Good News - HCMC Court's Decision regarding recognition and enforcement of foreign arbitral awards!

First Instance Court.

Plaintiff: Ecom Agroindustrial Corp. Ltd – Swiss nationality

UVietnamese commercial presence:U Representative Office and a sister FDI Acom Vietnam

Defendant: VINATEX Ho Chi Minh City (10% SOE, listed with HoSE) – a subsidiary of VINATEX, leading State-owned corporation in textile business in Vietnam

Foreign arbitration: International Cotton Arbitration (“ICA”) – a London-based arbitration specialized in international cotton trade disputes.

Subject matter of the foreign arbitral award: Dispute of non-performance of an international cotton trading contract, with Plaintiff as Seller and Defendant as Buyer.

UTwo contracts, one signed

Ecom and VINATEX signed an international trade contract dated 16 March 2011 (“Contract 1”) where VINATEX would buy cotton from Ecom and pay by L/C. This Contract 1 was duly signed and sealed by both parties, and legalized in Switzerland for using in Vietnam.

Later, on 24 June 2011, there was an amendment to Contract 1 (“Contract 2”) which amended couple of points of Contract 1. This Contract 2 was signed by only Ecom, with no signature from VINATEX.

However, the court intercepted an email from the General Director of VINATEX sending to the Global Cotton Exporters Association in which he explained about the delay in executing the Contract 2. So, the Vietnamese court found that Contract 2 has been duly entered by both VINATEX and Ecom.

UUnauthorized signing?

VINATEX tried to kill Contract 1 and 2 by arguing VINATEX’s General Director did not have authority to enter into those Contracts as its charter requires BOM’s approval.

However, Vietnamese court referred to two other clauses in VINATEX’s Charter which stipulate that (1) General Director is responsible to daily operation without having to obtain BOM’s approval, and (2) General Director is directly responsible to the company should his direction lead to damages to the company.

With these two clauses, Vietnamese court found that even if Contract 1 and 2 had not been duly entered, it would have been still effective. VINATEX may file a lawsuit against its director for compensation.

UWhat Vietnamese court will actually look at in order to recognize a foreign arbitral award?

In this case, Vietnamese court examined the following matters:

• Whether there is an effective arbitration clause between two parties. • Whether the foreign arbitration has been annulled under foreign law where

such arbitration is based; and • The merit of the subject matter (i.e. whether the contracts have been duly

entered etc.)

The decision is under appeal with no more information.

If you have any question, please contact 0TUomassmann@duanemorris.comU0T;