. purchaser sued a German limited partnership alleging that the partnership breached a contract to deliver 15,000-18,000 metric tons of used Russian railroad rail to the U.S. company for recycling into other products. The rail was to be shipped from the port in St. Petersburg, Russia, travel by sea for four weeks, and be delivered to the purchaser at its factory in Illinois by December 31, 2002. The seller failed to meet this deadline allegedly due to the unexpected early freezing of the St. Petersburg port on approximately December 1, 2002. The seller thus alleged that its performance was subject to force majeure. In denying the purchaser’s motion for summary judgment, the 13

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court acknowledged that the contract was governed by the CISG and, specifically, Article 79 relating to force majeure. It also noted the absence of U.S. case law interpreting Article 79. However, instead of applying foreign case law or scholarly commentary to the interpretation of Article 79, the court simply applied similar provisions contained within § 2-615 of the UCC. Applying the UCC, the court concluded that the freezing of the port rendered the seller’s performance impracticable, and the premature freezing was unforeseeable. The court’s opinion has been condemned as “the worst CISG decision in twenty-five years” due to its disregard of the international character of the CISG and the need for uniformity in international trade. It has also been cited as an example of the “homeward trend” in improperly utilizing analogous domestic law to interpret the CISG. What is meant by “homeward trend”? Do you agree with the application of this trend and result in this case? Compare the opinion with that in Chicago Prime Packers Inc. issued by the same court in the same year. What are the possible explanations for the divergence in sources utilized to interpret the CISG? Raw Materials, Inc. v. Manfred Forberich GMBH & Co., 2004 U.S. Dist. LEXIS 12510 (N.D. Ill. 2004). CHAPTER 4: CARRIAGE OF GOODS BY SEA CONTRACT Part 1. Questions and case problems 1. Captain Ishmael has the misfortune of shipping porcelain vases and sandstone statues for two different English buyers across the Malacca Straits on the Hispaniola. He packs the two commodities compactly in crates and secures a carriage-of-goods contract contained in a bill of lading (that does not contain a force majeure piracy clause). Given the danger involved, Ishmael employs Starbuck to keep a lookout for pirates but the latter falls asleep and fails to stop pirates from boarding the ship and stealing all of the cargo. The two buyers sue the Hispaniola and Starbuck separately for the value of the respective commodities that were being shipped. Discuss their liability based on the Hague and the Hague-Visby rules.

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2. Fishman shipped a container of boys’ pants on a ship owned by Tropical. The container was lost at sea due to improper storage. The pants were packed into bundles of 12 each and placed into what is known in the industry as a “big pack.” A “big pack” is similar to a 4’ × 4’ pallet, partially enclosed in corrugated cardboard, with a base and cover made of plastic. The bill of lading stated, “1 × 40 ft. [container] STC [said to contain] 39 Big Pack Containing 27,908 units boy’s pants.” Fishman maintains that Tropical is liable for an amount up to $500 for each of the 2,325 bundles. If the carrier is liable for up to $500 per “package,” what is the limit of the carrier’s liability? Fishman & Tobin, Inc. v. Tropical Shipping & Const. Co., Ltd., 240 F.3d 956 (11th Cir. 2001).\ CHAPTER 5: DISPUTE SETTLEMENT Part 1. Multiple choices. 1. Which of the following is true concerning negotiation? A. The outcome arising from negotiation is final and binding upon the parties to the dispute. B. Negotiation shall be exhausted prior to resorting to litigation and arbitration. C. Negotiation is pursued upon the consent of the parties to the dispute. D. Negotiation is more efficient, although more expensive, than mediation. 2. A Vietnamese company (seller) located in Binh Thanh District, Hochiminh city intends to sue a Japanese buyer in a Vietnamese court for violation of contract for sales of goods. Under these facts, the trial court that will first hear and decide this case is the: A. Economic tribunal in the Hochiminh city people’s court. B. Economic tribunal in Binh Thanh District people’s court.

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C. Supreme People's Court of Vietnam. D. High-level People’s Court of Vietnam. 3. Which of the following is NOT one of the characteristics of arbitration? A. Confidentiality B. Party autonomy C. Simplified procedures and faster decisions D. Subject to appeal on the merits 4. According to Vietnam’s law, is there any hierarchy or priority among the various methods of dispute resolution? A. There is no hierarchy among these methods and the choice belongs to the disputing parties. B. Yes, negotiation and mediation shall be exhausted prior to resorting to litigation and arbitration. C. Litigation and arbitration prevail over negotiation and mediation, since they are binding upon the parties. D. It is a matter of an impartial third party to decide which method will have priority over the other. 5. Where the contract is silent on the time limit for lodging complaints and the buyer failed to pay the price of the goods, according to Law on Commerce 2005, the seller is entitled to lodge the complaint within: A. Three months from the date of delivery of goods. B. Six months from the date of delivery of goods. 16

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C. Nine months from the date on which the buyer shall have to pay the price in full. D. Two years from the date on which the buyer shall have to pay the price in full. 6. If the buyer fails to lodge the complaint regarding the non-conforming goods within the time limit stipulated in the contract, according to Vietnam’s law, which of the following statements is true? A. The seller is not liable for delivery of non-conforming goods. B. The buyer is not entitled to sue the seller for delivery of non-conforming goods. C. A and B D. None of the above. 7. The arbitration agreement is null and void if: A. It fails to specify a specific arbitration center to resolve the dispute. B. It fails to specify how the arbitrator is selected. C. It is made via an exchange between the parties by fax. D. It is made between parties lacking legal capacity. 8. In a binding arbitration clause: A. A contractual provision gives the parties the opportunity to select arbitration, mediation, or litigation as the method of dispute resolution. B. The losing party must be handcuffed and led out of the arbitration room, and immediately begin serving an arbitrator-imposed term of imprisonment. C. A contractual provision mandates that all disputes arising under the contract must be settled by arbitration. D. None of the above 17

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9. Which of the following statements concerning arbitration is NOT true? A. Arbitration is the procedure by which parties refer their dispute to (an) arbitrator(s). B. It is common practice for commercial contracts to contain express clauses referring disputes to arbitration. C. Any award given in arbitration is enforceable. D. Invalidity or unenforceability of the contract shall result in the invalidity of the arbitration agreement. 10. Which of the following is the convention that makes arbitration awards more easily enforceable than litigation judgments in foreign courts? A. CISG B. The New York Convention of 1958 C. Hague-Visby Rules D. Rome Convention of 1980 Part 2. Questions and case problems You are CEO of a large publicly traded company. You are negotiating several contracts with foreign governments in Vietnam, India, and Brazil to provide hardware and software to government agencies. Are you interested in including an arbitration clause in the contract? What are the pluses and minuses of such a clause? What alternatives do you have? How does your plan change, if at all, if you are dealing with multiple corporations in the same countries? What if you are dealing with one corporation in the United Kingdom and one in New York? Discuss how these variables may affect your decision. 2. You have started a small high-tech company in New York.

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a. You are running an informational Website. Customers must call your 800 number to place an order. A customer in Alaska is very unhappy with your product. Can he or she successfully sue you in Alaska? b. You decide you want to be clear in all your future dealings, so you insert a forum selection clause in all of your contracts with your customers that stipulates arbitration in New York under the rules of the American Arbitration Association. Would this be enforceable? c. What if the forum selection clause stated that all disputes would be heard in Tibet? d. What ramifications are there to changing your Website and making it more interactive so that people can place orders there? e. What if your competitor is using your trade secrets and your patents without your permission or payment? Would you be interested in arbitrating this dispute? Explain. f. What difference would it make if your competitor were a Dutch company? g. The CEO has asked you to outline a comprehensive strategy to deal with customers, suppliers, and citizen groups complaining about a myriad of issues as well as employee complaints (both domestic and foreign). Prepare a short memo addressing key principles, major concerns, and suggested actions

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INTERNATIONAL BUSINESS LAW TRAN THANH TAM (LL.M, PhD Candidate)

CONTACT INFORMATION Lecturer: TRẦN

THANH TÂM

[email protected]

0918. 014. 246

COURSE INTRODUCTION 1. Course content 2. Course objectives 3. Reading materials 4. Teaching method 5. Learning method 6. Course assessment

1. COURSE CONTENT 1

2 3 4

5

Introduction to International Business Law Parties doing business in Vietnam International Sale of Goods Contract

Carriage of Goods By Sea Contract Dispute Resolution

2. COURSE OBJECTIVES 1. Understand sources of IBL, similarities and differences between IBL and domestic law 2. Grasp legal status of parties doing business in Vietnam. 3. Recognize valid international business contracts in general, sale of goods contract and carriage of goods by sea contract in particular. 4. Be capable of utilizing the regime of commercial dispute resolution in international context.

3. READING MATERIALS

Textbook(s): International Business Law: Handouts

3. READING MATERIALS Optional reading(s): 1- Nguyễn Minh Hằng, International Business Law (2012) (in Vietnamese) 2- Nguyễn Thị Mơ, Law for doing business abroad (2015) (in Vietnamese) 3- Indira Carr and Peter Stone (2018), International Trade Law 4- Richard Schaffer, Filiberto Agusti and Lucien Dhooge (2014) International Business Law and Its Environment 5- Ray August, Don Mayer and Michael Bixby (2013) International Business Law: Text, cases and readings

3. READING MATERIALS • VIETNAMESE LEGAL DOCUMENTS: 1. LAW ON ENTERPRISES 2020 2. LAW ON COMMERCE 2005 3. CIVIL CODE 2015 4. CIVIL PROCEDURE CODE 2015 5. MARITIME CODE 2015 6. LAW ON VIETNAM COMMERICAL ARBITRATION 2010 7. OTHER BY-LAWS

3. READING MATERIALS • INTERNATIONAL TREATIES: 1. Convention on Contract for International Sale of Goods 1980 (CISG) 2. Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) 3. Hague – Visby Rules 4. Hamburg Rules

4. TEACHING METHOD • BASED ON THE LECTURES (HANDOUTS) GIVEN TO STUDENTS • SOCRATIC DIALOGUE

5. LEARNING METHOD • • • •

LEGAL THINKING DISCUSSION GROUP PRESENTATION SELF - STUDY

LAW ON COMMERCE 2005 Article 317. Forms of resolution of disputes 1. Negotiations between the parties. 2. Mediation between the parties by a body, organization or individual selected by the parties to act as the mediator. 3. Resolution by the Arbitration or the Court. Procedures for resolution of commercial disputes by arbitration or a court shall comply with procedures applicable to arbitrations or courts provided for by law.

6. COURSE ASSESSMENT MARK (%)

FORM OF ASSESSMENT

ATTENDANCE

10%

ATTENDANCE CHECK

MID – TERM TEST

30%

TRUE/FALE STATEMENT

FINAL EXAM

60%

WRITING TEST (TRUE/FALSE STATEMENT + SHORT ANSWERS + CASES)

PLUS MARK

TENTATIVE SCHEDULE DAY

CONTENT

DAY

CONTENT

1ST DAY - 18/1

CHAPTER 1

9TH DAY - 26/2

CHAPTER 3

2ND DAY - 20/1

CHAPTER 2

10TH DAY – 01/3

CHAPTER 3

3RD DAY – 22/1

CHAPTER 2

11TH DAY – 3/3

CHAPTER 4

4TH DAY – 25/1

CHAPTER 2

12TH DAY – 5/3

CHAPTER 4

5TH DAY – 27/1

CHAPTER 2

13TH DAY - 8/3

CHAPTER 5

6TH DAY – 29/1

CHAPTER 3

14TH DAY – 10/3

CHAPTER 5

7TH DAY – 22/2

CHAPTER 3

15TH DAY – 12/3

GUEST SPEAKER

8TH DAY – 24/2

CHAPTER 3

CHAPTER 1: INTRODUCTION TO INTERNATIONAL BUSINESS LAW

TRẦN THANH TÂM (LLM, PhD Candidate)

READING MATERIALS 1. Richard Schaffer, Filiberto Agusti and Lucien Dhooge (2014) - International Business Law and Its Environment (See Chapter 1 – p.2-23; Chapter 2 – p.29-36, p.47-49) 2. Ray August, Don Mayer and Michael Bixby (2013) International Business Law: Text, cases and readings (See Chapter 1- p.21-28; 65-70) 3. Nguyễn Minh Hằng, International Business Law (2012) (See Chapter 1)

OUTLINE 1. Definition and scope of IBL 2. Sources of IBL 3. IBL and categories of law

DISCUSSION • Your Singaporean counterpart on a contract negotiation is demanding that the appropriate law be that of Singapore. Do you agree?

• Your customer in China has not paid your invoice – what do you do?

What is the importance of IBL? • to make us aware of the legal issues involving businesses and how to deal with them • To avoid risks arising from international business transactions • IBL is helpful in maintaining business in legal ways • to have secured business: If a business is found not to be in compliance with a law, it could possibly be subject to very heavy fines! 19

1. DEFINITION & SCOPE OF IBL

• International Business Law (IBL) is a body of law and regulations, derived from national and international sources, that governs international business transactions.

INTERNATIONAL BUSINESS TRANSACTIONS

• List forms of international business/methods of entering a foreign market – International trade & transportation – The Licensing of intellectual property – Foreign direct investment

The Scope of IBT: The Practitioner Perspective the legal relationships between buyers and sellers of goods and services;

their relationships with carriers

the arrangements they have with insurer

The operations of firms in foreign host countries

Dispute settlement

2. Sources of IBL • What are the sources of: – Vietnam’s law – IBL

23

Sources of law in Vietnam Legislation

Delegated legislation

Constitution Acts, Codes

Ordinances Decrees Circulars Decisions

24

2. Sources of IBL • Treaties and conventions – Treaty = Legally binding agreements between a minimum of two states – Convention = Legally binding multilateral treaties between states sponsored by international organizations (i.e. U.N.), usually negotiated on a regional/global basis and open to adoption by many nations.

