Vietnamlawmagazine

Dang Trung Ha, LL.M

Department of International Law Ministry of Justice

Enforcement of foreign civil judgments or decisions or arbitral awards is a specific proceeding implemented by competent agencies of the country that has judgment debtors in order to recognize the effect of the judgment or decision or award in its territory and apply coercive execution. This special proceeding solves conflicts of jurisdiction and respects each country’s jurisdiction.

The enforcement of foreign civil judgments or decisions[1] or arbitral awards also ensures the enforcement of judgments, decisions or awards issued by competent foreign entity and guarantees the interests of judgment creditors.

In the context of integration and economic and cultural exchange between countries, the increasing numbers of civil judgments or decisions or awards which are issued in one country and need to be executed in another have led to a demand for cooperation among countries on enforcement of judgments or decisions or arbitral awards.

Agreements on judicial assistance

Vietnam has signed 14 bilateral agreements on judicial assistance with other countries including Russia, the Czech Republic, Slovakia, Poland, Hungary, Bulgaria, Cuba, Laos, China, North Korea, Ukraine, Belarus, France and Mongolia. All of these bilateral agreements include provisions on the scope, conditions, procedures, and transfer of money and property to execute judgments.

Civil judgments or decisions, decisions related to civil matters in criminal judgments, and foreign arbitral awards are subject to enforcement. Some judicial assistance agreements between Vietnam and other countries include distinction between civil judgments involving property and those that do not. Under Article 51 of the Treaty on Judicial Assistance between Vietnam and Russia, judgments or decisions rendered by courts of one Party to litigation not related to property shall be recognized in the territory of the other Party without any special procedure, if a court of the requested Party has not rendered an effective judgment or decision on the same litigation or the court has no exclusive jurisdiction over the case in accordance with the Treaty or national law of that Party.

Under the treaties on judicial assistance between Vietnam and other countries, recognition and enforcement matters have concrete conditions. There are three main conditions:

First, the judgments or decisions have take effect and are enforceable under the law of the Party that has rendered them.

Second, the judgments or decisions have been rendered by a proper and competent agency/court.

Third, all forms of procedure related to the rendering of judgments or decisions have been ensured.

Judgments or decisions shall be recognized and enforced based on a requesting application. The procedures for recognition and enforcement of civil judgments or decisions of foreign courts or foreign arbitral awards shall commence only when there is a request of the person concerned or of the competent agency which rendered the judgments or decisions. Under the treaties on judicial assistance, requesting applications must be delivered through two channels:

- Diplomatic channels or judicial agency: According to this channel, judicial agencies that have rendered judgments or decisions should summit requesting applications to a competent agency/court of the contracting party directly or through a center (the treaties with Hungary and Bulgaria).

- The party applying for recognition and enforcement of the civil judgments or decisions of foreign courts or foreign arbitral awards summits the requesting application directly.

Under the treaties on judicial assistance between Vietnam and other countries, courts have authority to consider and to make a decision on recognition of foreign judgments or decisions and awards. In this case, the court will not consider the content of the judgment, decision or arbitral award. The jurisdiction of courts and arbitration centers that render such judgments or decisions are respected. The special procedure of recognition and enforcement only considers the form of process for rendering such judgments or decisions.

The treaties on judicial assistance between Vietnam and other countries mainly provide for the process, procedures and conditions for recognition of foreign judgments or decisions. What is not often resolved is how to enforce judgments once recognized. Most treaties only include provisions for money and property transfers overseas to enforce judgments or decisions. Issues related to executing judgments or decisions are not provided by treaties but are stipulated in the domestic law of each country.

Provisions of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards done at New York, on June 10, 1958 (New York Convention 1958) are applied in almost countries for the recognition and enforcement of foreign arbitral awards. Judicial assistance treaties that Vietnam has signed recently (e.g., with Russia, China and France) also include applications of this Convention’s provisions on recognition and enforcement of foreign arbitral awards. The Convention provides that member countries shall recognize and enforce arbitral awards made in the territory of a State other than that in which the recognition or enforcement is sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered domestic awards in the State in which recognition and enforcement are sought. After foreign arbitral awards are recognized, they will be executed under the same methods as local court decisions, and State judicial authorities may apply coercive measures to enforce awards.

Vietnam has announced three following reservations when acceding to the Convention:

1. Vietnam will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State; with regard to awards made in the territory of non-contracting States, Vietnam will apply the Convention only to the extent to which those States grant reciprocal treatment.

2. Vietnam will apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under the national law.

3. Vietnam declared that interpretation of the Convention before the Vietnamese courts or competent authorities should be made in accordance with the Constitution and the law of Vietnam.

