PROCESS FOR INITIATION OF COMMERCIAL DISPUTES INVOLVING FOREIGN FACTORS

In the age of worldwide business, commercial disputes involving foreign factors are an inevitable part of the landscape. While many commercial disputes can be resolved through negotiation, conciliation, there are instances where initiating legal proceedings against commercial disputes involving foreign factors at the court or arbitration becomes necessary to protect legitimate rights and interests of the parties. Therefore, understanding the process of commencing legal action in a commercial dispute involving foreign factors is essential for the disputing parties involved in the trade realm. The following article will provide information about the process of initiating legal proceedings in a commercial dispute involving foreign factors for organisations, enterprises to refer in the practical experiences.

Definition of commercial disputes involving foreign factors

Currently, Vietnamese law has no regulations giving a definition of “commercial disputes involving foreign factors”. However, it can be understood that a commercial dispute involving foreign factors must meet two conditions, including: (i) it is a commercial dispute; and (ii) there are foreign factors.

Regarding the “commercial dispute”, according to Article 30.1 of the Civil Procedure Code 2015, commercial disputes are “disputes arising from business or trade activities among individuals and/or organizations with business registration, which are all for the purpose of profits”. Commercial activities are defined in Article 3.1 of the Law on Commerce 2005 as “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.”

Regarding the “foreign factors”, Article 663.2 of the Civil Code 2015 stipulates that civil relation involving foreign factors means any of the following civil relations:

• One of the participating parties is a foreign individual or legal entity;
• The participating parties are Vietnamese individual or legal entity but the basis for the establishment, change, implementation or termination of such relation arose in a foreign country;
• The participating parties are Vietnamese individual or legal entity, but the subject matter of such civil relation is in a foreign country.

Thus, a commercial dispute involving foreign factors can be interpreted as a dispute arising from commercial activities for the purpose of profit between individuals, organisations having business registration involving foreign factors as stipulated under the Civil Code 2015.

Process for initiation of commercial disputes involving foreign factors

For each commercial dispute involving foreign factors, if the parties cannot reach a mutual agreement through negotiation or conciliation, one of the parties will initiate in commercial arbitration or at a competent people’s court to request the dispute settlement. In general, the process of initiating commercial dispute involving foreign factors will include the following tasks:

Determining the competence of commercial arbitrators/courts

Competence of commercial arbitration

Article 2 of the Law on Commercial Arbitration 2010 stipulates the arbitration’s competence to settle dispute shall apply the following: (i) disputes among parties which arise from commercial activities; (ii) disputes among parties at least one of whom conducts commercial activities; and (iii) other disputes among parties which are stipulated by law to be settled by arbitration.

In addition to the dispute falling under one of the above cases, the parties must agree to resolve the dispute by arbitration through the establishment of an arbitration agreement before or after the dispute occurs.

Competence of the People’s Court

In cases where commercial disputes involving foreign factors are within the common competence or separate competence of the People’s Courts of Vietnam, pursuant to Article 469 and Article 470 of the Civil Procedure Code 2015, the disputing parties must identify the specific court to file the petition and related documents, as follows:

• Determining court’s competenceaccording to the case: Pursuant to Article 30 of the Civil Procedure Code 2015, commercial disputes involving foreign factors fall under the court’s jurisdiction;
• Determining the court’s competence by level: depending on the kind of dispute, commercial disputes involving foreign factors may fall under the competenceof the district-level court pursuant to Article 35.1(b) of the Civil Procedure Code 2015 or under the competence of the provincial-level court pursuant to Article 37.1(a) of the Civil Procedure Code 2015.
• Determination of territorial competence: pursuant to Article 39 of the Civil Procedure Code 2015.

Furthermore, the plaintiff has the right to choose the court to resolve commercial disputes involving foreign factors in certain cases, as stipulated in Article 40 of the Civil Procedure Code 2015.

Preparing a petition

To initiate a commercial dispute involving foreign factors in commercial arbitration or the competent People’s Court, the initiating party must prepare a lawsuit with all the required contents as stipulated in Article 30 of the Law on Commercial Arbitration for cases initiated in commercial arbitration; or in Article 189.4 of the Civil Procedure Code 2015 for cases initiated in the court.

Preparing documents and evidence to prove the lawsuit request

The party initiating a commercial dispute involving foreign factors shall have the burden of proof that its legal rights and interests have been violated as well as relevant facts to the disputes by providing evidence and supporting documents together with the petition. When the parties are unable to collect evidence and have submitted a request, the commercial arbitration or the court will then consider and become involved in the process of gathering evidence (where necessary).

Filing a lawsuit with documentations, evidences

If disputes are resolved in court, the plaintiff can submit directly or courier via postal service the petition along with relevant documents and evidence, to the competent People’s Court. If disputes are resolved at an arbitration center, the plaintiff must send the lawsuit dossier of the dispute to the arbitration center. If disputes are resolved by an ad-hoc arbitration, the plaintiff must send the lawsuit dossier to the defender. It is noted that in cases of dispute resolution by arbitration, the plaintiff’s initiation must be submitted along with the arbitration agreement.

Above is the general content of process for initiation of commercial disputes involving foreign factors. If you have difficulty in finding a law firm to advise and support in legal aspect related to process for initiation of commercial disputes involving foreign factors, please contact us. Phuoc & Partners is a professional consulting firm established in Vietnam and currently has nearly 100 members working in three offices in Ho Chi Minh City, Hanoi and Danang. Phuoc & Partners is also rated as one of the leading consulting firms specializing in business law in Vietnam that has leading practice areas in the legal market such as Labour and Employment, Taxation, Mergers and acquisition, and Litigation. We are confident in providing customers with optimal and effective service.