Author: Phạm Huyền

Negotiation in case the dispute has plenty of parties

Written by Phạm Huyền on 31 December, 2021. Posted in Dispute Settlement, Giải quyết tranh chấp.

Multi-party disputes are not as common as two-party disputes. However, there are some cases where individuals and organizations have common interests in that dispute. At that time, individuals and organizations with common rights and interests in a dispute tend to gather, jointly litigate the party with opposing rights and interests and appoint one or a few representatives to negotiate with the other party.

Even so, is it really effective to litigate together and appoint only a few representatives for dispute settlement? By this article, we would like to analyze a few points about negotiation in case the dispute has plenty of parties.

1. Some common disputes that have plenty of parties

Multi-party disputes are disputes that have more than 2 parties. For example:

– The enterprise has dispute over debt collection with plenty of partners, customers at the same time in commercial business activities;

– Disputes over cooperation agreements between an enterprise and many different individuals and organizations.

Multi-party disputes often occur in the fields of commercial business, civil, labor or consumer’s rights protection.

2. Is it effective to litigate together and appoint only a few representatives for dispute settlement?

In fact, in multi-party lawsuits where one party (plaintiff or defendant) is different individuals and organizations with common interests in that dispute, there are usually only a few individuals and organizations successfully protect their legitimate rights and interests, while the rest of individuals and organizations have to accept that their rights and interests are infringed.

This situation occurs because individuals and organizations have trusted and expected too much that a few representatives can work with the other party without contributing to the dispute settlement process themselves. Although individuals and organizations have common interest in that dispute, the purpose of the settlement is still to protect the lawful rights and interests of each individual and organization. Therefore, if individuals and organizations want to resolve disputes, each individual and organization must spend time and effort to protect their rights and interests first, then they can protect the common interests of the whole group.

Another reason individuals and organizations should litigate themselves to protect their rights and interests is that in case individuals and organizations appoint representatives to resolve disputes, if the other party negotiates or entices representatives to its side, individuals and organizations will lose their leader and be easily divided and disbanded. If each individual or organization litigate against the other party on its own, that party will simultaneously have to settle the dispute with all individuals and organizations instead of a few representatives as in the case above. Thus, the success rate to protect the rights and interests of individuals and organizations in the second way will also be higher.

In summary, we would like to note that during the negotiation in case the dispute has plenty of parties, each individual, organization should contribute their own efforts, time or litigate themselves to protect their rights and interests. It is more beneficial than that individuals and organizations rely on a few representatives to claim rights and interests for the whole group.

Above are our legal sharings about negotiation in case the dispute has plenty of parties. TNTP hopes this article is useful for you.

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Compare regulations of the law on mediation

Written by Phạm Huyền on 24 December, 2021. Posted in Dispute Settlement, Giải quyết tranh chấp.

With the development of the country, business activities are more and more flourishing. Along with that, business and commercial disputes also increased rapidly. To reduce pressure on agencies such as Courts and Commercial Arbitration as well as promote the spirit of cooperation and goodwill between the parties, the Vietnamese government always dignifies mediation activities. However, currently, there are many regulations of the law on mediation, which makes it difficult for enterprises, businesses to apply. By this article, TNTP will help enterprises and businesses in comparing mediation at the Court before the case is accepted and mediation in the process of settling the case. For local mediation, because the scope of mediation does not include business and commercial disputes, TNTP will not mention it.

1. Similarities

First of all, about the similarities, both mediation at the Court before the case is accepted and mediation in the process of settling the case have the following specifications:

Participation of the parties in the dispute and a third party.
The third party is the party that organizes and conducts the mediation.
The third party is responsible for explaining and offering appropriate options for the parties to consider, helping the parties exchange opinions and summarizing the results of the mediation.

2. Differences

The differences in regulations of the law on mediation at the Court before accepting the case and mediation in the process of settling the case can be shown in the following table:

Above are legal sharings of TNTP related to the comparison of regulations of the law on mediation. We hope that this article is useful for you.

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Term of Confidential Information in Contracts

Written by Phạm Huyền on 17 December, 2021. Posted in Pháp luật Hợp đồng.

Nowadays, there are many business lines of enterprises that require high security. Disclosure of confidential information of enterprise may cause great damage to that enterprise. Therefore, many enterprises attach importance to the term of confidential information when signing Contracts. Some enterprises also request customers and partners to sign a Confidential Disclosure Agreement (CDA) in addition to the Contract. So what contents does confidential information term include? What should enterprises pay attention to when signing a Contract containing the term of confidential information or CDA? This article will answer the above legal issues.

1. What contents does confidential information term often include?

Normally, term of confidential information in Contracts or CDA includes the following basic contents:

Object and information that need to be confidential: Depending on the business line, the demand of enterprises, the object and information that need to be confidential may be different. However, objects and information needing to be confidential mainly include business secrets, revenue; contracts and agreements; lists and information of the enterprise’s customers; designs, samples and products owned by the enterprise; and other information in the course of business.
Rights and obligations of the parties in disclosing information: When enterprise signs a contract, customer or partner can access some confidential information of the enterprise. Therefore, enterprise needs to state clearly the scope of accessing, using and deciding information that customer, partner know during the performance of the Contract, agreement with enterprise.
Responsibility of the party breaching confidential information term: Although enterprises may have carefully specified the term of confidential information in the Contract, the risk that information is leaked and disclosed is always present. Thus, specifying the responsibility of the breaching party, such as compensating for damages when disclosing information to any third party, is necessary to reduce risks for enterprises and raise awareness of disclosing information of customers and partners.
Exclusion of responsibility for disclosing information: In most cases, the party who receives information is responsible for disclosing information owned by the enterprise. However, in some cases regulated by law or under the agreement, the party receiving information will be excluded from responsibility and do not have to compensate for damages if the information is disclosed to a third party.

