Lawyer in Vietnam Oliver Massmann – First time in history – Government Procurement Tender Decisions will be subject to International Arbitration and Investments subject to Investor State Dispute Settlement And Enforcement

Vietnam is one of the countries with the highest ratio of public investment to GDP on the world (i.e., 39% annually from 1995). However, Vietnam has not agreed to coverage of their government procurement by the Government Procurement Agreement of the WTO (GPA). Indeed, Vietnam for the first time has undertaken to do so in a recent Free Trade Agreement with the EU (EVFTA).

Currently Chinese companies profit the most from Vietnam’s procurement market. 90% of power, mining, manufacturing, ferrous and chemical projects of state-owned companies in Vietnam are awarded to Chinese contractors. China State Construction Engineering Corp (CSCEC) keeps winning important contracts although it has a poor track record and has even been blacklisted by the World Bank due to bribery charges. With the EVFTA that attractive market would be open to European companies which probably would be welcomed.

How is government procurement addressed under the EVFTA?

The EVFTA on Government Procurement mainly deals with the requirement to treat EU bidders or domestic bidders with EU investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The EVFTA also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc. These rules require all Parties, especially Vietnam, in the context of China’s bidders predominantly win the bids with cheap offer price but low-quality services, to reform their bidding procedures and protect their own interests by disqualifying tenders with poor performance and low capacity.

What is the covered procurement?

Government procurement of goods or services or any combination thereof that satisfy the following criteria falls within the scope of the EVFTA Government Procurement rules:

Criteria	EVFTA
Monetary values that determine whether procurement by central government is covered under an agreement	130,000 Special Drawing Rights (SDRs) (US$191,000) after 15 years from the entry into force of the agreement Initial transitional threshold: 1.5 million SDRs (US$2.23 million)
Procurement of construction services by central government entities	Initial threshold: 40 million SDRs (US$58.77 million) After 15 years, 5 million SDRs (US$7.35 million)
Entities covered	22 central government bodies 42 other entities (including 2 utility-related state-owned enterprises, 2 universities, 2 research institutes and 34 public hospitals under the control of the Ministry of Health Sub-central government coverage: including Hanoi and Ho Chi Minh
Exclusion of preferences for SMEs	Broad exclusion
Application of offsets	Based on value of a contract

Currently the EU investors are expressing great interest in Long Thanh Airport project, whose total investment amount is approximately USD16 billion. This project is located in Dong Nai, 40km East from Ho Chi Minh City. When it is completed in 2025, it will become the biggest airport in Vietnam. The project is now at the feasibility study stage. Its result will be submitted to relevant authorities for approval in Q3 2017. It is expected that in 2019, the investor – Aviation Corporation of Vietnam will select the main constructor for the project. Selection form and requirements are not available at the moment. This is a great opportunity for European investors, considering that the next phase of the project will start when the EVFTA is already in effect.

How to appeal Government tender decision?

EVFTA makes it possible that the EU could sue Vietnam (or vice versa) for its tender decisions according to the dispute settlement by arbitration rules in a separate chapter of the EVFTA. The violating party must take all necessary measures to promptly comply with the arbitral decision. In case of non-compliance, as in the WTO, the EVFTA allows temporary remedies (compensation) at the request of the complaining party.

Enforcement of arbitral awards

In disputes regarding investment (for example, expropriation without compensation, discrimination of investment), an investor is allowed to bring the dispute to the Investment Tribunal for settlement (Investor-to- State dispute settlement mechanism – ISDS). The final arbitral award is binding and enforceable without any question from the local courts regarding its validity. This is an advantage for European investors considering the fact that the percentage of annulled foreign arbitral awards in Vietnam remains relatively high for different reasons. According to report of the Supreme Court of Vietnam, the biggest reason lies in the relevant courts which are responsible for implementing the procedures for recognition and enforcement of foreign arbitration bodies. Specifically, in-charge judges do not fully understand nature of Vietnam’s commitments to New York Convention 1958, wrongly apply Vietnamese proceeding rules and, in some cases, are simply corrupted by the losing parties, often the local defendants.

Different from investment related disputes, disputes over a Government tender decision must be brought to the arbitration panel by a Government against the other Government. It is not clear whether local courts could annul arbitral awards of the arbitration panel regarding a wrongful tender decision. However, it is gradually becoming a less significant issue as over time, the number of rejected enforcement of arbitral wards in Vietnam is substantially on decline. The recognition and enforcement process is also shortened and is getting more straightforward and transparent. This is thank to efforts of the Supreme Court of Vietnam in training courts of lower levels, voices raised by foreign business communities and drastic changes in Vietnam’s proceeding laws recently.