25

2. Sources of IBL • Domestic law – Legislation – Case law

26

2. Sources of IBL • Lex mercatoria (trade usages) – Translates as the “law merchant” – body of rules created by the trade community to serve the needs of international trade – Origin in the Middle Ages when international fairs were held in places such as St Ives in England and in Italy. At these fairs they had their own “fair” court which applied its own rules and recorded its decisions, some of which are still available

27

Examples of Incorporation of Lex Mercatoria • CISG Article 9 – (1) The parties are bound by any usage to which they have agreed and by any practices which they have established between themselves. – (2) The parties are considered, unless otherwise agreed, to have impliedly made applicable to their contract or its formation a usage of which the parties knew or ought to have known and which in international trade is widely known to, and regularly observed by, parties to contracts of the type involved in the particular trade concerned.

• UNIDROIT PRINCIPLES OF INTERNATIONAL COMMERCIAL CONTRACTS – (Purpose of the Principles) – These Principles set forth general rules for international commercial contracts. – They may be applied when the parties have agreed that their contract be governed by general principles of law, the lex mercatoria or the like.

3. Categories of Law Law is a very large field, and it is common to divide it into categories

• Private law and public law • Common law and Civil law

30

Private Law and Public Law • Private Law and Public Law are concerned with relationships

31

Private Law • Private Law deals with the relationships between ordinary people in everyday transactions • That includes you and me, as well as businesses and companies

32

Private Law

Individual

Individual

Law regulates relationship between them

33

Public Law • Public Law deals with the relationships between government organisations and ordinary citizens – also between different government organisations

34

Public Law State

State Bodies Individual

Law regulates relationship between them

35

DISCUSSION • • • • • • • •

Criminal law Constitutional law Administrative law Law of contract Tort law Property law Family law Company law

IBT as a Sub-Category of International Law Law

Domestic Law

International Law

Public International Law

Private International Law

IBT

Common Law and Civil Law • Common Law and Civil Law are terms used to describe legal systems • A legal system is the way the law is structured and operated in a country – England and Vietnam have different legal systems

38

Common Law • Common Law is used to describe legal systems based on the English legal system • These are usually countries which were once part of the British Empire – eg: America, Australia, New Zealand

39

Civil Law • Civil Law is used to describe legal systems which are based on old Roman Law (from the Roman Empire in what is now Italy) • eg: France, Germany

40

Common Law v. Civil Law Common Law Civil Law • Case law and the courts • Consists of a legal code are most important of general principles source of law which is the source of law

41

Common Law v. Civil Law Below: A world map showing countries today that have a civil law system (light blue), countries that have a common law system (green), and countries that have both (orange).

42

CHAPTER 2: PARTIES DOING BUSINESS IN VIETNAM

READING MATERIALS LEGAL DOCUMENTS 1. Law on Commerce 2005 2. Law on Enterprises 2020 3. Law on Bankruptcy 2014 4. Law on Investment 2020 OPTIONAL READINGS 1. Nguyễn Thị Mơ, Law for doing business abroad (2015) (in Vietnamese) (See Chapter 2). 2. Trương Nhật Quang (2016), Law on Enterprises – Fundamental issues (in Vietnamese). 3. Phạm Hoài Huấn (2016), Law on Vietnam’s Enterprises – Cases – Explanation & Comments (in Vietnamese).

CHAPTER 2

I II II

1. DEFINITION

3. FOREIGN TRADERS IN VIETNAM

I. TRADER

2. CONDITIONS

1. DEFINITION • Art 5.6 Law on Commerce 1997: “Traders shall be individuals, legal persons, cooperatives, and family households having business registration for commercial activities which are carried out independently and regularly.” • Art 6.1 Law on Commerce 2005: Traders include lawfully established economic organizations and individuals that conduct commercial activities in an independent and regular manner and have business registrations

2. CONDITIONS FOR BEING A TRADER

Necessary

Sufficient

2.1. NECESSARY CONDITIONS 1. Parties (individuals, organizations) shall conduct commercial activities 2. Commercial activities are conducted independently 3. Commercial activities are conducted regularly

2.1. NECESSARY CONDITIONS Commercial activities mean activities for the purpose of generating profits, including: sale and purchase of goods, provision of services, investment, commercial promotion and other activities for the profit purpose. (Art 3.1 Law on Commerce)

2.2. SUFFICIENT CONDITIONS

→ The parties shall register their business

CEO, CHAIRMAN

3. FOREIGN TRADERS IN VIETNAM 3.1. Definition 3.2. Forms

3. FOREIGN TRADER IN VIETNAM 3.1. DEFINITION

“Foreign

traders mean traders established and making their business registrations according to the provisions of foreign laws or recognized by foreign laws”

(Art 16.1 Law on Commerce)

3. FOREIGN TRADERS IN VIETNAM 3.2. FORMS OF FOREIGN TRADERS IN VIETNAM + Representative Office (Art 3.6; 17; 18 Law on Commerce, Decree No. 72/2006/NĐ-CP) + Branch ( Art.3.7; 19; 20 Law on Commerce, Decree No. 72/2006/NĐ-CP)

DISCUSSION

1. What are similarities and differences between Representative offices and branches?

2. List forms of business made by foreign traders in Vietnam

DISCUSSION Company A (Vietnam) entered into a contract with Company B (Japan): Commodity: Chilled Crabs Delivery term: FOB Da Nang Payment: L/C at sight As the contract is silent on the issue of whether the crabs are with or without their claws, the company A further contacted Mr C – Head of the Representative office of Company B in Vietnam for the details. Mr C then revised the contract by adding the wording ‘Crabs without their claws’. Company B then rejected to take the delivery and claimed that Company A delivered non-conforming commodity.

II. ENTERPRISES UNDER THE LAW ON ENTERPRISES 2020 1. FUNDAMENTALS 2. FORMS OF ENTERPRISES UNDER THE LAW ON ENTERPRISES 2020 3. ESTABLISHMENT, DISSOLUTION AND BANKCRUPTCY OF ENTERPRISES

1. FUNDAMENTALS

1.1. HISTORY OF THE ENTERPRISE LAW IN VN

1.2. BASIC DEFINITIONS

1.1 HISTORY OF THE ENTERPRISE LAW IN VN Forms Business

of Prior to 2005

2005-2009

2009-2020

2021 onwards

Law on Cooperatives 2003

Law on Cooperatives 2012

Law on Cooperatives 2012

Law on Enterprises 2014

Law on Enterprises 2020

Cooperative

Law on Cooperatives 1996/2003

State-owned company

Law on Stateowned company 1995/2003

LLC

Law on Law on Enterprises 1999 Enterprises (Company Law 2005 and Law on Sole Proprietorship was annulled)

JSC Partnership Sole Proprietorship 100% foreignowned company Joint venture

Law on foreign investment in VN 1996 (amended in 2000)

1. FUNDAMENTALS 1.2. BASIC DEFINITIONS - ENTERPRISE “Enterprise means an organization that has its own name, assets, office, and is established or registered for establishment in accordance with law to do business. ” ( Art 4.10 Law on Enterprises 2020) ENTERPRISE – COMPANY?

1. FUNDAMENTALS 1.2. BASIC DEFINITIONS - BUSINESS ‘Business means the continuous conduct of one, several or of all of the stages of a process, from investment, production to sale of products or provision of services on the market for profit-making purposes.’ ( Art 4.21, Law on enterprises 2020) BUSINESS – COMMERCE ?

1. FUNDAMENTALS 1.2. BASIC DEFINITIONS - BUSINESS NAME + The Vietnamese name of an enterprise comprises two elements: Type of enterprise and proper name. + The proper name must be written in letters in the Vietnamese alphabets, the letters F, J, Z, W, numerals and symbols.

LEGAL ISSUES ON BUSINESS NAME

Law on Enterprises 2020 (Art 37 → 41)

PROHIBITED ACTS IN NAMING ENTERPRISES 1. Using names which are identical or confusingly similar to the name of a registered enterprise. 2. Using the name of a state agency, people’s armed forces unit, political organization, socio-political organization, socio-politico-professional organization, social organization or socio-professional organization as the whole or part of the proper name of an enterprise, unless it is consented to by such agency, unit or organization. 3. Using terms and symbols which contravene national historical traditions, culture, ethics and fine customs.

IDENTICAL NAME Identical names means that the Vietnamese name of an enterprise requesting registration, when written, is completely similar to the Vietnamese name of a registered enterprise. → A & B Co.,Ltd - a & b Co.,Ltd???

CONFUSINGLY SIMILAR a/ The Vietnamese name of an enterprise requesting registration is pronounced the same as the name of a registered enterprise; b/ The abbreviated name of an enterprise requesting registration is identical to the abbreviated name of a registered enterprise; c/ The foreign-language name of an enterprise requesting registration is identical to the foreign-language name of a registered enterprise; d/ The proper name of an enterprise requesting registration is different from the proper name of a registered enterprise of the same type only by an ordinal number, a cardinal number, a letter in the Vietnamese alphabet, or letters F, J, Z or W written next to or spaced after the proper name of such enterprise;

CONFUSINGLY SIMILAR dd/ The proper name of an enterprise requesting registration is different from the proper name of a registered enterprise of the same type only by the symbol "&" or "và", ".", "+", "-" and "_"; e/ The proper name of an enterprise requesting registration is different from the proper name of a registered enterprise of the same type only by the word "tân" immediately preceding or the word "mới" written next to or spaced after or before the proper name of a registered enterprise; g/ The proper name of an enterprise requesting registration is different from the proper name of a registered enterprise of the same type only by one of the following expressions: "miền Bắc", "miền Nam", "miền Trung", "miền Tây" and “miền Đông”; h/The proper name of an enterprise is identical to the proper name of a registered enterprise. The cases prescribed at Points d, dd, e, g and h of this Clause do not apply to subsidiaries of a registered enterprise.

2. FORMS OF ENTERPRISES UNDER THE LAW ON ENTERPRISES 2020 2.1. Limited Liability Company (46 – 87) 2.1.1. Two or more members (46-73) 2.1.2. One member (74 – 87) 2.2. Joint-Stock Company (111 - 176) 2.3. Partnership (177 - 187) 2.4. Sole Proprietorship (188 - 193) 2.5. Corporate group (194 - 197) 2.6. State-owned Company (88- 110)

2. FORMS OF ENTERPRISES BASED ON LAW ON ENTERPRISES - Characteristics: + Member + Member liability + Ability to issue shares + Legal entity status - Finance (Capital contribution, Capital Transfer, Profit contribution,…) - Management Structure, legal representative - Strengths, weaknesses of each kind of enterprises

2.1. LIMITED LIABILITY COMPANY WITH TWO OR MORE MEMBERS 2.1.1. CHARACTERISTICS A) MEMBER B) MEMBER LIABILITY C) ABILITY TO ISSUE SHARES D) LEGAL ENTITY 2.1.2. FINANCE A) CAPITAL CONTRIBUTION B) TRANSFER OF CONTRIBUTED CAPITAL AMOUNT C) REDEMPTION OF CONTRIBUTED CAPITAL AMOUNT D) ADJUSTMENT TO CHARTER CAPITAL E) PROFIT DISTRIBUTION 2.1.3. MANAGEMENT STRUCTURE

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.1. CHARACTERISTICS A) MEMBER - MAY BE ORGANISATION OR INDIVIDUALS - QUANTITY: 2≤x≤50 (?) LESS THAN 2 & MORE THAN 50???

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.1. CHARACTERISTICS B) MEMBER LIABILITY “Members must be liable for the debts and other property obligations of the enterprise within the amount of capital contributed to the enterprise” - Exception: Art 47.4: Committed capital?

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.1. CHARACTERISTICS C) ABILITY TO ISSUE SHARES → MUST NOT ISSUE SHARES except when it converts to become a shareholding company. → WHY?

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.1. CHARACTERISTICS D) LEGAL ENTITY → from the date of issuance of its Enterprise Registration Certificate (ERC). → (?) Contracts prior to business registration?

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.2. FINANCE A) CAPITAL CONTRIBUTION: + CONTRIBUTED ASSETS: ART 34 + VALUATION OF CONTRIBUTED ASSETS: ART 36 + TRANSFER OF OWNERSHIP OF CONTRIBUTED ASSETS: ART 35 + OBLIGATION OF CAPITAL DISTRIBUTION: Members must contribute capital to the company in full and in the type of assets as undertaken when registering establishment of an enterprise, within a period of ninety (90) days from the date of issuance of the ERC, excluding the duration of transporting or importing assets contributed as capital and conducting administrative procedures for conversion of ownership of assets.

2.1. LLC WITH TWO OR MORE MEMBERS (?) PROOF OF CAPITAL CONTRIBUTION: → Capital Contribution Certificate (Art 47.5)

2.1. LLC WITH TWO OR MORE MEMBERS B. TRANSFER OF CONTRIBUTED CAPITAL AMOUNT → Restrictions: Art 51-52-53 → Reasons for such restrictions?