2. What should enterprises pay attention to when signing Contract containing the term of confidential information?

When signing a Contract containing confidential information term or CDA, enterprises need to note the following issues before signing:

– Explaining clearly about objects, information that need to be confidential: Listing objects and information that need to be confidential is not enough because some objects such as business secrets, revenue are not clear and may be understood in different ways. Therefore, enterprises should clearly define and explain what business secrets or revenue in the scope of disclosing in the Contract include (for example: the company’s financial statements, reports on revenue and expenditure, allocating company’s assets and profits, …)

In this way, the parties can easily identify objects and information that must be disclosed and determine responsibility of the party receiving information if disclosing confidential information.

– Determining the value of compensation when information is disclosed: In many cases, the parties often specify the value of compensation for damages when information is disclosed according to actual damages. However, determining the actual damages to the information is very difficult. Thus, the parties should agree on a specific value of compensation after considering risks and the value of Contract.

In case the enterprise is the owner of the information, enterprise can specify the value of compensation close to the damage that enterprise estimates and considers.

In case the enterprise is the recipient of the information, enterprise can protect its rights and interest by specifying that the maximum value of compensation does not exceed the value of the Contract or another value of compensation.

Above are the legal shares about the term of confidential information in Contracts. Enterprises can consider before signing Contracts, Confidential Disclosure Agreements.

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Issues need to be noted when signing a Labor Contract

Written by Phạm Huyền on 14 December, 2021. Posted in Legal newsletter.

Labor relationship is a key relationship in current social life. To earn income, from which getting spending, investment, and promoting economic development, labor is essential. However, the practice in Vietnam shows that the interests of employees are not guaranteed. There are many cases that employers do not sign contracts with employees or the contract contains many disadvantage terms for employees but employees do not understand clearly or underestimate these terms. Until being terminated the labor contract, employees could not claim their benefits they signed and accepted disadvantage terms. To protect their interests, firstly, employees must understand the labor law and read the labor contract carefully before signing. In addition, employees must pay attention to the following contents in the labor contract:

1. Probationary period

Under provisions of the law, employees and employers can sign a labor contract with a term of probation. This is also the premise for the two sides to enter official labor relations later. However, many employees often underestimate this regulation without knowing that their rights are being violated.

Regarding the probation period regulated in Article 25 of the Labor Code 2019, in case the employer stipulates the probation period exceeding the stipulations of Article 25, it will violate the law and may be sanctioned administrative violation.

Pursuant to Article 26 of the Labor Code, the salary in the probation period of employees is agreed by the two parties but must be at least 85% of the salary of that job. This is a regulation employers violate a lot in practice, so employees need to pay special attention to protect their interests.

Pursuant to Article 27 of the Labor Code, at the end of the probationary period, the employer must announce the probation result to the employee. If the employee’s probation has met requirements, the employer must continue to perform the signed labor contract.

Thus, to ensure the interests of employees, when agreeing to sign a labor contract, employees need to check whether the time limit and the probationary salary are lawful or not. However, employees should note that according to the current regulations, during the probation period, each party has the right to cancel the probationary contract or the signed labor contract without prior notice and does not have to compensate.

2. Salary and other interests

When working, employees are always concerned about salary and other interests such as social insurance, health insurance, allowances such as bonuses, annual leave, and salary increases regulations, … Therefore, employees must pay attention to contents of salary and others when signing a labor contract.

Regulations of salary are stipulated in Chapter VI of the Labor Code, in which the salary includes the salary of the job or title, allowance, and other additional payments. The law does not regulate the maximum salary or the fixed salary for each job so employer and employee can freely negotiate. However, the law stipulates that the salary of the job or title must not be lower than the minimum salary specified by the Government.

3. Labor discipline

Pursuant to Article 124 of the Labor Code, the forms of labor discipline include: reproving, prolonging the period of increasing salary for no more than 6 months, unseating, dismissing.

In which, there are two issues that employers often violate:

Salary reduction/deduction penalty: Currently, there is no shortage of companies applying salary deduction penalty when staff, employees violate rules and regulations such as being late for work, taking a day off without permission, or failing with KPIs, … However, salary reduction/deduction of penalty is not a form of labor discipline. Therefore, if the employer stipulates the application of salary reduction/deduction penalty in the labor contract, it will violate the regulations of the law in Clause 2 Article 127 of the Labor Code.
Dismissal: In fact, when applying the dismissal, the employer often violates the labor discipline such as: the labor discipline does not have the participation of the representative organization of the employee at the workplace where the employee being disciplined is a member; the employee is absent from the session of labor discipline or does not have the right to defend himself; the disciplinary action is not recorded in writing (Clause 1 Article 122 of the Labor Code).

