Chapter 5: Arbitral jurisdiction Please identify any cases, laws, official interpretations of laws, books, articles, published notes, commentaries or other authoritative sources from your jurisdiction that you would consider as a necessary inclusion in this Chapter For any identified cases, please provide a short paragraph on the issue(s) relevant to this Chapter i) Legislation The Civil Procedure Code of Vietnam (the “CPC”) The Law on Commercial Arbitration 2010 (“LCA”) The Ordinance on Commercial Arbitration 2003 (“OCA”) The Resolution 01/2014 of the Supreme People’s Court providing guidance on the Law on Commercial Arbitration (“the Resolution” or “Resolution 01/2014”) ii) Institutional Rules Article 26 VIAC Rules concerning Jurisdiction of the Arbitral Tribunal (quoted in Answer to Question 2) iii) Cases Hong Phat v China Policy Limited [2013] People’s Court of Ho Chi Minh City The case China Policy v Hong Phat & Six individual guarantors revolved around the issues of objective and subjective arbitrability under the OCA 2003 Hong Phat, being the respondent and the losing party in the arbitration, applied for setting aside of the arbitral award based on three grounds: (i) the dispute, which had arisen out of a Head Agreement to set up a Joint Venture Company, was not a commercial one, (ii) the tribunal lacks jurisdiction due to invalidity of the main contract, and (iii) the award in dealing with matters related to land use rights was contrary to fundamental principles of Vietnamese laws In dismissing the application, the Court notably applied a broad definition of commercial activities to reject Hong Phat’s first submission Remarkably, despite applying such broad definition, the Court still upheld the finding of the Tribunal that the six guarantors were not business individuals and thus they are not entitled to enter into the arbitration agreement 2 Nguyen Thi Thanh Nhan v Hong Loan JSC and Founding Shareholders [2013] Decision 01/2013/QD-HPQTT of People’s Court of Can Tho Province Mrs Nguyen Thi Thanh Nhan, one of five founding shareholders of Hong Loan JSC, initiated arbitration against Hong Loan JSC and other four shareholders to withdraw her shares from the company after certain conflicts in the governance of the company In the company charter and a Minutes of Agreement there were arbitration clauses After the issuance of an arbitral award in favor of Mrs Nguyen Thi Thanh Nhan, Hong Loan and the Founding Shareholders applied to set aside the award on numerous grounds, some of which was upheld by the Court as follows • The dispute concerning the withdrawal of shares can be considered as “commercial” dispute • and therefore arbitrable under the LCA; however The arbitration agreement was concluded in December 2010, while in its jurisdictional award the Tribunal applied the LCA, which came into force as from 01 January 2011, to consider • the arbitration agreement thereby violating Article 81 of the LCA; The arbitration agreement provided for VIAC as the arbitration institution, while Mrs Nguyen Thi Thanh Nhan initiated the arbitration before Can Tho Commercial Arbitration • Centre The enrolment of Mrs Nhan’s request for arbitration was therefore invalid; The arbitral tribunal acted beyond its jurisdiction in obliging the Respondents to open a General Shareholders Meeting Phuong Nam Company v Doanh Ngan Company [2012] 1536/2012/QĐKDTM-ST People’s Court of Ho Chi Minh City In this case, the arbitral award resolving the dispute Phuong Nam and Doanh Ngan was set aside on the grounds of Articles 68.1.a LCA – non-existence of arbitration agreement and 68.1.c LCA – the Tribunal lack of jurisdiction over the dispute The dispute arose out of a Construction Subcontract, and during the performance of the Contract there were certain unexpected work that Phuong Nam undertook for Doanh Ngan However, the Minutes of Handover of such work was not signed by legal representative of Phuong Nam and the Court found that the scope of the arbitration agreement in the Subcontract did not cover the work performed under the Minutes of Handover The Tribunal, consequently, did not have jurisdiction to order Doanh Ngan to compensate Phuong Nam for such work 4 Kuo Chi Sheng v Truong Sanh [2009] Decision 1475/2009/KDTM-QĐ of People’s Court of Ho Chi Minh City This infamous case highlighted the heavy involvement of Courts in arbitration and the inconsistency of OCA 2003 and the Resolution 05/2003 of the Supreme Court guiding the implementation of the OCA 2003 After failure to perform a contract containing an arbitration agreement, Truong Sanh brought the dispute to the People’s Court of Binh Duong Province, while Kuo Chi Sheng later commenced arbitration for the same dispute The Binh Duong Court seized jurisdiction over the dispute by holding that according to Resolution 05/2003, Kuo Chi Sheng failed to object