2.1. LLC WITH TWO OR MORE MEMBERS C. REDEMPTION OF CONTRIBUTED CAPITAL AMOUNT - WHEN? ART 51.1, 53.4 - CONSEQUENCES?: + TERMINATION OF MEMBER STATUS + THE CHARTER CAPITAL WILL BE DECREASED

2.1. LLC WITH TWO OR MORE MEMBERS D. ADJUSTMENT TO CHARTER CAPITAL (Art.68) - INCREASE OF CHARTER CAPITAL: 2 POSSIBILITIES + Capital contribution of members is increased + Capital contributions are made by new members - DECREASE OF CHARTER CAPITAL: 3 POSSIBILITIES + Return part of the contributed capital to members – Conditions? + Redeem the members’ contributed capital amounts + The charter capital has not been paid in sufficiently and timely

2.1. LLC WITH TWO OR MORE MEMBERS D. PROFIT DISTRIBUTION (ART 69) - 3 CONDITIONS + Generate profits + Fulfil taxes and other financial obligations + Ensure that all debts and other property obligations may be fully paid after distribution of profits

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.3. MANAGEMENT STRUCTURE: Art 54 MEMBERS’ COUNCIL

DIRECTOR (GENERAL DIRECTOR)

CONTROLLING BOARD

REMARK: Company >=11 members: Controlling board is compulsory. Company < 11 members : Controlling board is optional

2.1. LLC WITH TWO OR MORE MEMBERS 2.1.3. MANAGEMENT STRUCTURE: Art 54 MEMBERS’ COUNCIL

DIRECTOR (GENERAL DIRECTOR)

CONTROLLING BOARD

REMARK: State-owned LLCs and its subsidiaries: Controlling board is compulsory. The remainder: Controlling board is optional

2.1.3. MANAGEMENT STRUCTURE LEGAL REPRESENTATIVE → ART.12-15 → ART 54.3

2.1.3. MANAGEMENT STRUCTURE A. MEMBERS’ COUNCIL (ART.55) - POSITION: + HIGHEST DECISION-MAKING BODY + COMPRISE ALL MEMBERS - MEMBERS’S COUNCIL MEETING: ART 57 - RIGHTS AND OBLIGATIONS: ART 55.2

2.1.3. MANAGEMENT STRUCTURE B. CHAIRPERSON OF MEMBERS’COUNCIL (ART 56) - SHALL BE ELECTED BY THE MEMBERS’ COUNCIL - MAY CONCURRENTLY ACT AS THE DIRECTOR OF THE COMPANY - THE TERM OF OFFICE: = 1, CHARTER) (n: THE QUANTITY OF VOTES)

VOTING PREFERENCE SHARE - ‘A voting preference shareholder carries more votes than an ordinary one’? - VOTE CALCULATION: 3 Elements + TYPE OF SHARES ( VOTING PREFERENCE OR ORDINARY) + THE QUANTITY OF SHARES +n=? EXAMPLE: A= 100 ORDINARY SHARES, B = 10 VOTING PREFERENCE SHARES -n = 10: A = B -n > 10: A < B -n < 10: A > B

VOTING PREFERENCE SHARE 1. OWNER: FOUNDING SHAREHOLDERS + ORGANISATIONS AUTHORIZED BY THE GOVERNMENT (ART 116.1) + FOUNDING SHAREHOLDER: VALID FOR 3 YEARS + CONVERTED INTO ORDINARY ONES + ORGANISATIONS AUTHORISED: UNLIMITED → why? 2. RESTRICTIONS: NON-TRANSFERABLE

DIVIDEND PREFERENCE SHARE -PREFERENCE: PAID AT A RATE HIGHER THAN THAT PAID FOR AN ORDINARY STOCK OR AT AN ANNUAL FIXED RATE. -RESTRICTION: - HAVE NO RIGHTS TO VOTE, ATTEND THE GMS, NOMINATE CANDIDATE TO THE BOARD OF MANAGEMENT, CONTROLLING BOARD.

REDEEMABLE PREFERENCE SHARE 1. PREFERENCE: SHALL BE REDEEMED BY THE COMPANY… 2. RESTRICTION: HAVE NO RIGHTS TO VOTE, ATTEND THE GMS, NOMINATE CANDIDATE TO THE BOARD OF MANAGEMENT, CONTROLLING BOARD.

REMARK AN ADDITIONAL PREFERENCE FOR DIVIDEND AND REDEEMABLE PREFERENCE SHARES (Art.117.2.b) Upon dissolution or bankruptcy of the company: 1. Redeemable preference shares 2. Dividend Preference shares 3. Voting Preference shares + Ordinary shares + other type of shares

2.3.3. MANAGEMENT STRUCTURE GENERAL MEETING OF SHAREHOLDER

BOARD OF MANAGEMENT

MODEL 1

CONTROLLING BOARD

DIRECTOR/ GENERAL DIRECTOR CONTROLLING BOARD NOT MANDATORY: 2 CONDITIONS - Quantity: < 11 shareholders - Institutional shareholders own < 50% /Total shares

2.3.3. MANAGEMENT STRUCTURE GENERAL MEETING OF SHAREHOLDER

MODEL 2

BOARD OF MANAGEMENT

DIRECTOR/ GENERAL DIRECTOR 2 CONDITIONS - 20% members of the B.M are independent members - Auditing Committee is required in the B.M

GENERAL MEETING OF SHAREHOLDER (ART.135) - POSITION: HIGHEST DECISION-MAKING BODY - COMPRISE ALL SHAREHOLDERS HAVING THE RIGHT TO VOTE - RIGHTS AND OBLIGATIONS: ART.138 - OTHER ISSUES: ART.139 → ART.152

BOARD OF MANAGEMENT 1. POSITION: THE BODY MANAGING THE COMPANY - FULL COMPETENCE TO MAKE DECISIONS IN THE NAME OF THE COMPANY… 2. QUANTITY: 3 ≤ n ≤ 11 3. TERM OF OFFICE: + MEMBERS OF B.M: UP TO 5 YEARS WITHOUT TERM LIMIT 4. CRITERIA, CONDITIONS + MEMBER OF B.M: ART 155.1 + INDEPENDENT MEMBER OF B.M: ART 155.2 5. RIGHTS AND OBLIGATIONS: ART 153.2

BOARD OF MANAGEMENT 6. ADOPTING RESOLUTIONS OF THE B.M - 1 MEMBER OF THE B.M = 1 VOTE - PRINCIPLE OF VOTING + Majority Rule + In the event of a Tie vote: The vote of the chairperson is decisive

AUDITING COMMITTEE – ART 161 1. POSITION 2. QUANTITY 3. RIGHTS AND OBLIGATIONS

DIRECTOR/GENERAL DIRECTOR - TERM OF OFFICE: UP TO 5 YEARS (WITHOUT TERM LIMITS) - RIGHTS AND OBLIGATIONS: ART 162.3 - CRITERIA: ART 162.5

DISCUSSION “ I AM CURRENTLY A DIRECTOR OF A JSC LOCATED IN HCM CITY. I PLAN TO ESTABLISH A SUBSIDARY COMPANY LOCATED IN HANOI. AM I ALLOWED TO BE THE DIRECTOR OF THIS NEWLY-ESTABLISHED COMPANY?

CONTROLLING BOARD (ART.168 → ART.174) - QUANTITY: 3 ≤ n ≤ 5, TERM OF OFFICE: UP TO 5 YEARS - RELATIONSHIP WITH B.M/ G.D: INDEPENDENT - CRITERIA AND CONDITIONS: ART.169 - RIGHTS AND OBLIGATIONS: ART.170

2.4. PARTNERSHIP 2.4.1. CHARACTERISTICS GENERAL PARTNER

LIMITED PARTNER

MANDATORY

OPTIONAL

INDIVIDUAL (WHY?)

INDIVIDUAL/ORGANIS ATION UNLIMITED

MIN:2 – MAX: UNLIMITED

2.4. PARTNERSHIP 2.4.1. CHARACTERISTICS - MEMBER LIABILITY GENERAL PARTNER Liable for the obligations of the partnership with all of their assets

LIMITED PARTNER liable for the debts of the partnership within the limit of the capital amount they have contributed to the partnership

2.4.1. CHARACTERISTICS C. LEGAL ENTITY STATUS LAW 1999 – LAW 2005 & 2014 & 2020 D. ABILITY TO ISSUE SHARES: NOT ALLOWED TO ISSUE SECURITIES OF ANY KINDS

2.4.2. MEMBERSHIP REGULATIONS - Rights and obligations of G.P: Art 181 - Restrictions on rights of G.P: Art 180 - Termination of G.P Status: Art 185 - Admission of new partners: Art 186 - Rights and obligations of L.P: Art 187

2.4.2. MEMBERSHIP REGULATIONS RESTRICTIONS ON RIGHTS OF G.P: ART 180 - Not allowed to be the owner of a sole proprietorship or a general partner of another partnership (Unless approved by other general partners) - Not allowed to conduct in his/her own name or in the name of another person the same business lines as those of the partnership for his/her personal benefits or for the interests of another organization or individual - Not allowed to transfer part or the whole of his/her capital contribution in the partnership to another person without the consent of other general partners.

2.4.2. MEMBERSHIP REGULATIONS Termination of G.P Status: Art 185 During 2 years after termination of general partner status, the general partner, who either voluntarily withdraws capital from the partnership or has been excluded from the partnership, shall still be jointly liable with all his/her assets for the partnership’s debts which arise prior to the date of termination of partner status.

2.4.3. MANAGEMENT STRUCTURE ART 182

MEMBERS’ COUNCIL CHAIRPERSON (MAY ACT CONCURRENTLY AS DIRECTOR/GENERAL DIRECTOR) (UNLESS OTHERWISE PROVIDED BY THE CHARTER)

2.4.3. MANAGEMENT STRUCTURE LEGAL REPRESENTATIVE OF THE PARTNERSHIP - GENERAL PARTNERS: act as legal representatives and organize management of day-to-day business of the partnership - CHAIRPERSON/DIRECTOR: Represent the partnership in relationship with state agencies; represent the partnership as defendant or plaintiff in lawsuits, commercial disputes or other disputes.

2.5. SOLE PROPRIETORSHIP

SOLE PROPRIETORSHIP = PRIVATE ENTERPRISE?

SOLE PROPRIETORSHIP COMPANIES?

VS

STATE-OWNED

2.5.1. CHARACTERISTICS A. OWNER: AN INDIVIDUAL 1 INDIVIDUAL = 1 SOLE PROPRIETORSHIP, WHY? B. MEMBER LIABLITY: Liable for all activities of the enterprise with all his/her assets. C. LEGAL ENTITY STATUS D. ABILITY TO ISSUE SECURITIES

2.5.2. RIGHTS AND OBLIGATIONS OF ENTERPRISE OWNERS A. FINANCE B. MANAGEMENT C. LEASE OF ENTERPRISE D. SALE OF ENTERPRISE

2.5.2. RIGHTS AND OBLIGATIONS OF ENTERPRISE OWNERS A. FINANCE (ART 189) - Register the investment capital by himself/herself. - Reduce the investment capital below the amount of investment capital registered only after registration with the business registration agency. - Have total discretion in deciding on the use of profits after payment of taxes.

2.5.2. RIGHTS AND OBLIGATIONS OF ENTERPRISE OWNERS B. MANAGEMENT - ART 190 - Have total discretion in making all business decisions - Act as the legal representative - Director can be the owner or can be hired Liability?

2.5.2. RIGHTS AND OBLIGATIONS OF ENTERPRISE OWNERS C. LEASE OF ENTERPRISE: ART 191 - The owner of a private enterprise may lease his/her whole enterprise provided that a written notice and a notarized copy of the lease contract shall be sent to the business registration agency and the tax agency within 3 working days after the lease contract becomes effective. - During the lease term, the owner of the private enterprise shall remain responsible before law as the owner of the enterprise. - The rights and responsibilities of the owner and the lessee with respect to the business operations of the enterprise shall be provided in the lease contract

2.5.2. RIGHTS AND OBLIGATIONS OF ENTERPRISE OWNERS D. SALE OF ENTERPRISE (ART 192) - The owner may sell his/her enterprise to another person. - After selling his/her enterprise, the owner shall remain liable for all debts and other property obligations of the enterprise incurring before the date of handing over the enterprise, unless otherwise agreed by the purchaser, the seller and creditors of the enterprise.

2.6. CORPORATE GROUPS ECONOMIC GROUP, CORPORATIONS: ART 194 PARENT COMPANIES, SUBSIDIARIES: ART 195 RIGHTS AND RESPONSIBILITIES OF A PARENT COMPANY TO ITS SUBSIDIARIES: ART 196 FINANCIAL STATEMENTS OF PARENT COMPANIES AND SUBSIDIARIES: ART 197

3. ESTABLISHMENT – DISSOLUTION - BANKCRUPTCY 3.1. ESTABLISHMENT AND MANAGEMENT OF ENTERPRISES (ART 17) →INDIVIDUALS AND ORGANISATIONS… EXCEPTIONS: 1. STATE AGENCIES… USING STATE ASSETS… TO MAKE PROFITS FOR THEIR OWN ORGANISATIONS 2. PUBLIC OFFICIALS, PUBLIC EMPLOYEES… 3. OFFICERS, NON-COMMISSION OFFCERS… 4. MANAGERS, PROFESSIONAL MANAGERS IN STATE COMPANIES 5. MINORS; PERSONS WHOSE CIVIL ACT CAPACITY IS RESTRICTED OR LOST; PERSONS WITH COGNITIVE DIFFICULTIES OR DIFFICULTIES WITH BEHAVIOURAL CONTROL; ORGANIZATIONS WITHOUT LEGAL ENTITY STATUS; 6. PERSONS BEING EXAMINED FOR PENAL LIABILITY, SERVING PRISON SENTENCES; OTHER CASES PRESCRIBED BY THE LAWS ON BANKRUPTCY AND CORRUPTION PREVENTION AND COMBAT. 7. ORGANIZATIONS BEING COMMERCIAL LEGAL ENTITIES WHICH ARE PROHIBITED FROM CONDUCTING BUSINESS OR OPERATING IN CERTAIN SECTORS PURSUANT TO THE CRIMINAL CODE.

3.2. CAPITAL CONTRIBUTION THOSE NOT ALLOWED TO CONTRIBUTE CAPITAL - State agencies, units of people’s armed forces using state assets to contribute capital to enterprises to make profits for their own organizations and units; - Those who may not contribute capital to enterprises in accordance with the law on public officials and employees.

3.3. PROCEDURE FOR ENTERPRISE REGISTRATION - Enterprise registration authorities: Business Registration Office - The Department of Planning and Investment - Documents and procedure for enterprise Registration: - Time limit for issuing certificate of enterprise registration:

3.4. DISSOLUTION OF ENTERPRISES Circumstances & conditions for dissolution? Solvent = able to pay ÓPoff its debts What are scenarios that an enterprise shall be dissolved? Compulsory? Voluntary?