Therefore, before signing a labor contract, employees should note regulations of labor discipline in labor contract as well as the labor rules of the company where the employee intends to work.

4. Termination of labor contract

Unilateral termination of labor contract is one of the most common disputes and often occurs in labor relations. To be able to protect their interests, employees need to understand the following issues:

The cases that employees and employers are allowed to unilaterally terminate the labor contracts: Employees are allowed to unilaterally terminate the labor contract pursuant to Article 35 of the Labor Code. Employers are allowed to unilaterally terminate the labor contract pursuant to Clause 1 Article 36 of the Labor Code. In addition, employers are not allowed to unilaterally terminate the labor contract if it belongs to one of the cases in Article 37 of the Labor Code. In some special cases, employers are allowed to unilaterally terminate the labor contract due to changes in structure, technology, or due to economic reasons (Article 42 of the Labor Code); due to total division, partial division, amalgamation, acquisition; selling, renting, converting business type; transferring the ownership, use-rights of assets of enterprises, or cooperatives (Article 43 of the Labor Code).
Procedures of unilateral termination of the labor contract: In the cases of unilateral termination of the labor contract specified in Article 35 and Clause 1, Article 36 of the Labor Code, the employee and the employer must notify a reasonable period of time in advance according to the Labor Code’s regulations. In special cases in Article 42 and Article 43 of the Labor Code, the employer must execute the plan of using employees and must exchange opinions with the employees’ representative organization at the workplace.

In summary, with the analyses above, the main contents that employees should pay attention to when signing a labor contract with the employer are probation period, salary and other interests, labor discipline, termination of labor contracts. TNTP hopes these legal shares will be useful to you.

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Basic rules when drafting, reviewing contracts

Written by Phạm Huyền on 10 December, 2021. Posted in Pháp luật Hợp đồng.

Under the provisions of law and practice, each type of Contract will have different nature, content. However, no matter what type of Contract is drafted and reviewed, the basic rules will not change. Therefore, enterprises, organizations and individuals should note and keep in mind some basic rules so that they can sign the Contract and also protect their legal rights and interests in the performance of the Contract. Accordingly, TNTP will provide basic rules when drafting and reviewing Contracts. Enterprises can refer, follow these rules to draft and review Contract by themselves or use legal services of professional law firms and lawyers to get the best result.

1. The information of the parties in Contract must be correct

When signing Contract, the parties are often unwary and do not anticipate risks if a dispute occurs. The parties only write the information in a general way, write the registered office address but do not write the actual operation address or actual contact address, do not write phone number, email, representative’s name, person in-charge, … As a result, when arising dispute, the aggrieved party cannot find the actual address of the breaching party to directly work and negotiate; unable to contact the breaching party; the litigation and dispute settlement face difficulties because the breaching party does not operate at the registered address; …

To avoid the above risk, writing information such as company name, tax code, registered office address, legal representative is not enough because these information can be easily searched on the National Business Registration Portal https://dangkykinhdoanh.gov.vn/en/Pages/default.aspx or Website of General Department of Taxation http://tracuunnt.gdt.gov.vn/tcnnt/mstdn.jsp. These information cannot show fully actual information of the parties when signing. Thus, enterprises should request clients, partners to write their phone number, email, actual contact address (if any) and verify the accuracy of these information.

Enterprises are also be noted that: The verification and receiving these information is not required to be done before signing the Contract. If the parties have signed the Contract, enterprise still can verify the information during the performance of the Contract to ensure that the enterprise always know the actual address and contact information of clients and partners.

2. Know the position of the parties in the transaction

When signing Contract, each party always wants to ensure their rights and interests. However, if enterprise adds provisions to protect their rights and interests, it means that the rights and interests of clients, partners in the Contract will be reduced. Not all clients, partners agree with this. In the worst situation, the signing of the Contract may not be performed because the parties cannot agree on the limits of the rights and interests of each party in the Contract.

Therefore, the second rules when drafting, reviewing contracts, enterprises need to know clearly the position of the parties in the transaction to balance the interests of both parties. Enterprises can note terms, contents that enterprises can make concessions and terms, contents that enterprises must have, whereby enterprises will have a plan to negotiate and reach an agreement with clients, partners to sign the Contract.

3. Know clearly provisions of laws about the type of Contract which the parties supposed to sign

In principle, the law respects agreement of the parties. However, for some types of Contract, the law also has provisions and frameworks that the parties must follow, for example, for sub-contractor contracts using state budget, the transfer rate must be less than 10%. In this case, if the Contract specify a transfer rate of more than 10%, it will be invalid due to a violation of the prohibition of the law.

The legal validity of Contracts is very important. It records the Contract’s performance of the parties is legally effective. Therefore, the parties should learn the provisions of laws on the type of contract that the parties are about to sign, then review terms to amend, or remove the term that violates the law, ensure that the signed Contract is valid.

4. The level of detail of the Contract is proportional to the scale and value of the Contract

If the Contract has small value of a few million dong to several tens of million dong, enterprise can specify a brief Contract, including only basic terms. However, if the Contract has a large value from hundreds million to several tens of billion dong, enterprise needs to consider the detail level of the Contract.