We believe that the procedural and legal changes regarding government procurement will enable EU exporters to reach markets that were closed before and compete more effectively.

***

If you have any question on the above, please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com . Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Thank you very much!

December 6, 2016December 6, 2016 by Dr. Oliver Massmann

La clause La Plus Importante De Tout Contrat Commercial Au Vietnam – Mettez Votre Clause De Résolution Des Conflits En Ordre !

1. Pourquoi l’arbitrage est un choix sensé

Cet article montre clairement aux entreprises étrangères la nécessité des clauses de résolution des conflits et assiste le choix des alternatives appropriées aux tribunaux civils vietnamiens.

Les inconvénients des tribunaux vietnamiens

La plupart des contrats d’Amérique du Nord et d’Europe précisent dans les détails les obligations de toutes les parties et ils seront regardés attentivement pour l’effectivité de ses clauses. La force exécutoire du contrat est néanmoins largement considérée comme allant de soi.

D’autre part, les contrats entre investisseurs étrangers etentités vietnamiennes ou ayant une référence au Vietnam qui établissent la compétence des juridictions vietnamiennes, devraient toujours préciser la question : « quelle institution devra se prononcer quel que soit le conflit et dans quelle langue et selon quel droit applicable ? »

Dans cette circonstance, sans clause de résolution des conflits, les juridictions vietnamiennes seront compétentes pour tout conflit. Mais les parties concernées doivent prendre en compte les particularités des cours vietnamiennes en comparaison avec les tribunaux occidentaux appliquant la règle de droit. D’après Transparency International, le risque de corruption des décisions demeure et presque un cinquième des ménages interrogés ayant été devant un juge ont déclaré avoir payé au moins une fois des pots-de-vin (Baromètre Général de Corruption, 2011). Beaucoup d’entreprises évitent donc d’avoir affaire aux juridictions vietnamienne, l’existence des pots-de-vin les en décourageant (Intégrité Globale 2011 ; USAID sur la compétitivité des provinces vietnamiennes Index 2011). Malgré le risque persistent et fâcheux de corruption et malgré des efforts d’amélioration, la justice vietnamienne continue de lutter contre d’autres problèmes. Beaucoup de juges vietnamiens manquent de pratique juridique adéquate et sont désignés grâce à leurs liens personnels avec les chefs du Parti ou d’après leurs opinions politiques, comme le révèle l’étude menée en 2012 par le ministère des affaires étrangères américain. Des salaires très faibles ainsi que des mandats de cinq ans devant être renouvelés par désignation, accentuent la dépendance du judiciaire à la sympathie du Parti Communiste et à la corruption. De plus, se pose le problème récurrent de l’incompatibilité entre la règle de droit et le système du parti unique, exclusifs l’un de l’autre de par l’absence de séparation des pouvoirs en pratique (Andersson 2012). Le terme de règle de droit, dans sa traduction vietnamienne, signifie règles d’état, soit règles du Parti Communiste gérant l’unique parti d’état. Tenant compte de ces faits, soumettre les éventuels conflits à la juridiction vietnamienne n’est pas conseillable, d’autant que la possibilité de corruption, de pression politique et d’incompétence des juges doit être prise en compte. Il est important de noter que, tel que dans les pays avec un système d’indépendance judiciaire et un attachement profond à la règle de droit, les sociétés peuvent préférer soumettre les affaires sensibles à l’arbitrage plutôt que de voir leurs affaires commerciales devenir de notoriété publique.

Les avantages de l’arbitrage

Le centre d’arbitrage adéquat assure indépendance des décisions et compétence professionnelle. Il est normalement possible de choisir un groupe d’arbitres que les parties reconnaissent comme fiable dans la clause, ce qui peut conduire à une meilleure acceptation de la décision arbitrale. Il est important d’envisager les candidats à l’arbitrage d’après leur compétence dans le domaine de l’entreprise. La majorité des centres d’arbitrage proposent des experts renommés pour certains domaines particuliers.

2. Quelle cour d’arbitrage est la plus adaptée ?

Choisir la bonne cour d’arbitrage est un élément essentiel dans la constitution de la clause de résolution des conflits. Une entreprise peut choisir entre une cour arbitrale vietnamienne, comme par exemple le Centre International d’Arbitrage Vietnamien (VIAC), ou une cour arbitrale à l’étranger telle que le Centre International d’Arbitrage de Singapour (SIAC). Pour choisir le lieu du procès, les éléments suivants doivent être soigneusement pris en compte :

La taille du projet

Pour les projets les plus importants avec un investissement total dépassant plus ou moins 5 millions de dollars, le choix d’une cour arbitrale internationale est généralement recommandé. A ce stade, il est probable que le problème de la pression financière (voir infra) soit négligé. Une décision arbitrale internationale a plus de chances d’être acceptée par les deux parties, puisque l’absence de compétence de l’arbitre ainsi que la moindre possibilité de pression politique peuvent ainsi être éliminées.