3.4. DISSOLUTION OF ENTERPRISES Procedures? Is the dissolution initiatedÓP by a resolution? What is the order of payment of company debts? When is the company deemed to be dissolved?

Prohibited activities?

3.5. BANKCRUPTCY OF ENTERPRISES When does a company fall into the state of bankruptcy? Insolvent = unable to pay its debts when they fall due VN: The Bankruptcy Law 2014 Other jurisdictions: Insolvency Law Will falling into the state of bankruptcy lead to the declaration of bankruptcy (bring the business to an end)? Winding up or liquidation involves the closing down of the business and the realization of company assets for the benefit of creditors.

ÓP

Thank You

CHAPTER 3: INT’L SALE OF GOODS CONTRACT

READING MATERIALS 1. Richard Schaffer, Filiberto Agusti and Lucien Dhooge (2014) - International Business Law and Its Environment (See Chapter 4 – p.86-119) 2. Ray August, Don Mayer and Michael Bixby (2013) International Business Law: Text, cases and readings (See Chapter 10- p.559-609) 3. Indira Carr and Peter Stone (2018), International Trade Law (See Chapter 2 – p.60-94) 4. Nguyễn Minh Hằng, International Business Law (2012) (See Chapter 3)

READING MATERIALS LEGAL DOCUMENTS 1. Law on Commerce 2005 2. Law on Foreign Trade Management 2017 3. Civil Code 2015 4. Decree No. 187/2013/NĐ-CP dated on 20/11/2013 5. United Nations Convention on Contracts for the international sale of goods (1980) [CISG] 6. Incoterms 2010, Incoterms 2000 7. Unidroit principles of International Commercial Contracts (PICC) 2016

I. FUNDAMENTALS OF INT’L SALE OF GOODS CONTRACT

INT’L SALE OF GOODS CONTRACT = SALE OF GOODS + CONTRACT

“INTERNATIONALITY ”

1.1. DOMESTIC SALE OF GOOD CONTRACT 1.2. INTERNATIONAL CHARACTER

1.1. DOMESTIC SALE OF GOODS CONTRACT • • • • •

Parties Object: Art 3.2 – Law on Commerce Purpose Form: Art 24 – Law on Commerce Governing law: Art 4 – Law on Commerce

1.2. INTERNATIONAL CHARACTER 1.2.1. Parties 1.2.2. Object 1.2.3. Payment currency 1.2.4. Governing law and dispute settlement body

1.2.INTERNATIONAL CHARACTER 1.2.1. Parties - CISG: Art 1.1, Art 10 - Vietnam’s law: Law on Commerce 2005 – Art 27.1

1.2.INTERNATIONAL CHARACTER → What if a party has more than one place of business? Ex: A buyer in Austria (a CISG State) purchased goods from the Swiss branch of a company with headquarters in Liechtenstein (notably: a non-CISG Contracting State) (CLOUT case 261)

1.2. INTERNATIONAL CHARACTER 1.2.2. Object - CISG: - Vietnam’s law: Law on Commerce 2005 – Art 27.1: Can be delivered across borders Remark: Country’s border – customs border (Export Processing Zone; commercial and industrial Zone…)

1.2. INTERNATIONAL CHARACTER 1.2.3. Payment currency - Payment currency can be foreign to at least one party to the contract

1.2. INTERNATIONAL CHARACTER 1.2.4. Governing law and dispute settlement body

II. LEGAL FRAMEWORKS FOR INT’L SALES CONTRACT

II. LEGAL FRAMEWORK FOR INT’L SALES CONTRACT 1. International treaties 2. Domestic law 3. International trade practices

I. INTERNATIONAL TREATIES • Treaties are legally binding written agreements between two or more nations.

CISG IN A NUTSHELL The issue of applicability 1. CISG - A brief history 2. Structure of the CISG 3. Scope of application 4. Exclusion of the CISG

CISG IN A NUTSHELL 1. CISG – A BRIEF HISTORY

• Developed by the United Nations Commission on International Trade Law (UNCITRAL) in response to the failure of ULIS & ULF • Signed in Vienna in 1980 & came into force on 01 Jan 1988 • Recognised as a ‘success story’ due to its widespread adoption and impact

CISG IN A NUTSHELL

CISG IN A NUTSHELL • 1. 94CISG contracting members – A BRIEF HISTORY(updated on 28th Oct 2020) • ¾ of all international business transactions • Over 4500 case presentations & abundant number of scholarly writings dedicated to the CISG • A model for law reform projects at both national and regional level.

CISG IN A NUTSHELL 2. STRUCTURE OF THE CISG • Part 1: Sphere of application and general provisions (Art 1-13) • Part 2: Formation of the contract (Offer and acceptance) (Art 14-24) • Part 3: Rights, obligations and remedies to buyers and sellers (Art 25-88) • Part 4: Final provisions (Art 89-101)

CISG IN A NUTSHELL 3. SCOPE OF APPLICATION Art 1: (1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (a) when the States are Contracting States; or (b) when the rules of private international law lead to the application of the law of a Contracting State. (2) The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between, or from information disclosed by, the parties at any time before or at the conclusion of the contract. (3) Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention.

CISG IN A NUTSHELL 3. SCOPE OF APPLICATION

3.1. DIRECT APPLICATION: ART 1(1)(a) 3.2. INDIRECT APPLICATION: ART 1(1)(b)

CISG IN A NUTSHELL

3.1. DIRECT APPLICATION: ART 1(1)(a)

• the CISG is “directly”or “autonomously” applicable when the parties have their places of business in different Contracting States

CISG IN A NUTSHELL ‘PLACE OF BUSINESS’

• The fact that the parties have their places of business in different States must be apparent before or at the at the conclusion of the contract within the meaning of Article 1(2) • Where a party (e.g. a natural person) does not have a place of business, his or her “habitual residence” is to be applied (Article 10(b)).

CISG IN A NUTSHELL

‘PLACE OF BUSINESS’

• The “place of business” is not defined under the Convention • It is subject to an autonomous interpretation unaffected by local definitions (Article 7(1)).

CISG IN A NUTSHELL ‘PLACE OF BUSINESS’

• Drafting history: ‘…place of business shall not be considered his place of business unless the party at that place maintains a permanent organisation [including an office and personnel of his own] ‘a stable place where the entire or (part of) the contract is performed and which has autonomous power to conduct the bargaining and to conclude the contract’ (Argentina & Belgium) an establishment having no competence to conclude the contract is still considered as a place of business provided that it has power to bargain (Norway)

CISG IN A NUTSHELL ‘PLACE OF BUSINESS’

• Scholarly writing: Certain characteristics attributed to the notion of ‘place of business: Duration, stability and a certain degree of independence. + a mere place of contracting such as booths at an exhibitions or rented hotels + a liaison office

CISG IN A NUTSHELL ‘PLACE OF BUSINESS’

• Case law: - It is mostly applied without providing any definitions or further explanations. - Some cases exhibit a homeward trend by defining a place of business as either ‘place of incorporation’ or ‘principal place of business’ - Many cases share the similar approach with CISG scholars that reference is made to duration, stability and independence

CISG IN A NUTSHELL ‘ MULTIPLE PLACE OF BUSINESS’

• Art 10(a): Principal place of business theory vs Closest relationship theory? If a party has more than one place of business, the place of business is that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;

CISG IN A NUTSHELL MULTIPLE PLACE OF BUSINESS

Ex: A buyer in Austria (a CISG State) purchased goods from the Swiss branch of a company with headquarters in Liechtenstein (notably: a non-CISG Contracting State) (CLOUT case 261)

CISG IN A NUTSHELL A Certain Ri Dev., Co. v. A Certain H.K. Bang Dev., Co.], (2008) Shen Zhong Fa Min Si Zhong Zi No. 101 Civil Judgment (Shenzhen Intermediate People’s Ct. Mar. 30, 2009).

• a Hong Kong company performed the sales contract partly through a factory set up in Shenzhen (the equipment sold under the contract was apparently delivered to and stationed in the factory). • the company’s headquarters in Hong Kong was held to be the place of business with the “closest relationship to the contract and its performance” under Article 10(a) given that it was in Hong Kong that the company performed its main obligation under the sales contract by making payments through a local bank

CISG IN A NUTSHELL US case law

•

Zodiac Seats US LLC v. Synergy Aero. Corp., 2019 U.S. Dist. LEXIS 68456: In weighing which location has the closest relationship to the contract, courts consider where the communications about the contract or representations about the product originated.

•

the Court finds that Synergy's employees involved in the initial negotiation of the contracts at issue were based in Colombia. Moreover, the ongoing renegotiation, and alleged novation pursuant to the Commitment Letters, occurred during a July 26, 2016, visit by Zodiac to Synergy's location in Colombia. Accordingly, both at the time the contracts were formed, and throughout the performance of the contract, the Court finds that as between Brazil and Columbia, Colombia had the "closest relationship to the contract and its performance." Therefore, the Court finds that the CISG governs the parties' dispute

CISG IN A NUTSHELL US case law

•

•

McDowell Valley Vineyards, Inc. v. Sabate USA Inc., 2005 WL 2893848 (N.D. Cal. Nov. 2, 2005): the CISG does not apply where most communications emanated from the United States, thus under the CISG, the parties were both American, not from different member states); Asante Technologies, Inc. v. PMC-Sierra, Inc., 164 F. Supp. 2d 1142, 1149 (N.D. Cal. 2001): Finding the "place of business" to be Canada where "most if not all of the defendant's representations regarding the technical specifications of the products emanated from Canada

CISG IN A NUTSHELL ‘CONTRACTING STATE’

• A current list of CISG contracting states, including their dates of ratification, acceptance, approval, or accession, and the relevant effective dates of the Convention, is available from the UNCITRAL website: https://uncitral.un.org/en/texts/salegoods/conv entions/sale_of_goods/cisg/status

CISG IN A NUTSHELL ‘CONTRACTING STATE’

• Should Hong Kong (or Macao) acquire an effective Convention status by reason of being a territorial unit of China?

CISG IN A NUTSHELL ‘CONTRACTING STATE’

• On 20 June 1997, the PRC deposited a diplomatic note with the Secretary General of the United Nations announcing that the treaties in Annex I to the note ‘will be applied’ to the HKSAR. This annex did not include any reference to the CISG. • As a result, courts seated throughout the world have taken inconsistent positions with respect to the CISG’s applicability to the HKSAR. – the Supreme Court of France (Cour de cassation), the Zhejiang High People’s Court decided that the CISG does not apply to the HKSAR . – Some courts in the United States have found that the CISG is applicable to the HKSAR 6

CISG IN A NUTSHELL 3.2. INDIRECT APPLICATION: ART 1(1)(b)

(1) This Convention applies to contracts of sale of goods between parties whose places of business are in different States: (b) when the rules of private international law lead to the application of the law of a Contracting State.

CISG IN A NUTSHELL

3.2. INDIRECT APPLICATION: ART 1(1)(b)

• rules of private international law -> private international law of the forum. • These rules may be found in an international set of rules if in force and applicable (e.g. the 1955 Hague Convention on the Law Applicable to Contracts for the International Sale of Goods, the 1980 Rome Convention on the Law Applicable to Contractual Obligations ) or in the domestic body of rules on private international law of that state, depending on the legal framework in the forum state.

CISG IN A NUTSHELL

RESERVATION UNDER ART 95

• article 95 was introduced to give Contracting States the opportunity to choose not to be bound by article 1 (1) (b).

CISG IN A NUTSHELL RESERVATIONS UNDER ART 95

•

Armenia: Pursuant to Article 95 of the Convention, the Republic of Armenia declares that it will not apply the Article 1, subparagraph (1) (b) of the Convention to the parties that declare not to be bound by the Article 1, subparagraph (1) (b) of the Convention. • China: The People's Republic of China does not consider itself to be bound by subparagraph (b) of paragraph 1 of article 1. • Saint Vincent and the Grenadines: “The Government of Saint Vincent and the Grenadines declares that Saint Vincent and the Grenadines will not be bound by subparagraph 1 (b) of Article 1 of the Convention.” • USA: "Pursuant to article 95 the United States will not be bound by subparagraph (1) (b) of Article 1".

CISG IN A NUTSHELL RESERVATIONS UNDER ART 95

•

Lao People's Democratic Republic (2019): “In accordance with article 95 of the United Nations Convention on Contracts for the International Sale of Goods (CISG), the Government of the Lao People’s Democratic Republic declares that it will not be bound by subparagraph (1) (b) of article 1 of the Convention and will apply the Convention to Contracts of Sale of Goods only between those parties whose place of business are in different States when the States are Contracting States.” • Singapore: "In accordance with article 95 of the said Convention, the Government of the Republic of Singapore will not be bound by subparagraph (1) (b) of article 1 of the Convention and will apply the Convention to the Contracts of Sale of Goods only between those parties whose places of business are in different States when the States are Contracting States.“

CISG IN A NUTSHELL RESERVATIONS UNDER ART 95

•

Germany: Germany did not make an Article 95 reservation when ratifying to the Convention, but made an interpretative declaration that relates to certain effects of Article 95 reservations made by other Contracting States ‘The Government of the Federal Republic of Germany holds the view that Parties to the Convention that have made a declaration under article 95 of the Convention are not considered Contracting States within the meaning of subparagraph (a) (b) of article 1 of the Convention. Accordingly, there is no obligation to apply - and the Federal Republic of Germany assumes no obligation to apply - this provision when the rules of private international law lead to the application of the law of a Party that has made a declaration to the effect that it will not be bound by subparagraph (1) (b) of article 1 of the Convention.’