If the Contract has a larger value, any small risk can bring great damage to the enterprise. Therefore, the Contract needs to be specified in detail and anticipate risks as much as possible.

Above are basic rules when drafting, reviewing Contracts. TNTP hope this article is useful for you.

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ISSUES OF DEBT RECONCILIATION IN CIVIL PROCEEDINGS

Written by Phạm Huyền on 7 December, 2021. Posted in Dispute Settlement, Giải quyết tranh chấp, Thu Hồi Nợ.

“Debt reconciliation” is a familiar terminology in commercial business disputes. “Debt reconciliation” can be understood that the parties in an agreement or contract execute the reconciliation and confirmation of the debt or the money that one party must pay to the other party. During the performance of the Contract, many enterprises do not pay attention to the debt reconciliation or do it cursorily. This leads to the situation when a dispute occurs, the plaintiff is confused in proving the value of money which they request the Court to settle because the Debt Reconciliation Report is not accepted by the Court as evidence. So which conditions must the Debt Reconciliation Report meet to be considered as evidence? What is the value of debt reconciliation in civil proceedings? To answer the above questions, TNTP will provide legal shares on debt reconciliation in civil proceedings.

1. What are the Debt Reconciliation Report/ Debt Confirmation and the Debt Payment Request/Letter of Demand?

Debt Reconciliation Report/ Debt Confirmation (collectively referred to as Debt Reconciliation Report) is a document signed by both parties to confirm the debt that one party is obliged to pay to the other party. Debt Reconciliation Report is usually applied to sale contracts or service supplying contracts between two enterprises.

Debt Payment Request/ Letter of Demand (collectively referred to as Debt Payment Request) is a unilateral document signed by the party having right (usually is the goods seller or the service supplier) and sent to the party having obligation (usually is the goods buyer or the service user) to remind and request the party having obligation to pay the debt under the agreement between the parties.

2. Are the Debt Reconciliation Report and the Debt Payment Request automatically considered as evidence?

According to Clause 1, Article 95 of the Civil Procedure Code 2015, a readable document is evidence if it is an original or a copy which is legally notarized or certified or provided, confirmed by a competent agency or organization. However, the Debt Reconciliation Report and the Debt Payment Request are documents signed, stamped, and confirmed by the parties according to the contract or agreement, so they will not be issued, provided, and confirmed by the competent agency or organization. Therefore, the Debt Reconciliation Report and Debt Payment Request are considered as evidence if it is the original or a legally notarized or certified copy.

For the Debt Payment Request: Debt Payment Request is a unilateral document signed and stamped by the party having the right. Therefore, it is easy to obtain the signature and stamp of the legal representative of the party that has the right. In this case, the enterprise can submit the original or a copy notarized or certified by a competent authority and it will be considered as evidence. However, the Debt Payment Request doesn’t make much sense in proving the value of the debt because it does not have the signature and stamp of the party having obligation. In case the party having right submits the Debt Payment Request to the Court but the party having obligation counter the value of the debt provided by the party having the right, the party having the right will face difficulties and still have to prove the value of the debt the party having right requested the party having obligation to pay.
For the Debt Reconciliation Report: The Debt Reconciliation Report is a document signed and stamped by both parties. In addition, the Debt Reconciliation Report must clearly state the money that the party having obligation must pay to the party having the right. Therefore, if the party having obligation signs and stamps the Debt Reconciliation Report, it means that the party having obligation has admitted the value of the debt. Thus, if the Debt Reconciliation Report is considered as evidence, it will have an important value in determining the debt which the party having obligation must pay to the party having the right.

However, the Debt Reconciliation Report is only considered as evidence if there are full signatures and stamps of both parties. If the Debt Reconciliation Report does not have the signature and stamp of the party who has obligation, it cannot be certified at the competent agency, even if the petitioner submits the original at the Court, it will not be accepted as evidence. Therefore, enterprises should note that when making a Debt Reconciliation Report, the party having right must request the party having obligation to sign and stamp for confirmation so that they can submit evidence to the Court in case disputes occur and the party having right litigates.

In case the party having obligation refuses to sign and stamp for confirmation to avoid payment, the enterprise should submit it to the Court, though. In this case, despite that the Debt Reconciliation Report is not considered as evidence but it can be used for reference and determination of the debt value if it is compared with other evidence and documents in the case’s file such as delivery notes, bank statements of payments, …

In addition, another case is the Debt Reconciliation Report signed and certified by the accountant/chief accountant. In principle, the Debt Reconciliation Report must be signed by the legal representative, however, in case the accountant signs, the legal representative knows but does not counter, it will be considered as they have agreed with the debt value and the Court will still accept it if the party having right can prove that the legal representative knew but did not counter. In this case, the solution which the enterprise can apply is when sending the Debt Reconciliation Report, if the accountant signs it, the enterprise should send a written notice of the accountant’s confirmation of the debt and request the party having obligation to pay. The sent document must have Accounts Receivable (AR) to provide clear evidence, then the party having obligation will not be able to counter the fact that the legal representative has known but did not counter the accountant with his/her signature for the debt confirmation.