Domestic regulations

The 2004 Civil Procedure Code of Vietnam provides for the recognition and enforcement of civil judgments or decisions of foreign courts or foreign arbitral awards in Vietnam. The Code replaced two ordinances, the Ordinance on recognition and enforcement of civil judgments or decisions of foreign courts in Vietnam approved by the National Assembly Standing Committee on April 17, 1993, and the Ordinance on recognition and enforcement of foreign arbitral awards in Vietnam approved by the National Assembly Standing Committee on September 14, 1995. Part Six of the Code “Procedures for recognition and enforcement in Vietnam of civil court judgments or decisions rendered by foreign courts or foreign arbitral awards” including 31 articles (Articles 342 thru 373) contains detailed provisions governing not only procedures but also principles of recognition and enforcement.

Under Article 343 of the 2004 Civil Procedure Code, the Vietnamese courts shall consider, recognize and enforce in Vietnam a civil judgment or decision of a foreign court in accordance with the following basic principles:

First, on the basis of treaties which are “A civil judgment or decision that is rendered by a court of a country with which Vietnam has signed or acceded to a treaty on that subject” (Point a, Clause 1, Article 343), or “the Vietnamese court shall consider recognition and enforcement in Vietnam of a foreign arbitral award if such an award is rendered in a country or by an arbitration of a country with which Vietnam has signed or acceded to a treaty on that subject” (Clause 2, Article 343);

Second, on the basis of the reciprocity principle that “a civil judgment or decision of a foreign court or an arbitral award of a foreign arbitration may also be considered by the Vietnamese court for recognition and enforcement in Vietnam on the basis of reciprocity without requiring Vietnam and such country to sign or accede to a treaty on that subject” (Clause 3, Article 343 of the Code). This is a new principle applied for the recognition and enforcement of civil judgments or decisions of a foreign court. Before the 2004 Civil Procedure Code took effect, the reciprocity principle was applied only for the recognition and enforcement of a foreign arbitral award. However, the application of this principle in reality has met with obstacles due to unspecified authority and proceedings.

Procedures

Under the Civil Procedure Code, the Ministry of Justice is the focal agency to receive applications for recognition and enforcement of foreign judgments or decisions and awards, review the legality and properness of dossiers, forward to a competent court, and announce results of the court consideration on the application or appeal. The Ministry of Justice will handle an application only when the party obligated under the judgment or decision has a place of residence or a place of work in Vietnam, or assets relating to the enforcement of a foreign court judgment or decision in Vietnam at the time of submission of the application.

Regarding the competence to consider applications for recognition and enforcement of foreign judgments or decisions or awards, Article 352 of the Code provides for People’s Courts of provinces or cities in which the party obligated under the judgment or decision resides or works, or assets related to the enforcement of the judgment or decision in Vietnam are located.

The Ministry of Justice shall, within seven working days after receiving the application and the attached documents, forward a dossier of the case to a competent court. If the court finds any unclear details in the civil judgment or decision of the foreign court or foreign arbitrator, it can require the court or the arbitrator that has rendered such judgment or award to provide further explanation. The court shall, within four months after the acceptance of the application, hold a hearing to consider the application if there is no evidence for suspension or termination. In the process of consideration and reviewing dossiers, the court also has to conduct investigations of the residence of the party obligated under the judgment or decision and assets related to the judgment or decision.

Under Article 355 of the Code, the consideration of an application will be in accordance with the following procedures:

+ an application shall be considered at a hearing conducted by a Panel consisting of three Judges of which one Judge shall be the presiding judge as may be assigned the Chief Justice.

+ the procurator of the Procuracy at the same level must participate in the hearing. If the procurator is absent from the court hearing, the hearing must be postponed.

+ the court hearing shall be conducted in the presence of the party obligated under the judgment or his/her legal representative. The consideration of an application shall proceed if the party obligated under the judgment or his/her legal representative has filed a request for the court to consider the application in his/her absence or is absent although they have been duly summoned.

After having considered the application and the attached documents and listened to the opinions of the summoned persons and the procurator, the Panel shall discuss and decide by majority vote. The Panel has the right to issue a decision to recognize and enforce in Vietnam or to reject the civil judgment and decision of a foreign court. After the court of first instance, the appeal rights of persons concerned are ensured in accordance with Vietnamese law. The appeals and protests shall be considered by the Supreme Court according to appeal proceedings.

Under Clause 4 Article 355 of the Code, the Panel shall not re-try the case and only consider whether proceedings under which the judgment or decision were rendered were legal or not (only on examination of procedural bases, not substantive law). Recently some Panels have examined the substance of cases when considering applications for enforcement of foreign judgments or decisions or awards. The fault is commonly made that the panel compares the application of foreign laws with the provision of domestic law, so that they can review whether the substance of the case is in conformity with Vietnamese laws before making a decision on recognition and enforcement.