CISG IN A NUTSHELL RESERVATIONS UNDER ART 95

Netherlands: • Article 2 of the Dutch Implementing CISG Act dated December 18, 1991 request foreign judges in Article 95 reservation states not to apply the Dutch Civil Code provisions on sales (Book 7, Title 1 of the Civil Code) but rather CISG, if Dutch law were to be applicable by virtue of the local conflict rule. • This suggestion is of course not binding on foreign courts but by enacting this Dutch solution the legislator has indicated that under Dutch law it prefers a solution which enhances uniformity rather than one that relies on local Dutch law

CISG IN A NUTSHELL RESERVATIONS UNDER ART 95

CISG-AC opinion 15: 1. A declaration under Article 95 excludes the declaring Contracting State's obligation under public international law to apply the Convention in accordance with Article 1(1)(b). However, it does not prevent the courts of such a State from applying the Convention when their rules of private international law lead to the application of the law of a Contracting State. 2. A declaration under Article 95 is without any effect for the Convention's applicability in accordance with Article 1(1)(a). In applying Article 1(1)(a), it is irrelevant whether the forum State has made an Article 95 declaration or whether one (or both) parties to the sales contract have their place of business in a State which has made an Article 95 declaration. 3. When the forum is in a Contracting State that has made no declaration under Article 95, the Convention applies in accordance with Article 1(1)(b) even when the rules of private international law lead to the application of the law of a Contracting State that has made an Article 95 declaration.

CISG IN A NUTSHELL Module: The issue of applicability 1. CISG - A brief history 2. Structure of the CISG 3. Scope of application 4. Exclusion of the CISG

CISG IN A NUTSHELL 4. EXCLUSION OF THE CISG

• Overview • Classification • Implicit exclusion: Variations

CISG IN A NUTSHELL 4. EXCLUSION OF THE CISG

Art 6: The parties may exclude the application of this Convention or, subject to article 12, derogate from or vary the effect of any of its provisions.

CISG IN A NUTSHELL 4. EXCLUSION OF THE CISG: OVERVIEW

• the principle of party autonomy expressed in Art. 6 CISG permits parties to agree to exclude its application, at the time of or after the conclusion of the contract. • An agreement to exclude the CISG is governed by the rules on contract formation and modification in Arts 11, 1424, 29 CISG.

CISG IN A NUTSHELL 4. EXCLUSION OF THE CISG: CLASSIFICATION

Ex-ante exclusion e.g. the form of a contract clause purporting to “opt out” of the CISG Ex-post exclusion e.g. agreements made during court proceedings prior to a court decision on applicable laws

CISG IN A NUTSHELL 4. EXCLUSION OF THE CISG: CLASSIFICATION

• Express exclusion e.g. ‘Australian law applicable under exclusion of UNCITRAL law’. • Implicit exclusion e.g. ‘ These terms and conditions and the transactions contemplated hereby shall be governed by, and construed in accordance with the laws of England’.

CISG IN A NUTSHELL Implicit exclusion • It can be an issue of some difficulty in determining whether the application of the CISG is implicitly excluded. • The intent of the parties to exclude must be determined in accordance with Art. 8 CISG.

CISG IN A NUTSHELL ART 8

negotiations

Parties’s intention

reasonable interpretation

usages

CISG IN A NUTSHELL 4. EXCLUSION OF THE CISG: VARIATIONS Implicit exclusion (1) #1: Where the CISG is applicable by virtue of Article 1(1)(a), but the parties agree to choose, either in contract or in subsequent legal proceedings, the law of a contracting state (such as Vietnam) as the proper law of their contract, does this choice of law oust the CISG? • Prevailing view: A mere choice of the law of a contracting state, without being specifically confined to its domestic law, does not of itself constitute such an implicit exclusion.

CISG IN A NUTSHELL

Implicit exclusion (2) • #2: Choice of an expressly specified domestic statute or code where that would otherwise be displaced by the CISG’s application. →Drafting History: ‘referring to the title of [a municipal law]’ was seen as potential evidence of parties’ intent to exclude.

CISG IN A NUTSHELL Case law: Germany: German Civil Code BGB, German Commercial Code HGB Austria: Austrian Consumer Protection Act or Austrian Commercial Code The USA: ‘Uniform Commercial Code’ Hungary: Hungarian Civil Code?

CISG IN A NUTSHELL Implicit exclusion (3) • #3: Choice of the law of a territorial unit of a Contracting State? (e.g choices of the law of ‘California’, the ‘Province of British Columbia’,‘the state of Pennsylvania’ )

CISG IN A NUTSHELL Implicit exclusion ThyssenKrupp v. Sinochem: Guiding case of Chinese SPC • A contract between a German seller and a Chinese buyer contained a choice of law clause designating the law of New York as the proper law of the contract. The SPC held that the parties “had not excluded its application.” The CISG remained applicable by virtue of Article 1(1)(a). The chosen law of New York was to supplement the CISG on matters not covered by the CISG.

CISG IN A NUTSHELL

Exclusion of the CISG in Chinese courts: ‘while a choice of Chinese law in the contract will not per se exclude the application of the CISG, the same choice made in court proceedings will be given such an exclusory effect provided the parties so intend.’

CISG IN A NUTSHELL

Implicit exclusion (4) • #4: A reference to INCOTERMS = intent to exclude the CISG?

2. DOMESTIC LAW 2.1. Application of domestic law

2.1. APPLICATION OF DOMESTIC LAW - It is agreed in the contract at the time the contract is concluded - It is agreed by the parties after the contract is concluded - It is referred by the applicable int’l treaty - It is decided by the court/arbitral tribunal who has the jurisdiction to settle the dispute

2.1. APPLICATION OF DOMESTIC LAW ‘In default of a law declared applicable by the parties under the conditions provided in the preceding Article, a sale shall be governed by the domestic law of the country in which the vendor has his habitual residence at the time when he receives the order.’ (Art 3- the Convention on the Law Applicable to Int’l Sales of Goods – The Hague 1955)

WHICH LAW SHOULD BE CHOSEN? • RESTRICTIONS: – Art 670.2 Civil Code 2015; A.481 Procedure Code 2015 – Art 683.4 Civil Code 2015. – Conflict with the public orders or general principles of VN’ laws (Art 670.1 Civil Code 2015; Art 5.2 Law on Commerce2005; Art 5.3 VN Maritime Code 2015)

Article 670 CIVIL CODE 1. A foreign law referred to [to which reference is made] shall not apply in the following cases: (a) The consequences of application of the foreign law are inconsistent with the fundamental principles of the law of Vietnam; (b) It is impossible to determine the contents of the foreign law although necessary measures have been applied in accordance with the law on civil proceedings. 2. Where a foreign law does not apply in accordance with clause 1 of this article, the law of Vietnam shall apply.

Article 481 CIVIL PROCEDURE CODE If the Vietnamese Court apply a foreign law to settle a civil case involving foreign element according to provisions of Vietnamese law and/or of an International treaty to which the Socialist Republic of Vietnam is a signatory, the responsibility for determining and providing foreign shall be performed as follows: 1. If the involved party of a civil case is allowed to choose a foreign law to be applied, he/she shall provide the foreign law he/she has chosen for the Court being in charge of such case. The involved party shall be responsible for the accuracy and legitimacy of the foreign law he/she provides for the Court. If involved parties fail to agreed with each other about the foreign law to be chosen or in necessary cases, the Court shall request the Ministry of Justice, the Ministry of Foreign Affairs, consular offices of the Socialist Republic of Vietnam in foreign countries or request the diplomatic missions of foreign countries in Vietnam (via the Ministry of Foreign Affairs) to provide the foreign laws; 2. If Vietnamese law and/or International treaties to which the Socialist Republic of Vietnam is a signatory provide for that foreign laws shall be applied, the involved parties may provide foreign laws for the Court or the Court shall request the Ministry of Justice, the Ministry of Foreign Affairs or consular offices of the Socialist Republic of Vietnam in foreign countries to provide it with foreign laws; 3. The Court may request agencies, organizations and individuals professional in foreign laws to provide it with information about foreign laws; 4. Past the 06-month time limit from the date of request for provision of foreign laws as provided for in this Article, if there is no response, the Court shall apply Vietnamese law to settle the civil case.

Article 683.4 CIVIL CODE Where the subject matter of a contract is immoveable property, the law applicable to transfer of ownership rights and other rights with respect to property being immoveable property, [applicable to] lease of immoveable property or use of immoveable property in order to guarantee the performance of obligations shall be the law of the country in which the immoveable property is located.

This contract, and all questions relating to its formation, validity, interpretation or performance shall be governed by… - the law of Vietnam -PICC

“Questions relating to this contract that are not settled by the provisions contained in the contract itself shall be governed by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Sales Convention of 1980, hereafter referred to as CISG). Questions not covered by the CISG shall be governed by the UNIDROIT Principles of International Commercial Contracts (hereafter referred to as UNIDROIT Principles), and to the extent that such questions are not covered by the UNIDROIT Principles, by reference to [specify the relevant national law by choosing one of the following options:

The applicable national law of the country where the Seller has his place of business, or The applicable national law of the country where the Buyer has his place of business, or The applicable national law of a third country (specify the country).]”

3. INTERNATIONAL TRADE PRACTICES 3.1. Application of Int’l trade practices 3.2. Remarks

3.1. APPLICATION OF INT’L TRADE PRACTICES • Where it is agreed by the parties • Where it is referred by the applicable law. • In the case where the applicable law cannot settle the dispute, the international trade practices may be invoked.

3.2. REMARKS 1. The contract No.170211 VCT-FETA on 17/1/2011 b/w VIET COTTON YARN INVESTMENT TRADING JSC & FETA TEKSTIL SAN.TIC.LTD.STI: “ ALL OTHER CONDITIONS, WHICH NOT STATED IN THIS CONTRACT, WILL REFER TO INCOTERMS 2000” 2. The contract No. BVQA400 b/w FORMOSA INDUSTRIES CORPORATION & NANYA PLASTICS CORPORATION: “ The INCOTERMS 2000 will be used for this contract”

HOW TO USE INCOTERMS® 2010

What do INCOTERMS® deal with? • The principal duties of the seller. • The principal duties of the buyer. • Transfer of risks – place and point in time. • Allocation of all costs incurred from dispatch to arrival at the place or port of destination. • Formalities (e.g. customs formalities) for import, export or transit.

HOW TO USE INCOTERMS® 2010

What do INCOTERMS® not deal with? • Questions of ownership. • Breach of contract and the legal consequences. • Declarations of indemnity.

• Delivery options. • Modes of payment. • Notice of defects.

HOW TO USE INCOTERMS® 2010

Notes • It is not mandatory to use INCOTERMS® in a sale contract. • INCOTERMS® are not price clauses, but do have an impact on the pricing. • Sales contracts which are based on a former version (e.g. INCOTERMS® 2000) remain valid according to the terms of that version.

HOW TO USE INCOTERMS® 2010 Notes • Buyers and sellers should refer appropriate version of the INCOTERMS®

to

the

e.g. FOB Hamburg, INCOTERMS® 2010.

• It is possible to add clauses or change the wording of INCOTERMS®. e.g. CFR Charleston port USA incl. THC, CUC, ISPS in Charleston. FCA Vienna Airport loaded on aircraft. DDP Hanoi Vietnam VAT unpaid.

III. REQUIREMENTS FOR A VALID INT’L SALE OF GOODS CONTRACT

III. REQUIREMENTS FOR A VALID CONTRACT 1. Parties to the contract 2. Forms of the contract 3. Content of the contract 4. Objects of the contract

1. PARTIES TO THE CONTRACT - VN: Decree No. 187/2013/NĐ-CP - Competence to enter into a contract: + Legal representative + Authorized representative

1. PARTIES TO THE CONTRACT • Exceed the sphere of authorization? • The legal representative knows but shows no objection within a reasonable period? See more: - Art 142-143 Civil Code 2015 - Resolution No. 04/2003 of the Judges Council of the Supreme People’s court

Article 674 CIVIL CODE 1. The capacity for civil acts of individuals shall be determined in accordance with the law of the country of which such person holds nationality, except in the case provided in clause 2 of this article. 2. Where a foreign individual establishes or performs civil transactions in Vietnam, the capacity for civil acts of such foreign individual shall be determined in accordance with the law of Vietnam. 3. The determination of whether an individual has lost capacity for civil acts, has difficulties in being aware of, or controlling his or her own acts or has restricted capacity for civil acts in Vietnam must comply with the law of Vietnam.

CIVIL CODE Article 19 Capacity for civil acts of individuals The capacity for civil acts of an individual shall be the capability of the individual to establish and exercise civil rights and perform civil obligations through his or her acts. Article 20 Adults 1. Adults are persons who are eighteen (18) or more years of age 2. An adult shall have full capacity for civil acts except in the circumstances provided in articles 22, 23 and 24 of this Code.

CIVIL CODE Article 22 Loss of capacity for civil acts 1. Where a person is incapable of being aware of or controlling his or her own acts due to any mental or other illness, a court shall, based on the conclusion of forensic mental examination and at the request of a person with related rights or interests, or a relevant agency or organization, issue a decision declaring the former person as a person who has lost capacity for civil acts. Where the basis on which a person has been declared as having lost the capacity for civil acts no longer exists, the court shall, at the request of such person or any person with related rights or interests, or a relevant agency or organization, issue a decision revoking the decision declaring the loss of capacity for civil acts. 2. Civil transactions of a person who has lost the capacity for civil acts must be established and performed by his or her legal representative.

ART 142 CIVIL CODE 1. A civil transaction entered into and performed by an unauthorized person shall not give rise to rights and obligations with respect to the principal, except in one of the following cases: (a) The principal has recognized the transaction; (b) The principal knew but has not objected within a reasonable period; (c) The principal is at fault, resulting in the fact that the transacting person did not know or could not have known that the person who entered into or performed the civil transaction with him or her was unauthorized. 2. Where a civil transaction established or performed by an unauthorized person does not give rise to rights and obligations with respect to the principal, the unauthorized person must, nevertheless, fulfil obligations to the person with whom he or she transacted, unless such person knew or should have known that the representative was unauthorized but still carried out the transaction. 3. A person having transacted with an unauthorized person has the right to terminate unilaterally the performance of or to rescind the civil transaction entered into and to demand compensation for any loss and damage, except where such person knew or should have known that the representative was unauthorized but still carried out the transaction or in the case prescribed in clause 1(a) of this article.