Based on the analysis above, it can be seen the importance of the Debt Reconciliation Report in commercial operations today. Through this article, TNTP has provided issues related to the Debt Reconciliation Report, especially the signing to confirm the Debt Reconciliation Report between the parties so that the Court would accept as evidence, thereby settling the plaintiff’s requests. TNTP hopes that this article is useful to you.

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Term of Dispute Settlement in the Contract

Written by Phạm Huyền on 3 December, 2021. Posted in Pháp luật Hợp đồng.

During the process of contacting and working, TNTP found that many enterprises did not pay attention to the term of Dispute Settlement in the Contract. The consequence is that enterprises often face difficulties and obstacles when submitting the petition and being accepted by the Court/Arbitration. Therefore, by this article, TNTP will give examples, analyze mistakes that enterprises often encounter when specifying the Dispute Settlement term in the Contract, thereby suggesting solutions to ensure legality, clarity, and minimize the risks when litigating.

Based on work experience, TNTP can show mistakes that enterprises often encounter when specifying the term of Dispute Settlement in the Contract as follows:

1. “In case the parties cannot resolve the dispute through negotiation and conciliation, the parties have the right to initiate a lawsuit to the Court of Province A for settlement”

Analysis:

The above is a common mistake that many enterprises make when specifying the jurisdiction to resolve the dispute. According to the Civil Procedure Code 2015, the Court’s jurisdiction is divided into: jurisdiction by case, jurisdiction by level, and jurisdiction by territory. The parties are not allowed to arbitrarily choose any specific Court (for example: Hanoi People’s Court) and must comply with the provisions of the Civil Procedure Code on the Court’s jurisdiction (Chapter III of the Civil Procedure Code).

Normally, commercial disputes between two enterprises established in Vietnam will be under the jurisdiction of the district court where the defendant has headquarters. In case the parties have an agreement, they can only agree on the jurisdiction at the Court where the plaintiff’s headquarter is located. In some special cases, the plaintiff may choose the Court but must comply with the provisions of Clause 1 Article 40 of the Civil Procedure Code.

Solution:

To overcome this mistake, in case the parties do not clearly understand the legal provisions on the jurisdiction of the Court, the Parties should specify the dispute settlement term as: “In case the parties cannot resolve the dispute through negotiation and conciliation, the parties have the right to initiate a lawsuit at a competent Court.

2. “If the parties cannot resolve the dispute through mediation, the parties have the right to initiate at an Arbitration. If it cannot be resolved by economic arbitration, the dispute will be resolved by the economic Court”

Analysis:

This is another common mistake made by enterprises when choosing an agency to settle the dispute, which is the parties do not have a clear arbitration agreement. According to Article 6 of the Commercial Arbitration Law 2010, in case of arising dispute and the parties signed an arbitration agreement but one party litigates at the Court, the Court must refuse to accept the case, unless the arbitration agreement is invalid or arbitration agreement cannot be performed. It can be understood that the parties cannot both settle the dispute at commercial arbitration and the Court. Enterprises can only choose ONE agency to settle the dispute.

This leads to the situation that when enterprises want to litigate at Arbitration, they will have to explain and prove that the arbitration agreement is valid. Or if enterprises want to litigate at the Court, they will have to prove that the arbitration agreement is invalid. This explanation and proof will prolong the time to accept the case.

Solution:

In case the parties have not signed the Contract, the parties should consider carefully and only choose one settlement agency, which is Commercial Arbitration or Court.

In case the parties have signed the Contract and have not yet had a dispute, the parties can make an Appendix to amend the term of Dispute Settlement in the Contract.

In case the parties have signed the Contract and have arisen dispute, the parties may base on Point a Clause 4 Article 2 of Resolution 01/2014/NQ-HDTP to litigate at Commercial Arbitration. Specifically, in case the parties have agreed to settle the dispute at Arbitration and also have agreed to settle the dispute at the Court and the parties do not have a new agreement on the agency having authority to resolve the dispute, if a party litigates at Commercial Arbitration first and neither party requests the Court to settle it or the Court has not yet accepted it, the Arbitration will have jurisdiction and the Court must refuse to accept, settle the dispute.

3. “In case it is not possible to negotiate or conciliate, the parties have the right to litigate at the competent Economic Court/ Economic Arbitration”

Analysis:

The next mistake of enterprises when specifying the term of Dispute Settlement in the Contract is not writing the correct name of the dispute settlement agency. In some cases, the dispute settlement agency will give the reason that the name is not correct, or there is no dispute settlement agency named that to refuse to accept and resolve.

Solution:

The parties should pay attention to learning and writing the correct name of the Dispute Settlement Agency to avoid difficulties in the process of submitting the petition and being accepted by the competent agency.

Currently, the name of Court system in Vietnam is as follows:

The Supreme People’s Court;

The High People’s Court;

The People’s Court of … Province/City;

The People’s Court of … District/Town;

For Commercial Arbitration Centers in Vietnam, enterprises can search on Google, Bing, Baidu, … to write the correct name of the Commercial Arbitration Center which the parties want to choose to resolve the dispute.

Above are the analysis and solutions for enterprises when specifying the term of Dispute Settlement in the Contract. We hope this article is useful to you.

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Business’s basic steps for debt collection

Written by Phạm Huyền on 30 November, 2021. Posted in Giải quyết tranh chấp, Thu Hồi Nợ.