the Courts’ jurisdiction and apply for reference to arbitration after 07 days upon receiving Truong Sanh’s petition Meanwhile, the VIAC Tribunal also decided that the dispute was within their jurisdiction as the OCA provided that any dispute with an arbitration agreement must be referred to arbitration Finally in 2009, the People’s Court of Ho Chi Minh city upheld the Jurisdictional Decision of the VIAC Tribunal, implying that the Binh Duong court had wrongfully enrolled the dispute Novo Commodities Ltd v Filipino Mertals Corp (FMC) [2009] Decision 07/2009/QDGQYC of People’s Court of Hanoi Novo applied for the Court to declare null and void the arbitration agreement in its Contract with Filipino which states “Any dispute related to this Contract or the performance of this Contract shall be negotiated in good faith and arbitration between the Parties When negotiation is not successful, the dispute shall be resolved by arbitration next to Vietnam Chamber of Commerce ( )” The Court accepted Novo’s application, finding that the arbitration agreement fell within the situation when the name of institution was not clearly identified under Article 10.4 OCA The correct provision, according to the Court, should have been “Any dispute arising out of the contract shall be resolved at The Vietnam International Arbitration Centre next to the Vietnam Chamber of Commerce and Industry under the arbitration rules of the Centre” Dong Phuong LLC, Mr Toan and Mrs Lang v Chung Eo Ram [2009] Decision 181/2009/KDTM-QDST of People’s Court of Ho Chi Minh City The dispute arose out of an Agreement between Chung Eo Ram and Dong Phuong and was brought to the VIAC for final resolution by arbitration During the proceedings, the Tribunal identified that the Claimant was actually Mr Toan and Mrs Lang, not Dong Phuong LLC and Dong Phuong LLC was only authorized to submit the Request for Arbitration Chung Eo Ram later applied to the People’s Court of Ho Chi Minh City set aside the arbitral award due to invalid authorization and wrongful identification of parties to the arbitration of the Tribunal The Court, however, dismissed such application as the Court was not entitled to review the merits of the dispute TNHH Sao Dai Hung v Zest Holding & Shipping Ltd [2005] 06/TTST People’s Court of Hanoi Sao Dai Hung, the award debtor, applied to set aside the arbitral award by claiming that its signatory, Mr Simonov, was discharged by Sao Dai Hung before he concluded the contract with Zest Holding, the award creditor The People’s Court of Hanoi dismissed such application on two grounds First, the Board of Directors of Sao Dai Hung issued the resolution to discharge Mr Simonov on 15 March 2004 with effects on 29 March 2004, while the Contract was concluded on 24 March 2004 i.e before the resolution came into force Second, Sao Dai Hung had never objected the jurisdiction of the Tribunal during the arbitration Sao Dai Hung also protested that Mr Simonov was barred from concluding contract with value exceeding USD 30.000 In rejecting such arguments, the Court relied on the principle of separability of the arbitration agreement in Article 11 of the OCA to hold that such restriction did not affect the arbitration clause iv) Books Tran Hoang Hai, Do Van Dai, Collection of judgments, decisions of Vietnamese Courts on commercial arbitration, Lao Động Publisher, 2010 Tran Hoang Hai, Do Van Dai, Vietnamese law on commercial arbitration, National Political Publishing House, 2011 v) Articles Dao Tri Uc, “Jurisdiction of Arbitral Tribunal and Role of Court in Arbitral Proceedings”, Journal of Hanoi National University, (2010) pp 270-276 Do Van Dai, “Setting Aside Arbitral Award in Vietnam”, Conference Paper, VIAC Conference on Setting Aside and Refusal of Recognition and Enforcement of Arbitral Award in October 2013 Do Van Dai, “Power of Vietnamese Court over Foreign Arbitration seated in Vietnam”, Democracy and Law Journal No 11/2012; Nguyen Vu Hoang, “Principles of Arbitration in Commercial Arbitration Law 2010”, Democracy and Law Journal, 2010 Please identify and quote any rules of arbitral institutions (referred to above in question for Chapter 1) that relate to the subject matter of this Chapter Article 26 Jurisdiction of the Arbitral Tribunal The Arbitral Tribunal shall have the power to rule on its own jurisdiction, including any objection with respect to the existence or validity of the arbitration agreement For that purpose, an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract A decision by the Arbitral Tribunal that the contract is null and void shall not entail automatically the invalidity of the arbitration clause Before considering the merits of the dispute, the Arbitral Tribunal shall consider the existence of the arbitration agreement; the validity of the arbitration agreement; whether or not the arbitration agreement is