ART 143 CIVIL CODE 1. A civil transaction entered into and performed by a representative beyond his or her scope of representation shall not give rise to rights and obligations of the principal with respect to that part of the transaction which exceeded the scope of representation, except in one of the following cases: (a) The principal has agreed; (b) The principal knew but has not objected within a reasonable period; (c) The principal is at fault, resulting in the fact that the transacting person did not know or could not have known that the person entered into or performed the civil transaction with him or her beyond the scope of representation. 2. Where a civil transaction established or performed by a representative beyond the scope of representation does not give rise to rights and obligations with respect to that part of the transaction established or performed which exceeded the scope of representation, the representative must fulfil obligations to the person with whom he or she transacted with respect to that part of the transaction which exceeded the scope of representation, unless such person knew or should have known that the scope of representation was exceeded but still carried out the transaction. 3. A person having entered into a transaction with such representative has the right to terminate unilaterally or rescind the civil transaction with respect to that part which is beyond the scope of representation or with respect to the entire transaction and demand compensation for any loss and damage, except where such person knew or should have known that the scope of representation was exceeded but still carried out the transaction or in the case prescribed in clause 1(a) of this article.

2. FORM OF THE CONTRACT • Written form or equivalent: Viet Nam (Art 27.2, Law on Commerce), China, Argentina, Chile, Belarus, Hungary, Ucraina… • The US: (Art 2.201, UCC): a contract for the sale of goods for the price of $500 or more shall be made in writing • CISG 1980: Art 11 & Art 96

3. CONTENT OF THE CONTRACT A. Are there any clauses mandatory in the contract? B. The content must not be contrary to the laws

A. Mandatory clauses in the contract - Viet Nam: Art 398 – Civil Code - CISG 1980: Art 19.3

COMMERCIAL LAW 1997 Article 50 Principal Contents of Contracts for Sale and Purchase of Goods Contracts for sale and purchase of goods must contain the following principal contents: 1. Name of goods; 2. Quantity; 3. Specifications, quality; 4. Price; 5. Method of payment; 6. Location and time for delivery and receipt of goods. In addition to the principal contents stipulated in this article, parties may agree on other contents of the contract.

ART 398 – CIVIL CODE 2015 1. Parties to a contract have the right to agree on the contents in the contract. 2. A contract may contain the following contents: (a) Subject matter of the contract; (b) Quantity and quality; (c) Price and method of payment; (d) Timelimit, place and method of performing the contract; (dd) Rights and obligations of the parties; (e) Liability for breach of contract; (g) Method of resolving disputes.

4. OBJECT OF THE CONTRACT - Goods banned from export and import - Goods imported and exported under conditions - Goods freely imported and exported (See more: Appendix 187/2013/NĐ-CP)

1-3

–

Decree

IV. OFFER AND ACCEPTANCE

OFFER AND ACCEPTANCE OFFER

+ ACCEPTANCE

INT’L SALE OF GOODS CONTRACT

Forms: - Offer + Acceptance = Contract - Offer signed by both the seller and buyer = Contract

1. OFFER

+ CISG 1980: Art.14 → Art.24 + Civil Code 2015: Art.386 → Art. 397

Contract formation under the CISG

OFFER • Criteria for an offer (Art 14) • Withdrawal (Art 15) • Revocation (Art 16) • Termination (Art 17)

ACCEPTANCE • Form of acceptance (Art 18) • Counter-offer (Art 19) • Time allowed for acceptance (Art 20-21) • Withdrawal (Art 22)

CONTRACT • The time when the contract is concluded (Art 2324)

1. OFFER 1. Criteria for an offer 2. Withdrawal and revocation of an offer

1

Criteria for an offer - Việt Nam: Art 386 Civil Code - CISG 1980: Art 14

ART 386.1 Offer to enter into a contract means a clear expression by the offeror of its intention to enter into a contract and to be bound by such offer made to another determined party or to the public (hereinafter collectively referred to as the offeree).

ART 14 CISG 1980 (1) A proposal for concluding a contract addressed to one or more specific persons constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of acceptance. A proposal is sufficiently definite if it indicates the goods and expressly or implicitly fixes or makes provision for determining the quantity and the price. (2) A proposal other than one addressed to one or more specific persons is to be considered merely as an invitation to make offers, unless the contrary is clearly indicated by the person making the proposal.

REMARKS • Inquiries • Mass distribution of a catalogue of merchandise • Brochures • Advertisement →DISCLAIMER SHOULD BE PROVIDED SUCH AS:

ART 14 VS ART 55 – OPEN PRICE CONTRACT ‘Where a contract has been validly concluded but does not expressly or implicitly fix or make provision for determining the price, the parties are considered, in the absence of any indication to the contrary, to have impliedly made reference to the price generally charged at the time of the conclusion of the contract for such goods sold under comparable circumstances in the trade concerned.’

ART 14 VS ART 55 – OPEN PRICE CONTRACT Case law: In the majority of cases, the courts and arbitral tribunals came to the conclusion that a contract had been formed while in rare cases a different result was reached

2

WITHDRAWAL AND REVOCATION - CISG: Art 15.2, Art 16 - VN: Art 389, Art 390 Civil Code

WITHDRAW

OFFER REACHES

REVOKE

DISPATCHES ACCEPTANCE 2 EXCEPTIONS ( Art.16.2)

ART 389 CIVIL CODE 2015 An offeror may modify or withdraw an offer to enter into a contract in the following cases: (a) The offeree receives notice of modification or withdrawal of the offer prior to or at the same time as receipt of the offer; (b) The offeror clearly specified the circumstances in which the offer could be modified or withdrawn and such circumstances have in fact arisen.

ART 390 CIVIL CODE 2015 An offeror may revoke the offer to enter into a contract if such right was specified in the offer and the offeree receives the notice of revocation of the offer prior to the offeree providing a notice of acceptance of the offer to enter into the contract.

2. ACCEPTANCE

+ CISG 1980: Art.14 → Art.24 + Civil Code 2015: Art.386 → Art.397

2. ACCEPTANCE 1. the offeree shall accept the entire content of the offer 2. the acceptance must be received within the time limitation set forth in the offer 3. the acceptance shall not be withdrawn

1

The offeree shall accept the entire content of the offer - Civil Code 2015: Art 392, 393 - CISG 1980: Art.19.2; Art.19.3

ART 393 CIVIL CODE 2015

“Acceptance of an offer to enter into a contract means a reply by the offeree accepting the entire contents of the offer” → ‘Mirror image’ rule

ART.19 CISG 1980 (1) A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer. (2) However, a reply to an offer which purports to be an acceptance but contains additional or different terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror, without undue delay, objects orally to the discrepancy or dispatches a notice to that effect. If he does not so object, the terms of the contract are the terms of the offer with the modifications contained in the acceptance. (3) Additional or different terms relating, among other things, to the price, payment, quality and quantity of the goods, place and time of delivery, extent of one party's liability to the other or the settlement of disputes are considered to alter the terms of the offer materially.

2

THE ACCEPTANCE MUST BE RECEIVED WITHIN THE TIME LIMITATION SET FORTH IN THE OFFER - CISG: ART.18, ART.21 - VN: ART 394

FORMS OF ACCEPTANCE -

Written forms Oral form Performing an act SILENCE = ACCEPTANCE? + CISG (Art 18.1) + VN (Art 393 Civil Code)

3

The acceptance shall not be withdrawn - VN: Art 397 Civil Code - CISG: Art 22

V. TERMS OF THE CONTRACT

V. TERMS OF THE CONTRACT 1. Name & addresses of parties 2. Commodity 3. Quantity 4. Quality 5. Payment 6. Delivery 7. Choice of Law 8. Dispute resolution

1. NAME & ADDRESSES OF PARTIES + Specified in the enterprise registration certificate + Branch of a company? + New partners: Check the legality?

LEGALITY OF THE FOREIGN PARTNERS

• Why to check? • What to check? • How to check?

LESSONS LEARNED FROM UNIMEX THÁI BÌNH ❑ Unimex Thái Bình sold 10.000MT of rice to PALAlgérie, CIF Incoterms 1990 ❑ Samoa Network (SN) (Singapore) is chartered to carry goods ❑ Prepaid freight is USD 300.000 ❑ SN received the goods and vanished ❑ Damage: 10.000MT of rice and USD 300.000 120

LESSONS LEARNED FROM UNIMEX THÁI BÌNH What should Unimex Thái Bình do? -

Bring SN to the court? -

Address of SN: C/O ….

-

SN - “ghost company”

-

Failed to sue

2. Commodity/ description of goods -

-

Uniform understandings of parties to the contract Both the trade name and scientific name should be incorporated Consistency among various documents

EXAMPLES • Vietnamese long grain white rice of 10% broken, crop 2005 • Two-litre multi rice cooker, Natio brand, model FX12, made in Japan, 2003

3. QUANTITY - Tolerance - Franchise

3. QUANTITY ‘Coffee covered by this contract term is sold on shipped weights basis, and unless otherwise specified on the contract, the franchise is 0.5%’ → The seller is not liable for any loss in weight within the specified franchise.

TOLERANCE + Variations: “ ±….”, “about”, “approximately”, “more or less”… + Tolerance option: - “ At seller’s option” - “ At buyer’s option” - “ At charterer’s option” + Tolerance price?

TOLERANCE Article 30 –UCP 600: a. “ The word “about” or “approximately” used in connection with the amount of the credit or the quantity or the unit price stated in the credit are to be construed as allowing a tolerance not to exceed 10% more or 10% less than the amount, the quantity or the unit price to which they refer b. A tolerance not to exceed 5% more or 5% less than the quantity of the goods is allowed, provided the credit does not state the quantity in terms or a stipulated number of packing units or individual items and the total amount of the drawings does not exceed the amount or the credit”

FOR EXAMPLE

QUANTITY: 500 MT (10% MORE OR LESS AT SELLER’S OPTION AT CONTRACT PRICE)

4. QUALITY 4.1. Methods to denote quality

4.2. Quality Inspection

4. QUALITY 4.1. Methods to denote quality - By sample - By standard or category - By specifications - By technical documents - Dựa vào hàm lượng các chất chủ yếu trong hàng

BY SAMPLE “The specification of the goods shall be about as per sample No.12FTS approved by both sides on 02 Jan 2018, sealed and signed by both parties; such sample forms an integral part of this contract. The samples are made into three (3) versions, to be preserved by Seller, Buyer and The Vietnam Superintendence and Inspection JSC (VINACONTROL) as basis for dispute settlement. Parties shall preserve these samplese until the stipulated limitation of claim expires’’.

BY STANDARD OR CATEGORY TCVN 4193: 2001 – VIETNAMESE COFFEE STANDARD TCVN 6096: 2004 – BOTTLE DRINKING WATER See more at: www.tcvn.org.vn

BY SPECIFICATIONS COMMODITY: LOVE SET WOODEN FURNITURE 01 TABLE (1.150 × 610 × 840)mm 01 LOUNGE ARMCHAIR (1.040 × 600 × 450)mm 02 LOVE ARMCHAIRS (590 × 610 × 840)mm

BY MAJOR CONTENTS OF THE PRODUCT EXPORTED RICE BROKEN

TẤM

10%MAX

MOISTURE

ĐỘ ẨM

14%MAX

CHALKY GRAIN

HẠT BẠC BỤNG

7%MAX

DAMAGED GRAIN

HẠT HƯ

0,5%MAX

YELLOW GRAIN

HẠT VÀNG

1%MAX

FOREIGN MATTER

TẠP CHẤT

0,2% MAX

BY TECHNICAL DOCUMENTS “ PRODUCT SPECIFICATION SHALL BE IN CONFORMITY WITH TECHNICAL DOCUMENTS NO…, SIGNED BY BOTH PARTIES ATTACHED HEREIN. THIS DOCUMENT SHALL SERVE AS AN INTEGRAL PART OF THE PRESENT CONTRACT”

DISCUSSION 1. “Up to export standard, 100% brand new” 2. “ The seller will make finished garments as the counter sample which is signed and confirmed by both parties” 3. “Goods are 100% brand new and packed products in good condition for normal transportation by sea and/or by air” 4. “Final at loading port as per Certificates of Quality/ weight issued by independent conveyor” 5. “As per sample approved by the Seller and upon agreed by the Buyer”

4. QUALITY 4.1. Methods to denote quality

4.2. QUALITY CHECK - INSPECTION

4.2. QUALITY CHECK - INSPECTION A. Mandatory quality checking - inspection B. Inspection agencies

E. Certificate of quality – Survey report

A. MANDATORY CHECK- INSPECTION - MANDATORY CHECK AT LEAVING PORT → 3 possibilities: 1. Stated in the contract 2. Stated in the L/C 3. Regulations of sellers/buyers’countries - MANDATORY CHECK AT DESTINATION PORT → Regulations of buyers’ countries

B. INSPECTION AGENCIES - Clearly stated in the contract - Not stated in the contract

E. Quality Certificate - Survey Report • Absolutely binding • Relatively binding • Not binding

RELATIVELY BINDING WHEN CAN SELLER/BUYER REJECT COQ? - Fraud of the seller - Mistakes and negligence of the surveying agency

VI. REMEDIES FOR BREACH OF THE CONTRACT 1. Exemptions for non-performance 2. Remedies for breach of the contract

1. EXEMPTIONS FOR NON-PERFORMANCE

- Vietnam’s law: + Law on Commerce: Art 294-295-296 + Civil Code: Art 156.1; Art 351.2 - CISG: Art 79, Art 80 - PICC 2016: Art 7.1.7

1. EXEMPTIONS FOR NON-PERFORMANCE

ART 294 – LAW ON COMMERCE + A case of liability exemption agreed upon by the parties + Force majeure event (Compared to Art 79.1 CISG) + A breach by one party is entirely attributable to the other party's fault (Compared to Art 79.2) + A breach is committed by one party as a result of the execution of a decision of a competent state management agency which the party cannot know, at the time the contract is entered into.