Poor performance of debt recovery adversely affects the cash flow and finance of a company. However, it normally is a hard job. It requires effort on negotiation, and lawsuits in some cases. There is a process in debt recovery every company should prepare. Therefore we would like to give an overview of business’s basic steps for debt collection in this article.

1. Demand for settling debt by negotiation (lead time from 01 to 03 months).

Demand in correspondence:

It is actually more effective to communicate by phone, email, or in-person with the Debtor, but in several cases that we cannot arrange an appointment with the Debtor, we must prepare the written request to the Debtor to fulfill the payment obligations (“The payment request“) in the most effective way.

Purpose of The payment request: In fact, only 10% of the Debtor decides to pay the Businesses for the debt when the Businesses send The payment request. However, in order to recover the irrecoverable debts, this is such a significant amount for the Businesses to implement this method. In addition, The request payment is also the basis for the Businesses to initiate a lawsuit. Besides that, it helps the Businesses determine the time limit for initiating lawsuits in resolving disputes at competent states which is its advantage.

Negotiation:

There are many steps, methods a creditor can use to approach the debtor. Case by case the creditor could conduct the steps as follows:

Convincing period: When payment is not made by the due date and the Debtor does not have any response about the debt, the creditor may call, mail to the debtor to ask for his payment in accordance with regulations law. These are gentle reminders and the creditor should show sympathy for difficulties the debtor may have. The creditor can consider giving extension to the payment (1 week could be a reasonable extension).
Reminding period: When the payment continues to miss the extension, the creditor could request for negotiation. Cooperation and faithfulness should be shown up.
Warning period: If the debtor continues to fail to perform his obligations, the creditor should seriously demand the payment as well as indicate very negative consequences if the debtor fails to fulfill his payment obligations. At this time, the creditor should request the Debtor to commit by a writing document. In the worst scenario, the creditor afterward files the case to a competent court, this writing commitment shall be very useful. It would be very clear evidence that the debtor did not cooperate to settle the debt.

In the case where debts are big, calling or email reminders do not work, The creditor should send its representative to the debtor to request payment in person. This is also the chance to discover why the debtor cannot pay for debts on due time. Feasible solutions can be navigated. In some cases after understanding the situation, creditors assisted debtors in overcoming the difficulties, reducing inventory, from which they can recover the debts.

If there was no positive feedback from the debtor, the creditor should immediately give notice on filing a case to court or Arbitration Center.

2. Lawsuit initiation in a court or arbitration center (lead time from 03 to 12 months).

If the negotiation fails and the lawsuit is evaluated as a feasible solution, a creditor may initiate a lawsuit against the debtor at a competent court or an arbitration center.

A lawsuit can be initiated if it satisfies 03 (three) conditions. First, there is an actual debt and the debtor fails to repay as committed and the creditor believes that its rights and interests are infringed. Second, disputes between the creditor and debtor are under the jurisdiction of a court or arbitration center, not any other agencies or organizations. And the last, if pre-proceedings, such as conciliation, negotiation, notification, … are required by laws and/or agreements, the creditor has to complete such procedures before it initiates the lawsuit against debtors.

Therefore, the Businesses can proceed to submit a petition at a Competent Court or initiate a lawsuit at Arbitration Cent in accordance with the law.

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Commercial disputes – Which law will enterprises calculate late payment interest?

Written by Phạm Huyền on 26 November, 2021. Posted in Legal newsletter.

Nowadays, due to the development of business activities, commercial disputes become common. In particular, disputes in which the buyer fails to pay enough money, service fee to the seller under the Agreement or Contract is increasing. However, when litigating, many enterprises face difficulties in claiming interest on the principal debt of the buyer because the Agreement, Contract do not specify the late payment interest as well as the applicable law to calculate late payment interest.

Under the current law, both the Civil Code 2015 and the Commercial Law 2005 specify late payment interest. So, which law must enterprises calculate interest? Which interest calculation method will the competent authority accept?

1. Provision of the laws about late payment interest

Provision of the Civil Code:

Under Clause 4 Article 466 of the Civil Code, in case of a non-interest debt but when due, the borrower fails to repay the debt or fails to pay in full, the lender has the right to demand the interest at the interest rate specified in Clause 2 Article 468 of the Civil Code on the late payment amount corresponding to the late payment period, unless otherwise agreed or otherwise specified by law.

Under Clause 2 Article 468 of the Civil Code, in case the parties have an agreement on the interest but do not specify the interest rate and there is a dispute over the interest rate, the interest rate shall be determined at 10%/year of the debt.

Thus, in case of a non-interest debt but when due, the borrower fails to pay the debt or fails to pay in full, the lender has the right to demand the interest at the interest rate of 10%/year on the late payment amount corresponding to the late payment period.

Provision of the Commercial Law:

Under Article 306 of the Commercial Law, in case the breaching party pays money of goods or service fee and other reasonable expenses late, the aggrieved party has the right to demand interest on late payment at the average overdue debt interest rate on the market at the time of payment corresponding to the late payment period, unless otherwise agreed or otherwise provided by law.

Under Article 11 of Resolution 01/2019/NQ-HDTP dated January 11^th, 2019 providing for the determination of the average interest rate according to the provisions of Article 306 of the Commercial Law, the overdue interest rate will be applied to the average overdue interest rate of at least 03 local banks (Vietnam Bank for Agriculture and Rural Development, Joint Stock Commercial Bank for Foreign Trade of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade).

