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A dispute on VLA’s standard trading conditions

(VLR) “Arbitration agreement is an agreement between the parties to settle by arbitration a dispute which may arise or has arisen”. Such provisions in Clause 1, Article 3 of the Law on Commercial Arbitration 2010 (LCA) seem to be too clear but there are still disputes. So, I would like to introduce the case below for readers’ reference.

Summary of the facts

The Claimant (a forwarding company - a member of Vietnam Logistics Business Association (VLA) and the Respondent (Shipper) signed 02 Contracts (Booking Notes) No. BKS5090317A dated 09/3/2017 and BKS504417A dated 04/4/2017 (Contracts). Accordingly, the Claimant provided transport services for the Defendant’s shipments. On 28/04/2017 Claimant delivered the shipment under the contract No. BKS5090317A to the Respondent with the payment term of 15 days from the date of completion of the shipment as stipulated by contract. On 23/5/2017, the Claimant handed over the Respondent the goods under the Contract No. BKS5040417A with a payment term of 30 days from the date of handover of all payment documents for the shipment. Due to the unpaid amount for the Contract No. BKS5090317A, on 24/6/2017 the Claimant sent the Respondent Letter No. 0316/ CV-PGD-CN requesting payment of overdue debts for the shipment delivered on 28/4/2017 being VND 18,403,175, and on 02/10/2017, Letter No. 0117/CV-GD-HAN requesting payment of overdue debts for 02 shipments delivered on 28/4/2017 and 23/5/2017 with the total amount of VND 60,159,515. Due to the Respondent’s unpaid amount, on 19/3/2019 the Claimant sued the Respondent at the arbitration but after being sued, the Respondent thought that the two parties had not agreed on the institution of dispute resolution while the Claimant confirmed having arbitration agreement on this issue.

Analysis of the arbitral tribunal (tribunal)

Among other things, the Tribunal has analyzed to see if there was an agreement between the parties on the institution of dispute resolution. “Arbitration agreement is an agreement between the parties to settle by arbitration a dispute which may arise or has arisen” as provided for in Clause 1, Article 3 of the LCA. Section II.5 of the Contracts stated: “The services provided by us Claimant to customers always in compliance with the Standard Trading conditions of VLA, and customers will be provided with the STC if required”. Paragraph 62 of the STC stipulated: “Any dispute, conflicts or claim arising out of or in relation to this STC, including the signing, interpretation, performance, breach, termination or invalidation must be referred to Vietnam International Arbitration Centre for final settlement in accordance with its Rules of Arbitration.”

Regarding the laws and regulations governing the arbitration agreement, the Contracts signed on 09/3/2017 and 04/4/2017 were the time when the LCA took effect, so governed by the LCA and relevant documents, and by the Civil Code 2015 (Civil Code). In the document No. 0507 of 09/7/2019, the Respondent said that (i) the dispute file that the Respondent sent to the Arbitration Centre on 19/6/2019 is the Respondent’s goodwill to it so that it had grounds to work with the Claimant on the case involving the Respondent, (ii) in fact, the two parties has not agreed on any institution to resolve the dispute.

The Claimant said that in the Request for Arbitration and in the Document No. 0219/CV-PGD-CT of 11/7/2019, the Claimant based on the provisions of the Contracts incorporating the STC and Section 62 of the STC. Accordingly, the Claimant affirmed that these provisions were the legal basis for resolving the case at the arbitration centre.

In terms of form, the arbitration agreement between the two parties was made in writing in the form of an arbitration clause in Contracts in accordance with Article 16 of the LCA. Specifically, Clause 2, Article 16 of the LCA stipulates: “The following forms of agreements are also considered to be made in writing: d) In transactions, the parties refer to a document that expresses the arbitration agreement such as contracts, documents, company charter and other similar documents; dd) Through exchanges of the Request for Arbitration and the Statement of Defence which indicates the existence of an arbitration agreement made by one party and the other does not deny.”

Section II.5 of the Contracts referred directly to the STC and the STC indicated the arbitration agreement as cited above. Therefore, based on Point d, Clause 2, Article 16 of LCA, the arbitration agreement between the parties met the criterion “established in writing”. In Section III.3 of the Request for Arbitration, the Claimant stated that the grounds of the request for arbitration are the arbitration agreement prescribed in Section II.5 of the Contracts as well as Section 62 of the STC. However, in the Statement of Defence, the Respondent did not deny or object the arbitration agreement which the Claimant referred to in the Request for Arbitration.

From the above analysis, the Tribunal found that the arbitration agreement was established in accordance with the laws and regulations, not falling into the invalid cases specified in Article 18 of the LCA or in cases where it was not possible to perform.

Regarding the scope of the arbitration agreement, Section 62 of the STC stated that disputes resolved by arbitration included “Any dispute, conflict or claim arising out of or relating to this STC, including the signing, explanation, performance, breach, termination or void”. Therefore, the Tribunal found that it was necessary to clearly determine whether the scope of this arbitration agreement included the dispute between the Claimant and the Respondent in the case.

Section 15 of the STC states: “These STC shall apply to all logistics services, irrespective of whether they concern freight forwarding, carriage, warehousing, distribution of goods or other services common to the logistics services provided, handled, performed, procured or rendered by the Company acting either as Freight Forwarder or as Logistics Service Provider even in case when the Company procures a Bill of Lading or other similar document evidencing a contract of carriage between a person other than the Company and the Customer”, In this case it was the Claimant. “Customer” meant any party giving instructions, including the shipper, consignor, consignee, the owner of the goods or their behalf upon whose request the Company provided any services, in this case it was the Respondent. From the above provisions, it could be seen that the transactions between the Parties were transactions which provided logistics services, which were subject to the scope of the STC.

In addition, the implementation of related rights and obligations of the Parties was stipulated not only in the Contracts but also in the STC to which the Contracts referred. Specifically, the problem that the Parties were in dispute relating to payment obligations was stipulated in both the Contracts (Article 4.3) and the STC (Section 4445). Therefore, disputes arising from transactions between the Parties, namely disputes arising from Contracts, were also considered as disputes “arising from or in relation to the STC”. In other words, disputes between the Parties fell within the scope of the arbitration agreement and as such, the Tribunal had jurisdiction over disputes between the Parties arising out of the Contracts.

Notes should be that if you wanted to apply for STC, you needed to specify in the documents such as contracts, invoices, quotations, etc that “the services we provide to our customers always comply with the Standard Trading Conditions of Vietnam Logistics Business Association, customers will be provided with these Standard Trading Conditions if required “ (or you could write this in similar content), and when needed, translate it into English.

Ngô Khắc Lễ

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