FORCE MAJEURE

 Art 156.1 Civil Code 2015: An event of force majeure is an event which occurs in an objective manner which is not able to be foreseen and which is not able to be remedied by all possible necessary and admissible measures being taken.  Art 79.1 CISG 1980: A party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it or its consequences.

1. EXEMPTIONS FOR NON-PERFORMANCE REMARKS (ART.295 LAW ON COMMERCE 2005)

• The party must promptly notify in writing the other party of cases of liability exemption and possible consequences thereof. • Provide the evidence from qualified authority • Comparisons: Art 79(4) CISG

1. EXEMPTIONS FOR NON-PERFORMANCE Effects of exemptions on the rights and duties of the parties • Not liable for damages resulting from nonperformance • Comparisons: Art 79(5) CISG

FORCE MAJEURE vs HARDSHIP • Hardship: Art 420 – Civil Code 1. The change of circumstances shall be deemed fundamental when it meets all following conditions: a) The circumstances change due to objective reasons occurred after the conclusion of the contract; b) At the time of concluding the contract, the parties could not foresee a change in circumstances; c) The circumstances change such fundamentally that if the parties know in advance, the contract has not been concluded or are concluded, but with completely different content; d) The continuation of the contract without the change in the contract would cause serious damage to one party; dd) The advantaged party has adopted all the necessary measures in its ability, in accordance with the nature of the contract, cannot prevent or minimize the extent of effect.

1. EXEMPTIONS FOR NON-PERFORMANCE Effect of Hardship: Art 420 – Civil Code 2. In the case of basic circumstances change, the advantaged party may request the other party to the re-negotiate the contract in a reasonable period of time. 3. If the parties cannot reach an agreement on amending the contract within a reasonable period of time, any of the parties may request a court to: a) Terminate the contract at a specific time; b) Adapt the contract with a view to restoring its equilibrium The court may only decide to adapt the contract in the event that the termination of the contract would cause greater damage than the cost to perform the contract if it is adapted

2. REMEDIES FOR BREACH OF CONTRACT • Remedies available to the injured party under the general contract law Buyer

payment goods

Seller

• Contractual parties fully perform their obligations and gain the benefits they bargained for. • If a party fails to perform part or all of the required duties under the contract, then breach of contract occurs. The other party cannot get the benefits it bargained for.

2. REMEDIES FOR BREACH OF CONTRACT • What types of breach of contract are there? Non-performance, delayed performance and defective performance. • What are the buyer’s remedies for the seller’s breach? • What are the seller’s remedies for the buyer’s breach?

2.3. COMMON REMEDIES FOR BREACH THE CONTRACT

- Specific performance (Art 297→299 Law on Commerce – Art 28; 46→48; 62→63 CISG) - Penalty (Art 300-301 Law on Commerce) - Damages (Art 302→306 Law on Commerce; Art 74 → 77 CISG) - Avoidance of the contract (Đ312 →315 Law on Commerce; CISG: [49(1); 51(2); 64(1); 74; 73; 81-84]

SPECIFIC PERFORMANCE (1) The seller has made non-delivery/delivered a part of goods (2) The seller has delivered non-conforming goods (3) The buyer failed to pay or take delivery -- A grace period to be given for the buyer/seller to perform their obligations -- What happens if they fail to perform within the given grace period?

SPECIFIC PERFORMANCE • Relationships with other remedies • ART 299 LAW ON COMMERCE 2005 • ART 48; 63 CISG

PENALTY • Penalty means a remedy whereby the aggrieved party requests the breaching party to pay an amount of fine for its breach of a contract, if so agreed in the contract (Art 300 – Law on commerce 2005)

DISCUSSION Should the Sellers fail to make delivery on time as stipulated in the Contract, with exception of Force Majeure causes specified in Clause 13 of this Contract, the Buyers have the right to penalize the Sellers. Only in case the delay shipment is more than 1 week. The penalty, however, shall not exceed 10% of the goods involved in the late delivery. The rate of penalty is charged at 0.5% for every seven days starting counting from 8th day of the delay, odd days less than seven days should be counted as seven days.

PENALTY • “The fine level for a breach of a contractual obligation or the aggregate fine level for more than one breach shall be agreed upon in the contract by the parties but must not exceed 8% of the value of the breached contractual obligation portion.” (Art 301 Law on Commerce 2005 ) Exceptions: + Art 266 Law on Commerce 2005 + Art 146.2 Law on Construction 2014 Compare: Art 418 Civil Code 2015

PENALTY • Art 146.2 Law on Construction 2014 ‘For works using state funds, the fine level must not exceed 12% of the value of the violated contract’

PENALTY RELATIONSHIPS WITH OTHER REMEDIES - Art 307 Law on Commerce 2005 - Art 418 Civil Code 2015

DAMAGES “ Liability to pay damages shall arise upon existence

of all of the following elements: 1. Breach of the contract; 2. Material loss; 3. Act of breaching the contract is the direct cause of the loss.” (Art 303 Law on Commerce 2005)

DAMAGES CLASSIFICATION OF DAMAGES • Loss suffered by the other party as a consequence of the breach • Loss of profit

DAMAGES Principles of claiming damages • The party claiming damages must bear the burden of proof of the loss • A party claiming damages must take such measures as are reasonable in the circumstances to mitigate the loss

DAMAGES RELATIONSHIP WITH OTHER REMEDIES • Art 307 Law on Commerce 2005 • Art 419 Civil Code 2015 • Limitation of damages clause/liquidated damages clause: Art 419 & 360 Civil Code

ART 360 – CIVIL CODE 2015 ‘Where there is any loss and damage resulting from a breach of an obligation, the obligor must compensate for the total loss and damage, unless otherwise agreed or provided by law.’

AVOIDANCE OF THE CONTRACT • Law on Commerce 2005: Art 312 → Art 315 • CISG: 49(1); 51(2); 64(1); 74; 73; 81-84

AVOIDANCE OF THE CONTRACT • Fundamental breach: + CISG: Art 25 + Law on commerce: Art 3.13

ART 3.13 LAW ON COMMERCE Fundamental breach means a contractual breach by a party, which causes damage to the other party to an extent that the other party cannot achieve the purpose of the entry into the contract.

ART 25 CISG A breach of contract committed by one of the parties is fundamental if it results in such detriment to the other party as substantially to deprive him of what he is entitled to expect under the contract, unless the party in breach did not foresee and a reasonable person of the same kind in the same circumstances would not have foreseen such a result.

Foreseeability and/or knowledge of the detriment • lack of foreseeability and knowledge pertains to the detriment caused by the breach of contract, and not the breach itself or its reasons • The promisor’s knowledge or foreseeability of the promisee’s expectations are relevant (only) for interpreting and assessing the importance of the obligation that has been breached, and its significance for the promisee • A promisee is only entitled to rely on something as a ‘substantial’ expectation ‘under the contract’ (Article 25) if his contracting partner knew (or a reasonable person of the same kind in the same circumstances would have known) that, by entering into the contract, such a particular expectation would be created.

Foreseeability and/or knowledge of the detriment •

Where an obligation’s importance has been clearly defined in the contract (e.g a fixed date for delivery, making time ‘of the essence): the party in breach cannot prevent avoidance of the contract by arguing that he did not foresee any detriment to the promise • Where an obligation’s importance has been addressed during negotiations + If the buyer informs the seller about the obligations he has entered into towards his own customers, their importance is discernible to both parties and the consequences of their non-fulfilment foreseeable for the seller. + It may also have been made unequivocally clear during negotiations (and provable) that if a certificate of examination, an export licence, etc were not obtained by the seller, the buyer would have no interest in the contract, would not conclude a contract without the inclusion of that obligation, and would therefore wish to avoid the contract if that obligation were breached. • In other cases: a question of interpreting the contract in accordance with Article 8(2) and (3) by asking whether a reasonable person of the same kind, e.g one active in the same branch of the trade or economic sector, would have recognized its importance.

Foreseeability and/or knowledge of the detriment A reselling buyer who purchases certain ‘wholefood products’, tomatoes, from a new supplier. The buyer only operates in the market for organic food products and its customers are environmentally conscious. At the time of conclusion of the contract, the buyer did not inform the seller about the importance of this ecofriendly feature of the goods. Because of the shortage in organic tomatoes, the supplier delivers tomatoes that were at some point treated with chemical fertilizer. If the buyer wants to avoid the contract because of delivery of non-conforming goods, it must show that it is substantially derived of what it was entitled to expect under the contract. If it can show that it cannot resell the goods within its normal course of business, the question of foreseeability of this result for the supplier becomes decisive.

AVOIDANCE OF THE CONTRACT • Effects of avoidance: + CISG: Art 81-84 + Law on commerce: Art 314

CARRIAGE OF GOODS BY SEA CONTRACT

READING MATERIALS 1. Richard Schaffer, Filiberto Agusti and Lucien Dhooge (2014) - International Business Law and Its Environment (See Chapter 6 – p.151-178) 2. Ray August, Don Mayer and Michael Bixby (2013) International Business Law: Text, cases and readings (See Chapter 6- p.622-656) 3. Indira Carr and Peter Stone (2018), International Trade Law (See Chapter 5– p.158-168; p.277-315) 4. Nguyễn Thị Mơ, Law for doing business abroad (2012) (See Chapter 5)

READING MATERIALS 1. 2. 3. 4. 5.

Hague Rule 1924 Visby Rule Hamburg Rule 1978 Vietnam Maritime Code 2015 Carriage of Goods by sea Act of the United States – COGSA 1936 6. The UK Carriage of Goods by sea Act 1971

CHAPTER 4 I

II

LINER CHARTERING

VOYAGE CHARTER PARTY – VCP

I. LINER CHARTERING 1. Definition, main features and process of liner tendering 2. Legal rules governing Bill of lading 3. Obligations of the parties to Liner chartering 4. Liability of the carrier

1. Definition, main features and process of liner tendering Definition A liner is a ship which is employed in a service between one port (or range of ports) and another port (or range of ports). It does this with a regularity and frequency which will conform to an advertised schedule which, in the main liner trades, is on a fixed day of the week basis (Institute of chartered Shipbrokers, 2011)

1. Definition, main features and process of liner tendering Main Features • A liner is a common carrier that recalls the analogy of a bus service. • A liner almost always carries general cargo, very often in small consignments. • Bill of lading is evidence of a contract between the carrying line and the shipper and it is rate indeed to alter by negotiation any of the other terms and conditions of carriage laid down by the liner operator. • The freight paid by the shipper for liner transportation (liner terms) includes the full cost of loading from the quay and discharging it to the quay at destination. THC? • There are no demurrage or dispatch under liner terms

1. Definition, main features and process of liner tendering Process of Liner tendering • Step 1: Get Booking note from the Agent/ Carrier. Booking note means an order from a shipper to book shipping space with a carrier. • Step 2: Fulfill the Booking note with needed information such as: Name of shipper, Name of consignee, Port of loading, Port of discharge, Discriptions of goods, Gross weight, Measurement… • Step 3: Get the Booking confirmation with necessary information to prepare for delivering goods such as closing time, container release… • Step 4: Get the Bill of lading after cargoes have been received or shipped on board.

2. LEGAL RULES GOVERNING B/L 1. International treaties 2. Domestic law 3. International mercantile customs and usages.

2.1. INTERNATIONAL TREATIES • • • •

Hague Rule Visby Rule Hamburg Rule Rotterdam Rule

THE HAGUE RULES 1924 (International convention for the Unification of Certain

Rules of Law relating to Bills of lading)

• • • •

Come into force: 02/6/1931 State members: 88 Content: 16 Articles The Hague Rules form the basis of national legislation in almost all of the world's major trading nations, and probably cover more than 90 per cent of world trade.

THE HAGUE RULES 1924

THE VISBY RULES 1968/1979 • Visby Rule 1968 has come into effect on 23/6/1977 • Visby Rule 1979 has come into effect on 14/2/1984 • Not all state members of Hague rule are members of Visby rules → “Hague - Visby Rules”

THE HAMBURG RULES The United Nations on the Carriage of Goods by sea • Come into force: 01/11/1992 • Content: 34 Articles • State members: + 34 members

ROTTERDAM RULES UN Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea

• Adopted by the UN General Assembly On 11 December 2008 • It has been ratified by 4 countries • Not yet in force as they have been ratified by only four states.

2.2. NATIONAL LAW 2.2.1. Principles of application 2.2.2. Sphere of application

2.2.1. PRINCIPLE OF APPLICATION SPECIALISED LAW SHALL BE PREVAILED + Viet Nam: 1. Vietnam Maritime Code 2015 2. Decree No 140/2007/NĐ-CP 3. Decree 87/2009/NĐ-CP + The US: COGSA 1936 + The UK: COGSA 1971 + China: Maritime Code 1992

2.2.2. SPHERE OF APPLICATION 1. WHERE IT IS REFERRED BY B/L CLAUSE PARAMOUNT : “As far as this Bill of lading covers the Carriage of the Goods by sea or inland waterways, this Bill of Lading shall have effect subject to the provisions of the International Carriage of Goods by Sea Act of Japan, enacted 13 June 1957, as amended 3 june 1992,.....” 2. WHERE IT IS DECIDED BY THE COURT/ARBITRAL TRIBUNAL

2.2.2. SPHERE OF APPLICATION ART 3.4 VN MARITIME CODE 2015: “Any legal relation concerning a cargo shipping contract shall be governed by the laws of the country to which cargo is shipped as agreed upon in this contract. ”

2.3. INTERNATIONAL MARITIME PRACTICES 2.3.1. SPHERE OF APPLICATION WHERE B/L AND LEGAL RULES GOVERNING B/L DO NOT GOVERN SPECIFIC MATTERS IN DISPUTE.