Therefore, it is clear that there is a difference between the Civil Code and the Commercial Law in the calculation of late payment interest. So, when an enterprise litigates the debtor, which law will the enterprise calculate interest?

2. Which law will the enterprise litigating a commercial dispute calculate late payment interest?

Comparing the regulations on calculating late payment interest in the Civil Code and the Commercial Law, it can be seen that the subject of adjustment of the Civil Code and the Commercial Law is different.

Specifically, Article 466 and Article 468 of the Civil Code govern property loan contracts. This is a civil contract in which a party hands over the property to the borrower, when it is due, the borrower must return to the lender property of the same type in the correct quantity and quality and pay interest according to the agreement or provisions of the laws.

Although that the buyer does not pay money or service fee to the seller under the Agreement or the Contract means the buyer owes the seller, the essence of the Agreement and the Contract between the parties is Goods Sale Contract, Service Supply Contract, not a property loan contract. Therefore, if the Agreement or the Contract does not specifically stipulate late payment interest or does not stipulate the applicable law to calculate, when filing a lawsuit, the Enterprise cannot apply Article 466 and Article 468 of the Civil Code to calculate late payment interest.

Besides, Article 306 of the Commercial Law directly applies to goods sale contracts and service supply contracts, so when filing a lawsuit, the enterprise has the right to apply Article 306 of the Commercial Law.

In summary, if the parties do not agree from the beginning on late payment interest or the applicable law to calculate late payment interest, the enterprise litigating a commercial dispute must calculate interest according to Article 306 of the Commercial Law.

3. Solutions for enterprises for late payment interest

In practice, when signing an Agreement or Contract, the parties often do not think about late payment interest but only pay attention to the payment of the value of goods or contract. Therefore, Agreements and Contracts often do not specify the interest rate, calculation method, or applicable law to calculate late payment interest in case the buyer does not pay money, service fee. This leads to the consequence that when filing a lawsuit, the enterprise is not allowed to choose the law or interest rate to calculate late payment interest, or the competent authority does not accept the request about late payment interest but only accepts the request about the principal debt.

According to TNTP’s working experience, if in the Agreement, Contract, enterprises specify how to calculate late payment interest or the applicable law to calculate interest in case the buyer does not pay then when litigating, the application of late payment interest corresponding to the agreement will be accepted by the competent authority because both the Civil Code and the Commercial Law give priority to the agreement of the parties. To ensure maximum benefits, enterprises should choose interest rate according to Article 466 and Article 468 of the Civil Code of 10%/year on the amount of late payment corresponding to the late payment period because the interest rate specified in Article 306 of the Commercial Law usually cannot reach 10%/year.

With the above analysis, enterprises can decide to calculate interest by clearly stipulating it in the Contract. Otherwise, enterprises will have to calculate interest according to the provisions of the Commercial Law when filing a lawsuit.

Above is the article “Commercial disputes – Which law will enterprises calculate late payment interest?” We hope this article is useful to you.

Best regards.

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Distinguish between civil disputes and the crime of obtaining property by fraud

Written by Phạm Huyền on 19 November, 2021. Posted in Legal newsletter.

In business activities, enterprises cannot avoid the situation that partners or debtors evade payment obligation for months or even years. At that time, many enterprises thought that such action could constitute a crime of Obtaining property by fraud and submitted a denunciation to the competent police agency. However, to be able to constitute the crime of Obtaining property by fraud, the offender must meet all conditions for this crime as prescribed in the Penal Code. In this article, we will show the similarities and differences between Civil disputes and the crime of Obtaining property by fraud for enterprises to apply in real situations.

1. Elements of crime of Obtaining property by fraud

The crime of Obtaining property by fraud is specified in Article 174 of the Penal Code 2015. Accordingly, the elements constituting this crime are as follows:

The subject of the crime

The subject of the crime of Obtaining property by fraud is a person who is capable of criminal liability and reaches the age of 16 years or older.

Thus, the subject of the crime of Obtaining property by fraud can only be an individual.

The object of the crime

The object of the crime of Obtaining property by fraud is to infringe on property relations (money, things, valuable papers, …), not to infringe on personal relations (life, health, honor, dignity, intellectual property rights, …).

The guilty act (Actus reus)

The offender has only one guilty act that is the act of appropriation, but the appropriation is done by fraud.

The criminal intent (Mens rea)

The crime is conducted with direct intentional fault because the intention of the offender is the desire to appropriate property. The offender is aware of the consequences of his/her action and wants that consequences to happen. The purpose of appropriation is a mandatory sign and must appear before the act of appropriation is performed.

2. Comparison of civil disputes and the crime of Obtaining property by fraud

Similarities:

The act of evading debt payment and the crime of Obtaining property by fraud both begin with one party handing over one or more certain properties to the other party through a contract or other agreement.

Differences:

The Subject:

For the crime of Obtaining property by fraud, the subject can only be an individual. Therefore, in case the debtor is an individual, the enterprise may consider denouncing the crime at the competent authority. However, in case the debtor is an enterprise, it cannot denounce the act of obtaining property by fraud because according to the law, the enterprise is not the subject of this crime.

