>>Courts’ jurisdiction to settle civil cases
Pham Diem
Vietnam State and Law Institute
In the budding and developing market economy in Vietnam, disputes arising in business activities have been increasing in number, diverse in form and complicated in content. The settlement of economic disputes by law has received greater attention.
In Vietnam, an economic dispute is understood as a difference between involved parties on the settlement of an issue which has arisen in their economic relations. In essence, an economic dispute is a conflict of economic interests of the parties involved in a given economic relation.
There often appear in Vietnam the following types of economic disputes:
- Disputes arising from economic contracts on goods trading or distribution, service provision, representation, agency, consignment, property lease, construction, consultancy, cargo and passenger transportation.
- Disputes over intellectual property rights, technology transfer;
- Disputes related to share or bond trading, financial investment, insurance;
- Disputes between companies and their members or between company members over company establishment, operation, dissolution, merger, division and separation or transformation;
- Other disputes over business and commerce as prescribed by law.
Vietnamese policies and law ensure the rights to business autonomy for individuals and economic organizations, including the right to self-determination in the settlement of economic disputes under law. With such rights, enterprises may themselves settle their economic disputes through negotiations and conciliations or through reconciliation conducted by organizations, agencies or individuals selected by the parties concerned in accordance with law.
In the course of dispute settlement, enterprises are entitled to select participants being organizations, agencies or individuals. Depending on their selection and agreement, the nature, degree, scope and type of their disputes as well as the jurisdiction of agencies and organizations, economic disputes among enterprises that have failed in their negotiations and conciliations are often settled by the following modes:
i) Commercial arbitration proceedings;
ii) Economic-court proceedings;
iii) Economic competition proceedings
Economic-court proceedings constitute a very important mode in the settlement of economic disputes.
Negotiation means a form of spontaneous and non-official settlement of disputes before legal intervention and state coercion are required. Negotiation can be fruitful only when the disputing parties have a sense of law and a spirit of cooperation and generosity. It is also a form of voluntary settlement of disputes among parties with the participation of third parties.
Though with a lot of advantages, this form of dispute settlement proves to be less effective.
Commercial arbitration is also a form of voluntary settlement of economic disputes, chosen by the parties concerned. The enforcement of arbitral awards is based on the principle of voluntarism, without state coercion; hence, its efficacy is not so high.
Meanwhile, with the economic court’s advantages in its organizational structure, functions, jurisdiction and own strengths and particularly with its rulings to be enforced by enforcement bodies under assured state coercion, economic-court proceedings constitute the most important and effective mode of settling economic disputes.
Formerly, there appeared very early in Vietnam a form of economic-court proceedings. After the anti-French war of resistance was crowned with victory, northern Vietnam was liberated, where existed in the initial period from 1954 to 1959 different economic sectors: private capitalist economy, individual household economy, cooperative economy and state-run economy.
Economic disputes were largely over business contracts. Under Prime Minister Decree No. 735-TTg of April 10, 1956, they could be settled by competent bodies, depending on a case-by-case basis. If they were disputes between private businesses or between private businesses and state enterprises or cooperatives, they could be settled by registration agencies or contract performance bodies, or even by courts when necessary. If they were disputes between cooperatives or between state enterprises, they would be submitted to superior bodies for settlement.
So, in this period, economic disputes, which were actually disputes over business contracts, were settled through two ways:
1. The administrative way, which was applied to disputes within the socialist economic sector (state enterprises and cooperatives).
2. Through court proceedings, which was applied to disputes involving “non-socialist” elements, namely parties in the private economic sector.
From 1963 on, after the completion of the socialist transformation (with the nationalization of capitalist enterprises, collectivization in agriculture and cottage industry as well as handicrafts), there existed in the Vietnamese economy only the socialist economic sectors (state enterprises and cooperatives). Meanwhile, the economy operated under the mechanism of high planning and administration. Consequently, economic disputes in this period, which were, in essence, disputes over economic contracts, were settled only by the State Economic Arbitration Council, through an administrative way, and court jurisdiction ceased to exist.