3. OBLIGATIONS OF PARTIES IN LINER CHARTERING 3.1. Duties of the carrier 3.1.1. Obligation to provide a seaworthy ship 3.1.2. Care of cargo 3.1.3. Obligation to issue a bill of lading 3.2. Duties of the charter 3.2.1. Obligation to provide goods 3.2.2. Obligation to pay to the carrier

3.1.1. Obligation to provide a seaworthy ship + Art III Hague Rules 1924 + Hamburg Rules inferred from Art 5.1

1978:

Can

be

+ Art 150, 171- VN Maritime Code 2015

HAGUE RULES – ARTICLE III The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to: (a) Make the ship seaworthy. (b) Properly man, equip and supply the ship. (c) Make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation.

ART 150 VN MARITIME CODE 2015 The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy; properly man, equip and supply the ship; make the holds, refrigerating and cool chambers, and all other parts of the ship in which goods are carried, fit and safe for their reception, carriage and preservation of goods.

DUE DILIGENCE

3 2 1

CARGOWORTHINESS OF THE VESSEL

THE EFFICIENCY OF THE CREW AND EQUIPMENT

PHYSICAL CONDITION OF THE SHIP

3.1.2. CARE OF CARGO • Art 3.2 Hague Rules 1924 • Art 171 VN Maritime Code 2015

3.1.2. CARE OF CARGO • “… the carrier shall properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried..” (Art 3.2 Hague Rules) • “Bear responsibility for loading and unloading of goods in a careful and appropriate manner, and carefully preserve goods during the carriage process” (Art 171.1, VN Maritime Code)

3.1.3. Obligation to issue a B/L Art 3.3 Hague Rules ‘After receiving the goods into his charge the carrier or the master or agent of the carrier shall, on demand of the shipper, issue to the shipper a bill of lading…’

2. OBLIGATION OF THE CHARTERER

• PROVIDE GOODS TO THE CARRIER

• PAY FREIGHT

4. LIABILITY OF THE CARRIER

4.1. The period of liability 4.2. Time limitations 4.3. Limitation of Liability 4.4. The Immunities of the Carrier 4.5. Trách nhiệm của người chuyên chở trong một số trường hợp cụ thể

4.1. THE PERIOD OF LIABILITY • Group 1: From tackle to tackle + Hague Rules + US, Singapore… • Group 2: From taking in charge until delivery. + Hamburg rules: Art 4 + VN Maritime Code: Art 170 + China, Ukraine, Poland, Thailand,…

4.2. TIME LIMITATION • Hague Rules (Art 3.6) • Hamburg Rules 1978 (Art 20.1; 20.2) • VN Maritime Code 2015 (Art 169)

4.2. TIME LIMITATION • HAGUE RULES: In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered. • Hamburg RULES: Any action relating to carriage of goods under this Convention is time-barred if judicial or arbitral proceedings have not been instituted within a period of two years. The limitation period commences on the day on which the carrier has delivered the goods or part thereof or, in cases where no goods have been delivered, on the last day on which the goods should have been delivered. • VN: The statute of limitation for submission of a claim on loss of and damage to the goods shall be 01 year from the date of discharge of the goods or the date on which the goods should have been delivered to the consignee.

4.3. LIMITATION OF LIABILITY • Hague Rules 1924 (Art 4.5) • Protocol 1968 (Art 2) • Protocol 1979 (Art 2) • Hamburg Rules 1978 (Art 6) • VN Maritime Code (Art 152) → Late delivery (Hamburg = VN Maritime code)

4.4. THE IMMUNITIES OF CARRIER • Hague Rules 1924 : Art 4.2 • Hamburg Rules 1978: Art 5.1

• VN Maritime Code: Art 151.2

4.4. THE IMMUNITIES OF CARRIER REMARKS: - Navigation & management of the ship - Nautical Faults vs Commercial Faults

4.5. LIABILITY OF CARRIERS IN CERTAIN CIRCUMSTANCES • DANGEROUS GOODS • DECK CARGO • DEVIATION

DANGEROUS GOODS • Art 4.6 Hague rules 1924 • Art 13 Hamburg rules 1978 • Art 155 VN Maritime Code 2015

DECK CARGO • Hamburg Rule 1978: Art 9 • Hague Rule: No stipulation • VN Maritime Code 2015: Art 172

DEVIATION + Lawful deviation: deviation for the purpose of avoiding danger to crew, vessel and cargo and deviation for the purpose of saving life or property, are lawful deviations + Unlawful deviation a breach of contract and the charterers can entitled to damages as well as, in some cases, to cancel the charter agreement.

II. VOYAGE CHARTER PARTY (V./CP) 1. Definition 2. Standard forms of voyage charterparty 3. Main contents of Voyage charterparty 4. Obligations of the parties to the VCP 5. Lien on cargo

1. DEFINITITON A voyage charterparty is a charterparty under which the shipowner charters out and the charterer charters in the whole or part of the ship’s space for the carriage by sea of the intended goods from one port to another and the charterer pays the agreed amount of freight. Charter party → “Carta Partita” (divided document)

2. STANDARD FORMS OF VCP • Group 1: General cargo + GENCON (1922, 1976, 1994), SCANCON, NUVOY… • Group 2: Specific cargo + NOGRAIN 89 + CEMENCO + EXONVOY, MOBILVOY 96, SHELLVOY + CUBARSUGAR

3. MAIN CONTENTS OF VCP i) Date, name and address of shipowner and·charterer. ii) Description of ship - name and where registered, Tonnages, capacities, and cargo gear relevant to the cargo in ·question. iii) Nature of goods to be shipped and in what manner. iv) Name of loading and discharging ports. v) Details of routes to be followed and what conditions the vessel might be allowed to deviate from it. vi) Date vessel is to arrive at the loading port. vii) The freight rate and currency. viii) Whose agents are to be used. ix) How the problems of strikes, ice congestion in ports, shortage of cargo etc.are to be settled x) Arbitration clause. (Muthiah & Krishna Veni, 2010)

3. MAIN CONTENTS OF VCP 1. Preamble 11.Both to blame collision 2. Owner’s responsibility 12. G/A and new Jason 3. Deviation 13. Taxes and dues 4. Payment of freight 14. Agency 5. Loading and discharging 15 Brokerage 6. Laytime 16 General strike 7. Demurrage 17 War risks 8. Lien 18 General ice 9. Canceling 19 Law and arbitration 10. Bill of lading Standard VCP of Gencon (1994)

4. OBLIGATIONS OF THE PARTIES TO THE VCP 4.1. OBLIGATIONS OF THE CARRIER 4.2. OBLIGATIONS OF THE CHARTERER

5. LIEN ON CARGO A lien is a right given to a shipowner to retain possession of the cargo at the port of discharge as security for the payment of freight or other charges. It is noted that lien may arise at common law or may be provided for in an express term of the contract of carriage. - VN Maritime Code: Art 167.4 and Art 157.2

DISPUTE RESOLUTION Tran Thanh Tam (LLM, PhD Candidate) Foreign Trade University – HCMC Campus

READING MATERIALS 1. Law on Commerce 2005 2. Law on VN Commercial Arbitration 2010 3. Civil Procedure Code 2015 4. Decree No. 22/2017/NĐ-CP on commercial mediation 4. New York Convention 1958 5. ICC Arbitration Rules 6. VIAC Arbitration Rules (Effective on 01/3/2017)

READING MATERIALS 1. Richard Schaffer, Filiberto Agusti and Lucien Dhooge (2014) - International Business Law and Its Environment (See Chapter 3 – p.56-80) 2. Ray August, Don Mayer and Michael Bixby (2013) International Business Law: Text, cases and readings (See Chapter 3- p.127-181) 3. Indira Carr and Peter Stone (2018), International Trade Law (See Chapter 19 – p.629-652; chapter 20- p.654-669) 4. Nguyễn Thị Mơ, Law for doing business abroad (2012) (See Chapter 6)

NEGOTIATION

CONTENT

MEDIATION

LITIGATION (COURTS)

ARBITRATION

I. NEGOTIATION 1.1. Definition 1.2. Advantages and Disavantages 1.3. Remarks

1.1. DEFINITION Negotiation is the process of reaching an agreement by discussion

1.3. REMARKS “Commercial disputes must be first resolved through negotiations between the parties…Where negotiation or conciliation fails, commercial disputes may be resolved by an arbitration body or a court.’’ ( Art 239 Law on Commerce 1997) → NEGOTIATIONS ARE MANDATORY

1.3. REMARKS

Law on Commerce 2005: • Art 237.1.e • Art 40.2

1.3. REMARKS - Time limit for negotiation/complaints? Art 318 – Law on Commerce

II. MEDIATION 1. Definition: Mediation involves the use of a third party who transmits and interprets the proposals of the principal parties and sometimes advances independent proposals

II. MEDIATION 2. Features: • Non-binding, voluntary, conciliatory • Both parties must be willing to be assisted by an independent party • Always reserve the right to other courses of action

III. LITIGATION

A dispute between the parties is taken to court through the commencement of a lawsuit

III. LITIGATION • Remember the 5 issues of litigation with foreign parties: 1. 2. 3. 4. 5.

It can take a long time It is complicated It is expensive Be ready for anything to happen Nothing is guaranteed (‘I can’t lose’)

Legal Names of disputing Parties CRIMINAL LAW

CIVIL LAW

• Prosecution(R) • Accused

• Plaintiff • Defendant • Appellant • Respondent

61

Parties • Plaintiff commences the lawsuit • Respondent defends the lawsuit

Litigation • Plaintiff vs. Respondent • Claim by Plaintiff against Respondent

• Demands relief, i.e. damages

III. LITIGATION • Statement of Claim • Statement of Defence

Which Level of Court 1. Regional court, Higher Court, Supreme Court 2. Depends on the law of the geographic jurisdiction where the law suit is started 3. May depend on the $ value you are suing for

COURT SYSTEM IN VN - Supreme People’s Court - High People’s Court - Provincial People’s Court - District People’s Court - Miliary Court (Art 3 – Law on organization of People’s Courts 2014)

Which Level of Court Vietnam: Commercial disputes involving foreign elements are settled by economic tribunals in the People’s Province Courts.

IV. ARBITRATION

ADVANTAGES • Confidentiality • Party autonomy • Simplified procedures and faster decisions • Not subject to appeal on the merits • Enforceable in approx 142 countries

CLASSIFICATION

- Ad-hoc Arbitration - Institutional Arbitration

INSTITUTIONAL ARBITRATION • ICC International Court of Arbitration (LCIA) www.iccwbo.org/court/arbitration • Singapore International Arbitration Centre Website: www.siac.org.sg • Japan Commercial Arbitration Association Website: www.jcaa.or.jp • China International Economic and Trade Arbitration

INSTITUTIONAL ARBITRATION • Hong Kong International Arbitration Centre (HKIAC) Website: www.hkiac.org • American Arbitration Association Website: www.adr.org • Thai Arbitration Institute ( Ministry of Justice)

ARBITRATION CENTERS IN VN 1. Vietnam International Arbitration Centre – VIAC 6th Floor, 9 Đào Duy Anh, Đống Đa, HN 2. Pacific International Arbitration Centre – PIAC 57-59 Hồ Tùng Mậu, Bến Nghé, HCM 3. Hochiminh City Commercial Arbitration Center – TRACENT 460 Cách mạng Tháng tám,Tân Bình, HCM

ARBITRATION CENTERS IN VN 4. Vietnam Finance and Banking Commercial Arbitration Centre – VIFIBAR– 569-573 Trần Hưng Đạo Dist 1 HCM 5. Finance Commercial Arbitration Centre – FCCA – 215/42 Nguyễn Xí, Bình Thạnh, TPHCM 6. Vietnam Lawyers’ Commercial Arbitration Centre – VLCAC – 163/18 Xô Viết Nghệ Tĩnh – Bình Thạnh, TPHCM

DISPUTE SETTELEMENT AT VIETNAM PEOPLE’S COURTS FROM 2005 TO 2012

11995

8418 6574

6879

2009

2010

4748 3783 1035 2005

1978 2006

2007

2008

2011

2012

ARBITRATION VS COURT • Economic Court – HCM City People’s Court: 1000 - 1100 cases per year

50 cases / year/ judge

• VIAC 2015: 146 cases

0,25 cases/ year/Arbitr ator

Conditions for resolving dispute by arbitration • A dispute shall be resolved by arbitration if the parties have an arbitration agreement.

ARBITRATION AGREEMENT • Form: In writing or equivalent + Art 2 New York Convention 1958 + Art 16 Law on VN Commercial Arbitration 2010 (VNCAL)

ART 16 – VNCAL 2010 a) An agreement established via an exchange between the parties by telegram, facsimile, telex, email or other form prescribed by law; b) An agreement established via the exchange of written information between parties; c) An agreement prepared in writing by a lawyer, notary or competent organization at the request of the parties; d) Reference by the parties during the course of a transaction to a document such as a contract, source document, company charter or other similar documents which contain an arbitration agreement e) Exchange of a statement of claim and defense which express the existence of an agreement proposed by one party and not denied by the other party.

ARBITRATION AGREEMENT (?) What is the relationship between arbitration agreement and contract? An arbitration agreement shall exist totally independently of the contract. Any modification, extension or rescission of the contract, or invalidity or unenforceability of the contract shall not result in the invalidity of the arbitration agreement. (Art 19 – VNCAL)

ARBITRATION AGREEMENTS NULL AND VOID VNCAL 2010 (Art 18): a) The dispute arises in a sector outside the competence for arbitration prescribed in article 2 of this Law; b) The person who entered into the arbitration agreement lacked authority as stipulated by law. c) The person who entered into the arbitration agreement lacked legal capacity pursuant to the Civil Code; d) The form of the arbitration agreement does not comply with article 16 of this law; e) One of the parties was deceived, threatened or coerced during the process of formulation of the arbitration agreement and requests a declaration that the arbitration agreement is void; f) The arbitration agreement breaches a prohibited clause prescribed by law.

Recognition and enforcement of foreign arbitral awards Three questions will arise: 1) what are the conditions required for recognition or enforcement? 2) What procedure should be expected? 3) What defence might be available?