Trade is one of the most dominant markets in the domestic and foreign economy. Along with the fact that our country is in the process of boosting the national economy, it is impossible to stop promoting the process of relations with other countries. Therefore, more and more commercial disputes with foreign elements arise. So about the matter “What is a commercial contract with foreign elements in Vietnam?” Let’s find out with LSX in the article below.
Legal grounds
- Civil Code 2015
- Commercial Law 2005
- Decree 22/2017/ND-CP
What is a commercial contract with foreign elements in Vietnam?
Article 683 of the 2015 Civil Code provides for contracts with foreign elements as follows:
“Article 683. Contracts
1. The parties to a contractual relationship may agree on the choice of law applicable to the contract, except for the case specified in Clauses 4, 5 and 6 of this Article. If the parties do not agree on the applicable law, the law of the country with the closest relationship to the contract shall apply.
2. The laws of the following countries are considered to be the laws of the countries that have the closest relationship with the contract:
a) The law of the country where the seller resides if he is an individual or the place of establishment if he is a legal entity, for the sale of goods contract;
b) The law of the country where the service provider resides if he is an individual or the place of establishment if he is a legal entity for service contracts;
c) The law of the country where the right recipient resides if he is an individual or the place of establishment if he is a legal entity in respect of contracts for licensing of use rights or assignment of intellectual property rights;
d) The law of the country where the employee regularly performs work for the labor contract. If the employee regularly performs work in different countries or it is not possible to determine where the employee regularly performs work, the law of the country that has the closest relationship with the labor contract is the law of the country where the employer resides in the case of an individual or is established in the case of a legal entity;
The Commercial Law 2005 does not specify what is a sale contract with foreign elements. However, it can be understood that a contract for the sale of goods with foreign elements is a civil contract with foreign elements. Therefore, based on the regulations on civil relations with foreign elements, the foreign element of a goods sale contract with foreign elements is determined as follows:
i. At least one of the participating parties is a foreign trader;
ii. The parties involved are all Vietnamese traders, but the establishment, change, performance or termination of such relationship occurs in a foreign country;
iii. The parties involved are all Vietnamese traders, but the subject matter of the sale and purchase contract is overseas.
Settlement of contract disputes involving foreign elements
In Vietnam, the ways to settle contract disputes with foreign elements include: negotiation, conciliation, arbitration and court.
Negotiated settlement:
Negotiation is when the parties sit down, engage in discussions with each other to resolve the conflicts or problems they encounter so that the interests of the parties are fully met. Bargaining is a method of agreement, prioritizing the agreement of the parties’ issues. Currently, there is no domestic law regulating how to settle this contract dispute with foreign elements.
However, negotiation can be agreed in writing, this is to determine the basis if there is a dispute that needs to be resolved by a third agency (Court, Arbitration).
Mediation settlement:
Mediation in civil legal relations should be carried out with the consent of the parties and with the participation of a commercial mediator in our country. The mediation is carried out and adjusted according to the order and procedures of Decree 22/2017/ND-CP on commercial mediation.
Settlement by Arbitration:
Along with the method of conciliation and negotiation, the method of settling contract disputes with foreign elements by commercial arbitration is also a popular settlement method today. The application applies to cases where the parties agree to settle disputes by arbitration for disputes between the parties arising from commercial business activities in general and contracts with foreign elements in particular.
Other disputes between the parties that are prescribed by law may be resolved by arbitration in accordance with the provisions of “Jurisdiction to settle disputes by arbitration” in Article 2 of the Law on Commercial Arbitration 2010.
Settlement by Court:
With a contract dispute involving foreign elements by way of the Court, this is one of the content of the dispute under the jurisdiction of the People’s Court under the provisions of the Civil Procedure Code 2015.
What is the jurisdiction to adjudicate a commercial contract dispute involving foreign elements?
In the contract, if the parties agree that when there is a dispute, it will be settled by commercial arbitration. When there is a dispute, the parties can initiate a lawsuit to request arbitration to resolve the dispute over a commercial contract involving foreign elements.
Vietnamese courts will have jurisdiction to settle commercial contract disputes involving foreign elements in cases falling under their general and separate jurisdiction specified in Articles 469 and 470 of the 2015 Civil Procedure Code. Accordingly, Vietnamese courts are competent to settle civil cases involving foreign elements in the following cases:
• The defendant is an individual who resides, does business and lives in Vietnam for a long time;
• Defendant is an agency or organization based in Vietnam or the defendant is an agency or organization with a branch or representative office in Vietnam for cases related to the operation of the branch or representative office of such agency or organization in Vietnam;
• The defendant has assets in the Vietnamese territory;
• A civil relationship case in which the establishment, change or termination of such relationship occurs in Vietnam, the subject matter of which is property in the Vietnamese territory or work performed in the territory. Vietnam;
• A civil relationship case in which the establishment, change or termination of such relationship occurs outside the Vietnamese territory but is related to the rights and obligations of Vietnamese agencies, organizations or individuals or has its head office and residence in Vietnam.
The following civil cases involving foreign elements fall under the exclusive jurisdiction of Vietnamese courts:
• The civil case is related to the rights to real estate assets located in the Vietnamese territory;
• Other civil cases in which the parties may choose a Vietnamese court to settle according to Vietnamese law or an international treaty to which the Socialist Republic of Vietnam is a signatory and the parties agree to choose the Court Vietnam.
After determining that the Vietnamese Court has jurisdiction, the provisions of the Court’s jurisdiction under Chapter III of the Civil Procedure Code shall be applied to determine which court in the Vietnamese territory has jurisdiction.
How does the law apply to dispute resolution?
If the parties agree to choose commercial arbitration for settlement, the applicable law to settle commercial contract disputes involving foreign elements is determined as follows:
According to Article 14 of the 2010 Commercial Arbitration Law: For disputes involving foreign elements, the arbitration council shall apply the law chosen by the parties; if the parties do not agree on the applicable law, the arbitral tribunal shall decide to apply the law which it considers most appropriate.
In case the parties choose the Court to settle, according to Article 683 of the Civil Code 2015: The parties in a contractual relationship may agree to choose the law applicable to the contract, except for the case specified in Clauses 4, 5 and 6 this article. If the parties do not agree on the applicable law, the law of the country with the closest relationship to the contract shall apply.
Therefore, when there is a dispute, the Court will decide based on the law that the parties agree to apply.
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Frequently asked questions
According to Clause 2, Article 683 of the 2015 Civil Code, the laws of the following countries are considered to be the laws of the countries that have the closest relationship with the contract:
a) The law of the country where the seller resides if he is an individual or the place of establishment if he is a legal entity, for the sale of goods contract;
b) The law of the country where the service provider resides if he is an individual or the place of establishment if he is a legal entity for service contracts;
…
Freedom to enter into contracts, but not against the law or social ethics. The content of the principle shows that the two sides are of primary importance in entering into a contract, free but not contrary to the requirements prescribed by law, not contrary to the law or against social morality.
Principle of the parties “voluntarily, equality, goodwill, cooperation, honesty and integrity in entering into the contract”. First of all, the parties must have an equal position, because equality is a condition for genuine voluntariness.
A contract is an agreement to perform, change or terminate by the parties thereby expressing the rights and obligations that the parties agree in order to meet the interests of each party.
Conclusion: So the above is What is a commercial contract with foreign elements in Vietnam?. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
