Vietnamese Court’s refusal to enforce and recognise a foreign court judgment
From 2012 to 2019, 26 foreign court judgments were attempted to be recognised and enforced in Vietnam, but only 12 judgments were successful. It is worth looking into the refusal cases in order to have a better understanding of the Vietnamese Court’s findings for such refusal and better drafting of the dispute resolution clause for similar cases.
In 2019, a Korean party tried to recognise and enforce a Korean court judgment against a Vietnamese party in Vietnam, but the High Court refused to enforce the Korean court judgment on the basis of a breach of the exclusive jurisdiction rule.
Litigation in Korea
Ms Oh is a Korean citizen and the sole owner of P Limited Liability Company (“P LLC”) which is established and operating in Vietnam. S Company, a Vietnamese corporation wanted to purchase Ms Oh’s ownership of P LLC. The two parties entered into a share purchase agreement (“SPA”) in which Ms Oh will transfer 100% of her shares in P LLC to S Company, and S Company will consequently obtain all land use rights, offices, warehouses, machinery, and other fixed assets of P LLC that are listed in P LLC’s land use right certificate No. BE758248 issued by the People Committee of L province. The parties further agreed that the Seoul Central District Court shall have jurisdiction to resolve the disputes arising from the SPA.
Upon the execution of the SPA, S Company has taken over the warehouse and inspected the construction and technical infrastructure. S Company found out that the construction and technical infrastructure were impaired. S Company, therefore, did not make payment as agreed. Ms Oh then filed a lawsuit against the S Company at the Seoul Central District Court.
The Korean Court rendered two judgments in favour of Ms Oh, the first instance judgment No. 2014GAHAP546418 dated 22 May 2015 by the Seoul Central District Court and the appeal judgment No.2015NA2034435 dated 05 February 2016 by the Seoul High Court (“Korean Court Judgment”).
Vietnamese Court’s refusal to enforce and recognise the Korean court judgment
Subsequently, Ms Oh sought the recognition and enforcement of the Korean Court Judgment in Vietnam, but the People’s Court of D province issued refused to recognise and enforce the Korean Court Judgment.
Ms Oh then appealed against the decision of the People’s Court of D province, but in June 2020, the Court of Appeal – High Court of Vietnam upheld the lower court’s decision.
The High Court of Vietnam observed that the dispute between the parties was contractual. Ms Oh transferred the warehouse, machinery, etc. located at 10,000 square meter premise according to land use right certificate No. BE758248 issued by the People Committee of L province – which is a real estate within the territory of Vietnam. The High Court of Vietnam invokes Articles 469 and 470.1.a of the Civil Procedure Code 2015 and finds that the Vietnamese court has concurrent jurisdiction and exclusive jurisdiction over the dispute.
The reasons for such findings are (i) the respondent of the dispute, P Company, is a Vietnamese company that results in concurrent jurisdiction of the Vietnamese Court according to Article 469.1.b of the Civil Procedure Code 2015; (ii) the dispute concerned real estate within the territory of Vietnam results in the exclusive jurisdiction of Vietnamese Court the according to Article 470.1.a of the Civil Procedure Code 2015.
With respect to the jurisdiction of the foreign court, Article 440 of the Civil Procedure Code 2015 provides that in the procedure of recognition and enforcement of a foreign judgment in Vietnam, the foreign court shall have jurisdiction to resolve disputes if:
- they do not fall within the scope of exclusive jurisdiction of the Vietnamese Court prescribed in Article 470 of the Civil Procedure Code 2015; or
- they fall within the scope of concurrent jurisdiction prescribed in Article 469 of the Civil Procedure Code 2015 but the respondent does not object to the jurisdiction of the foreign court, or a third jurisdiction has not rendered a judgment that has been recognised and enforced in Vietnam, or the foreign court accepted the case before the Vietnamese Court did.
Foreign investors should be careful in drafting agreements or commencing litigations in foreign jurisdictions if the matters concerned are related to real estate properties in Vietnam. Due to the complex real estate laws in Vietnam, winning a case might not result in getting what they want.