Additionally, there is a lack of cooperation between competent agencies in proceedings. The Ministry of Justice is a focal agency to receive dossiers from persons concerned, and is the responsible “communication channel” between domestic authorities and individuals and organizations that request execution of judgments (most of which are overseas). However the facts show that courts do not keep the Ministry of Justice informed when they handle or hold a hearing to consider applications, making it impossible for the Ministry of Justice is impossible to be proactive whenever it receives questions from foreign individuals or organizations. The Supreme People’s Court has not paid sufficient attention to providing directions for the handling of these cases. It results in courts giving inconsistent consideration to applications and causing unreliability for foreign individuals and organizations.

Challenges

Vietnam is speeding up the process of national industrialization and modernization and expanding foreign cooperation in order to meet the requirements of international economic integration. Therefore, recognition and enforcement of foreign judgments or decisions and awards should follow the trend to create legal facilities to ensure the rights of requesting parties, whether foreign or Vietnamese, and to contribute to the development of international cooperation based on respect for others’ sovereignty and rights.

To reform and improve the legal system in this area, it is necessary that Vietnam research and apply selectively special rules of international civil law that are in conformity with Vietnamese law and reality. That point of view had been used in the process of drafting Part VII of the Civil Code on civil relations involving foreign elements, Chapter XI of the 2000 Law on Marriage and Family, the Commercial Law and the Civil Procedure Code. Meanwhile, guiding regulations also need to be issued in a timely and coordinated manner.

The enforcement of foreign civil judgments in Vietnam often involves judgment creditors that are foreigners or foreign legal entities and judgment debtors being Vietnamese citizens or legal entities.

The first issue is, therefore, how to have a proper understanding and application of the principle of observation and protection of the interests of the State, Vietnamese citizens and legal entities in enforcement of foreign judgments. Requests for enforcement of foreign civil judgments are sometimes related to assets. The common measure to enforce judgments relating to assets is to allow money or assets of the judgment debtor to be transferred out of the territory of the enforcing country. In case the judgment debtor is a Vietnamese resident or legal entity based in Vietnam, the enforcement measure is that Vietnam ensures the transfer out of its territory of money or assets to the judgment creditor being a foreigner residing overseas or a foreign legal entity based in a foreign country.

Although the issue is provided for by law, understanding of enforcement agencies and officers and the general population is low. Some believe that if the State allows (even enforces) the transfer of money of Vietnamese citizens (or legal entities) abroad in order to execute judgments, it means only interests of foreigners are protected while those of Vietnamese citizens (or legal entities) are ignored. This way of thinking, familiar with receiving rather than paying, has prevailed since the subsidy period. In the 1980s and 1990s judgments and decisions rendered by foreign courts which were sent to Vietnam to request Vietnamese citizens to enforce decisions on providing child support had never been enforced. Others even hold that the non-transfer of money and assets of Vietnamese citizens is in accordance with the principle of protection of the interests of the State, citizens and legal entities of Vietnam. It results in the fact that, to date, there have been almost no transfers of money or assets from Vietnam to other countries to enforce a civil judgment or decision of a foreign court. This is a mistaken understanding which needs to be changed.

It is time to reconcile the understanding of this important principle. Enforcement of civil judgments or decisions rendered by foreign courts or awards of foreign arbitrators and the observation and protection of the interests of the State, citizens and legal entities in Vietnam do not mean that it is necessary to provide any pretext for intentionally declining or avoiding the enforcement of foreign judgments related to assets. The interests of the State should be put on a higher position than the benefits of each individual. In other words, we should not let the worry of “losing” the money and property of an individual (or legal entity) impact the position, honor and prestige of the Socialist Republic of Vietnam in international cooperation.

This important principle is the legal basis for the process of considering execution of foreign judgments or awards. Every country is, in accordance with the international public law, equal to each other in international relations. The equality in terms of territory is the foundation for the existence of international cooperative commitments in diversified fields and mutual benefits. Therefore, one country which is willing to enforce a judgment rendered by the court of another country will be ensured the enforcement of its court’s judgment in the territory of the latter country on the basis of the principles of reciprocity and mutual benefit.

Protecting the interests of citizens is an obligation of every State. The assurance made by one country to enforce the judgments or decisions of courts or awards of arbitrators in others helps fulfill the obligations of their citizens. The cooperation between countries is strengthened and socio-economic development of every country facilitated. Strict enforcement of foreign decisions and judgments, including the application of coercive measures, will increasingly enhance and consolidate the effect of the national legal system and capacity of government officers. It also makes contributions to training citizens to follow a way of life that respects and obeys the law and precludes and restricts conflicts and risks in civil, economic and commercial transactions, especially involving foreign elements.-