To settle the case where the debtor is an enterprise, the debt collector may denounce the act of Obtaining property by fraud against the person who directly signed the contract (usually the legal representative of the enterprise) or the person who directly holds and uses the property of the debt collector.

Fraud:

In many cases, after entering into a contract, the debtor fails to pay, or intentionally prolongs the payment term, cuts off contact, which makes many enterprises think that it may be a fraud of obtaining property. However, not all actions of the debtor are deception act.

Fraud is to give false information but make others believe it is true so that they hand over the property to the offender. Fraud must be present before the offender appropriates property. Therefore, the debtor is considered to use deception act to appropriate property of the debt collector when the debtor uses false information, and/or conceals the true purpose of the transaction before the parties enter into a contract or transaction to create trust, make the debt collector trust and hand over the property to the debtor.

In case the parties signed a contract legally but then the debtor performs an appropriation act, it cannot constitute the crime of Obtaining property by fraud but becomes the crime of Abusing trust to appropriate property. We have analyzed this crime in the article “Distinguish between Civil disputes and the crime of Abusing trust to appropriate property”

Above are legal sharings that help enterprises distinguish between civil disputes and the crime of Obtaining property by fraud. We hope this article is useful for you.

Best regards.

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Author: Phạm Huyền

Negotiation in case the dispute has plenty of parties

1. Some common disputes that have plenty of parties

2. Is it effective to litigate together and appoint only a few representatives for dispute settlement?

Compare regulations of the law on mediation

1. Similarities

2. Differences

Term of Confidential Information in Contracts

1. What contents does confidential information term often include?

2. What should enterprises pay attention to when signing Contract containing the term of confidential information?

Basic rules when drafting, reviewing contracts

1. The information of the parties in Contract must be correct

2. Know the position of the parties in the transaction

3. Know clearly provisions of laws about the type of Contract which the parties supposed to sign

4. The level of detail of the Contract is proportional to the scale and value of the Contract

ISSUES OF DEBT RECONCILIATION IN CIVIL PROCEEDINGS

1. What are the Debt Reconciliation Report/ Debt Confirmation and the Debt Payment Request/Letter of Demand?

2. Are the Debt Reconciliation Report and the Debt Payment Request automatically considered as evidence?

Term of Dispute Settlement in the Contract

1. “In case the parties cannot resolve the dispute through negotiation and conciliation, the parties have the right to initiate a lawsuit to the Court of Province A for settlement”

Analysis:

Solution:

2. “If the parties cannot resolve the dispute through mediation, the parties have the right to initiate at an Arbitration. If it cannot be resolved by economic arbitration, the dispute will be resolved by the economic Court”

Analysis:

Solution:

3. “In case it is not possible to negotiate or conciliate, the parties have the right to litigate at the competent Economic Court/ Economic Arbitration”

Analysis:

Solution:

Business’s basic steps for debt collection

1. Demand for settling debt by negotiation (lead time from 01 to 03 months).

Demand in correspondence:

Negotiation:

2. Lawsuit initiation in a court or arbitration center (lead time from 03 to 12 months).

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Author: Phạm Huyền

1. Some common disputes that have plenty of parties

2. Is it effective to litigate together and appoint only a few representatives for dispute settlement?

1. Similarities

2. Differences

1. What contents does confidential information term often include?

2. What should enterprises pay attention to when signing Contract containing the term of confidential information?

1. Probationary period

2. Salary and other interests

3. Labor discipline

4. Termination of labor contract

1. The information of the parties in Contract must be correct

2. Know the position of the parties in the transaction

3. Know clearly provisions of laws about the type of Contract which the parties supposed to sign

4. The level of detail of the Contract is proportional to the scale and value of the Contract

1. What are the Debt Reconciliation Report/ Debt Confirmation and the Debt Payment Request/Letter of Demand?

2. Are the Debt Reconciliation Report and the Debt Payment Request automatically considered as evidence?

1. “In case the parties cannot resolve the dispute through negotiation and conciliation, the parties have the right to initiate a lawsuit to the Court of Province A for settlement”

Analysis:

Solution:

2. “If the parties cannot resolve the dispute through mediation, the parties have the right to initiate at an Arbitration. If it cannot be resolved by economic arbitration, the dispute will be resolved by the economic Court”

Analysis:

Solution:

3. “In case it is not possible to negotiate or conciliate, the parties have the right to litigate at the competent Economic Court/ Economic Arbitration”

Analysis:

Solution:

1. Demand for settling debt by negotiation (lead time from 01 to 03 months).

Demand in correspondence:

Negotiation:

2. Lawsuit initiation in a court or arbitration center (lead time from 03 to 12 months).

1. Provision of the laws about late payment interest

Provision of the Civil Code:

Provision of the Commercial Law:

2. Which law will the enterprise litigating a commercial dispute calculate late payment interest?

3. Solutions for enterprises for late payment interest

1. Elements of crime of Obtaining property by fraud

The subject of the crime

The object of the crime

The guilty act (Actus reus)

The criminal intent (Mens rea)

2. Comparison of civil disputes and the crime of Obtaining property by fraud

Similarities:

Differences:

The Subject:

Fraud:

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