capable of being performed; and its jurisdiction regardless of whether or not there is any objection raised by any party Where the Arbitral Tribunal finds that the arbitration agreement exists, is valid and capable of being performed, the Arbitral Tribunal shall proceed with the dispute resolution Where the Arbitral Tribunal finds that the arbitration agreement does not exist, is invalid or incapable of being performed, the Arbitral Tribunal shall make a decision to stay the dispute resolution If any party finds that the Arbitral Tribunal is exceeding the scope of its jurisdiction, it shall raise an objection to the Arbitral Tribunal The Arbitral Tribunal shall consider and decide such an objection 3 Is there a general preference in your jurisdiction for jurisdictional objections to be decided as a preliminary matter rather than combined with the arbitral tribunal's decision on the merits? As far as we know, there is no specific preference for jurisdiction objections to be decided as a preliminary matter or combined with the arbitral tribunal’s decision The VIAC Rules and the LCA both provided that jurisdictional objections should be submitted along with arguments on the merits in the Statement of Defence; and the Tribunal, whether on its own initiatives or based on the jurisdictional objection of the parties, shall always consider the jurisdiction issues before the merits of the case Such provisions may infer that the tribunal is entitled, not obliged, to open a Hearing on jurisdiction and made a separate award on jurisdiction under the LCA and the VIAC as Article 10.1 of Resolution 01/2014 deduces that the Tribunal may or may not issue a jurisdictional decision Please identify any court decisions concerning whether a party has waived its right to invoke an arbitration agreement by participating in court proceedings After the implementation of the LCA, the authors have not become aware of any public resources reporting case where a party is held as having waived its right to invoke an arbitration agreement In this regard, there is a substantial difference between the LCA and the Model Law in that upon seizing a substantive claim where there has already been a valid and operative arbitration agreement, the Courts shall refuse to enroll the case irrespective of whether there is request from party or not under Article the LCA By virtue of Article the Resolution 01/2014, the burden to find out the existence of an arbitration agreement is imposed on the Court Before the implementation of the LCA, under Article 1.2(b) of the Resolution 05/2003/NQHDTP providing guidance for certain provisions of the OCA promulgated by the Council of Judges – Supreme People’s Court, one party shall be considered as waiving its rights to invoke an arbitration agreement if within 07 days upon being noticed that the other party has commenced court proceedings to resolve the dispute, that party fails to (i) object the jurisdiction Article 35.4 LCA, Article VIAC Rules Article 43.1 LCA of the Court or (ii) prove its objection Nevertheless, the Resolution 05/2003 has been replaced and even when such Resolution was still in force, Article 1.2(b) was heavily criticized as it did not reflect the spirit of the OCA The infamous Kuo Chi Sheng v Truong Sanh case highlighted the heavy involvement of Courts in arbitration and the inconsistency of OCA 2003 and the Resolution 05/2003 of the Supreme Court After failure to perform a contract containing an arbitration agreement, Truong Sanh brought the dispute to the People’s Court of Binh Duong Province, while Kuo Chi Sheng later commenced arbitration for the same dispute The Binh Duong Court seized jurisdiction over the dispute by holding that according to Resolution 05/2003, Kuo Chi Sheng failed to object the Courts’ jurisdiction and apply for reference to arbitration after 07 days upon receiving Truong Sanh’s petition Meanwhile, the VIAC Tribunal also decided that the dispute was within their jurisdiction as the OCA provided that any dispute with an arbitration agreement must be referred to arbitration Finally in 2009, the People’s Court of Ho Chi Minh city upheld the Jurisdictional Decision of the VIAC Tribunal, implying that the Binh Duong court had wrongfully enrolled the dispute Please explain the practice of your courts concerning the limits of the competencecompetence rule In particular, to what extent will your courts examine the validity of an arbitration agreement when asked to refer a dispute to arbitration? Please try to provide relevant case law on this point Under Article of the Resolution 01/2014, the Court shall not have to examine the validity of an arbitration agreement at all According to Article 2.2 (b) and Article 2.3, upon finding that there is an arbitration agreement, the Court only needs to review whether: i There has been a Court decision to set