From late 1980s, Vietnam has embarked on the cause of national renewal, called “doi moi”, which aimed at building a multi-sector market economy and implementing an open-door policy for international integration. In such context, the forms and contents of economic relations substantially changed. Economic disputes, which were no longer merely disputes over economic contracts, appeared in greater number and became more diverse and complicated. The settlement of such disputes through state economic arbitration proved to be no longer appropriate under the market mechanism. The court’s economic jurisdiction was restored and substantively developed. On December 28, 1993, the National Assembly adopted a law amending a number of articles of the Law on Organization of the People’s Courts. In 1994, economic tribunals were established within the Supreme People’s Court and provincial-level People’s Courts to settle economic disputes. At district-level People’s Courts, there existed no economic courts but only judges specialized in economic cases.
Economic courts’ jurisdiction was prescribed mainly in the Law on Organization of the People’s Courts, the Civil Procedure Code and especially in the Ordinance on Procedures for Settlement of Economic Cases, which was passed on March 16, 1994, by the National Assembly Standing Committee, and later revised.
Due to the peculiarities of economic relations and economic disputes, the settlement of economic disputes by courts must strictly abide by not only the general principles for organization and operation of the People’s Courts, the general principles for civil procedures, but also the following particular principles:
First, the principle of self-determination and conciliation of involved parties is one of the most fundamental principles of the economic courts’ jurisdiction.
In a market economy, enterprises are free to do business and to enter into contracts under law, without state intervention in their business activities. In its capacity as a state power body, the State cannot bring economic disputes between enterprises to court for settlement and cannot intervene in economic disputes, if not so requested by the parties concerned. Hence, the involved parties’ request for settlement of their economic disputes at court is a must in the economic-court proceedings.
The involved parties’ right to self-determination in economic proceedings is demonstrated through various forms of dispute settlement, including conciliation consultancy provided by a third party selected by the disputing parties, non-governmental arbitration or economic courts. The disputing parties may authorize their attorneys at law or citizens to act as their respective representatives participating in proceedings.
They are also entitled to withdraw their lawsuits, to alter the lawsuit contents or to conduct conciliations at any stage in the process of dispute settlement. Especially, the right to self-conciliation in the settlement of economic disputes covers a content broader than in other types of civil procedures. For example, in lawsuits against illegal marriage or against relations arising from illegal transactions, the involved parties are not entitled to conciliation.
Generally, courts settle economic disputes only on the basis of lawsuits initiated by involved parties if the following conditions are met:
- There is no prior agreement between the parties that their disputes will be settled according to arbitration procedures.
- If the involved parties cannot reconcile by themselves through discussions or negotiations.
The second principle is that all economic sectors are equal before law.
In a multi-sector market economy, equality among different economic sectors constitutes a basic economic policy, creating favorable conditions for all economic sectors and the entire economy to develop. So is in the course of settling economic disputes, the Vietnamese law guarantees that enterprises and business people are all equal in participating in the proceedings, regardless of whether they are state enterprises or limited liability companies, private enterprises, cooperatives or small proprietorships. All parties have the rights and obligations to abide by legal provisions on economic proceedings, without discrimination and restriction against or privilege for any economic sector when they participate in the settlement of disputes at court.
The third principle is no investigation but only verification and evidence collection will be conducted.
Upon settlement of economic cases, the courts rely mainly on evidences presented by involved parties in order to issue lawful decisions. They gather and verify such evidences and listen to viewpoints respectively presented by the parties concerned. When finding it necessary to further clarify them, the courts will conduct verification but not investigation like in criminal procedures.
The fourth principle is fast and timely settlement of economic cases.
For business people, time is decisive to their business success. Therefore, the settlement of economic disputes must ensure not only its lawfulness but also its timeliness, creating conditions for entrepreneurs to feel relaxed and confident, spending most of their time on business activities.
In the Ordinance on Procedures for Settlement of Economic Cases, this principle was specifically demonstrated in the shortened statute of limitations for lawsuits, the shortened duration for first-instance, appellate, cassation and review settlement of cases, and the shortened duration for appeal or protest.