Be careful with the regulations on “the exclusive jurisdiction of Vietnamese Courts”
Be careful with the regulations on “the exclusive jurisdiction of Vietnamese Courts” in choosing foreign Arbitrator and Court to resolve capital and share disputes related to enterprise with rights over real estates in the territory of Vietnam.
Parties participating in transactions that are foreign organizations and individuals tend to choose foreign Arbitrator or Court to resolve disputes arising from transactions related to capital and shares of enterprises in Vietnam, even in cases where that enterprises has rights over real estates in the territory of Vietnam. The argument given for this option is that shareholders, company members, and business owners are only owners of the contributed capital, shares, and owner’s equity in the enterprise and are not the direct owners or direct users of these real estate according to the corresponding legal regulations on real estate management; Therefore, in case of a dispute over capital or shares in the enterprise, that dispute will not be related to the rights over real estates.
However, the verdicts of Vietnamese Courts in the process of resolving procedures requesting recognition and enforcement in Vietnam of judgments and decisions of foreign Courts and the verdicts of foreign Arbitrators related to the disputes over capital and shares in enterprises with rights over real estates in the territory of Vietnam show that the arguments given for choosing foreign Arbitration and Court as above are not entirely correct.
It should be reiterated that Article 470 of the 2015 Civil Procedure Code of Vietnam stipulates:
Article 470. Exclusive jurisdiction of Vietnamese Courts
1. The following civil cases involving foreign elements shall be subject to the exclusive jurisdiction of Vietnamese Courts
a) That civil case is related to rights over real estates in the territory of Vietnam”.
This law can easily be understood to mean that there are only civil cases in which the parties in the lawsuit (the litigants in the lawsuit) have a dispute over the rights over real estates in the territory of Vietnam are subject to the exclusive jurisdiction of Vietnamese Courts.
In the recent decisions of the Vietnamese Court, during the process of Vietnamese Courts resolving requests for recognition and enforcement in Vietnam of civil judgments and decisions of foreign Courts and and verdicts of foreign Arbitrator, the Court has argued that at any stage of the dispute resolution (including the trial process or the process of implementing the relevant judgment or decision) if one of the rights over real estates arises, it is considered to be under the exclusive jurisdiction of the Vietnamese Courts.
Based on the arguments in these decisions and in the absence of any further explanation or guidance from the Council of Judges of the Supreme People’s Court, there is a high possibility that Vietnamese Courts will continue refusing to recognize and enforce in Vietnam civil judgments and decisions of foreign Courts and verdicts of foreign Arbitrator in similar situations.
Please refer to the decisions of the Vietnamese Courts at the links at the end of the article.
(1) https://congbobanan.toaan.gov.vn/2ta507307t1cvn/chi-tiet-ban-an
(2) https://congbobanan.toaan.gov.vn/2ta1245158t1cvn/chi-tiet-ban-an
(3) https://congbobanan.toaan.gov.vn/2ta1176341t1cvn/chi-tiet-ban-an