aside the arbitral award or to set aside the decision of the Arbitral Tribunal on recognizing the parties’ agreement; ii There has been a decision by the Arbitral Tribunal to stay the dispute resolution process as provided in Article 43.1, Article 59.1(a)(b)(d) and (dd) LCA; iii The Arbitration Agreement is incapable of being performed under Clauses 1, 2, and of Article of the Resolution The language of Article of the Resolution seemingly demonstrates an approach requiring the Court to address “pima facie” the [arbitral] jurisdictional issue before any such issue has been put before the Court However, in the authors’ respective opinions, the extent and procedure of Courts’ review prescribed in Article of the Resolution 01/2014 are actually complimenting Article 167 of the CPC concerning enrolment of case Evidently, the statutory time-limit for the Court to decide whether to enroll the claim or not is only five (05) days under Article 167 of the CPC and within that (05) days it would be impracticable to have both parties’ submissions and a full hearing on the existence, validity and operability of the arbitration agreement Article of the Resolution reflects new supportive attitude of the Supreme Court by respecting the competence of the Tribunal to review its own jurisdiction beforehand Does your law provide, or have your courts developed a practice in relation to, whether it is possible to have recourse against a negative jurisdictional finding by an arbitral tribunal? If there are relevant cases, please name them Article 44 of the LCA3 allows the party to recourse against any jurisdictional finding and Article 10.5(b1) of the Resolution 01/20144 reinstates that negative jurisdictional finding by an arbitral Article 44 of the LCA: Petition and resolution of petition against decision of arbitration tribunal concerning whether the arbitration agreement exists, the arbitration agreement is void, the arbitration agreement is incapable of being performed and whether the arbitration tribunal has jurisdiction If the parties disagree with any decision of the arbitration tribunal prescribed in article 43 of this Law, they shall have the right, within five (5) business days from the date of receipt of such decision, to petition the competent court to review such decision of the arbitration tribunal The petitioner must simultaneously notify the arbitration tribunal of such petition Article 10 Objections to and resolution of objections to Decisions of the Arbitral Tribunal on the existence of an arbitration agreement, whether the arbitration agreement is void or incapable of being performed, or whether the Arbitral Tribunal’s jurisdiction in accordance with Article 44 LCA Any party objecting to a Decision of the Arbitral Tribunal on whether the arbitration agreement exists, whether the arbitration agreement is void or incapable of being performed or whether the Arbitral Tribunal has jurisdiction, shall have to file a petition Such petition shall be comprised of the matters provided in Article 44(2) LCA and shall be accompanied by documents and/or evidence in compliance with Article 44(3) LCA Where the Arbitral Tribunal does not issue a separate decision on its jurisdiction, the petitioner shall have to provide documents and evidence proving that the Arbitral Tribunal has no jurisdiction to resolve the dispute ( ) The Judge, in compliance with the law, shall accept or reject the objection to the Decision of the Arbitral Tribunal on whether the arbitration agreement exists; the arbitration agreement is void or incapable of being performed, and the Arbitral Tribunal’s jurisdiction The Court shall clearly state the reasons and grounds for acceptance or non-acceptance, and depending on each specific case, shall proceed as follows ( ) tribunal may still be reversed by the Court Provision for judicial review of negative jurisdictional award may also be found in numerous jurisdictions, both Model Law and nonModel Law5, and is expected to guarantee that the parties shall not be unjustly forced to litigate their disputes before the Court b)Where the Court determines that the dispute falls within the Arbitral Tribunal’s jurisdiction, the arbitration agreement exists, the arbitration agreement is not void or is capable of being performed, the case shall proceed as follows: b1) Where the Arbitral Tribunal has decided to stay the dispute resolution, it shall, within fifteen (15) days from the date of receipt of the Court’s Decision on the Objection, shall reconvene the arbitration in accordance with the general procedure ( ) See Gary Born, International Commercial Arbitration, Kluwer International (2009), p.896 ... shall have to file a petition Such petition shall be comprised of the matters provided in Article 4 4(2) LCA and shall be accompanied by documents and/or evidence in compliance with Article 44(3) LCA