L’emplacement des biens saisissables – les risques d’exécution des sentences arbitrales étrangères

Un autre élément déterminant est l’emplacement des biens du partenaire contractant pouvant être saisis en exécution de l’éventuelle sentence arbitrale. Si les biens sont principalement situés au Vietnam, la décision d’une cour arbitrale internationale doit être appliquée – ce qui est plus compliqué que d’exécuter une sentence nationale. En effet, le Vietnam est devenu membre de la Convention de New York sur la reconnaissance et l’exécution des décisions arbitrales étrangères de 1958 (NYC) en 1995, et dès lors les sentences arbitrales étrangères des 149 états membres doivent normalement être appliquées. Cependant, il y a un risque de délai notable dans l’exécution de la décision, puisqu’il est requis de formuler une demande auprès du Ministère de la Justice avec des explications approfondies, et de comparaitre au tribunal dont la décision est susceptible d’appel, en exécution de la sentence arbitrale. En outre, la cour vietnamienne d’application des décisions peut rejeter la sentence. D’après l’article V de la NYC, cela est possible dans le cas où une sentence arbitrale viole le droit national ou l’ordre public. Le Code Civil vietnamien s’y réfère via les « principes de lois vietnamiennes », et la justice vietnamienne en a retenu une interprétation large (Tam Shu Ching et al. 2012). Dans un cas, par exemple, la sentence arbitrale d’une société étrangère avait été rejetée au motif qu’il manquait un permis de construire (Tyco Services Singapore Pte Ltd vs Leighton Contractors Vietnam).

La pression du coût

Il faut également prendre en compte la différence de prix entre un arbitrage national et un arbitrage à l’étranger. Pour un conflit mettant en jeu environ 4 millions de dollars, par exemple, le coût de l’arbitrage au VIAC s’élève à environ 62 000$ si un arbitre est assigné à l’affaire, tandis que le coût atteint 117 000$ au SIAC. Non seulement les coûts d’arbitrage à l’étranger sont considérablement plus élevés, mais cette option peut créer des coûts supplémentaires pour les parties, tels que des frais de déplacement pour les parties, les témoins et les avocats. Par ailleurs, les honoraires des avocats des cours internationales sont souvent plus importants que ceux des avocats vietnamiens (Shouzhi et al. 2009). Cette même constatation s’applique aux opinions d’experts et autres professionnels. Le risque d’un litige onéreux risque de pousser une entreprise avec moins de liquidités à accepter un accord même défavorable. Dès lors, un arbitrage moins coûteux est souvent plus bénéfique aux entreprises avec de moindres ressources financières.

La complexité et la spécialité de l’objet du contrat et les problèmes éventuels

Les cours arbitrales vietnamiennes, telles que VIAC, ont une grande compétence juridique. Toutefois l’arbitrage national ne peut pas proposer des experts de renommée internationale tels que le sont ceux des tribunaux étrangers. La raison principale tient du coût peu élevé des charges d’un arbitre au Vietnam. Aussi les décisions concernant des transactions financières très complexes ou les contrats portant sur un domaine très spécialisé, sont plus à mêmes d’être acceptées par les parties si ces dernières choisissent un arbitre plus coûteux avec une expertise reconnue.

Les entreprises publiques (cachées)

Quand les entreprises publiques sont impliquées, il est conseillé d’intégrer une clause d’arbitrage étranger. Cela assure un arbitrage indépendant de toute forme de pression de l’entreprise publique. En théorie, le problème d’exécution de la décision demeure, cependant le développement actuel tend à montrer qu’une sentence en faveur d’une entreprise renforce sa position vis-à-vis de ses partenaires. La même chose s’applique pour les entreprises publiques : les sociétés qui sont de facto influencées par le gouvernement, par exemple ceux qui se partagent la propriété via les filiales des entreprises publiques. Le caractère public, « state-owned », du partenaire contractuel doit toujours être apprécié avec prudence.

Cas spécial : la propriété intellectuelle

Dans des cas particuliers, concernant la propriété intellectuelle, les contrats doivent s’assurer qu’aucune mesure provisoire officielle ne soit rendue caduque par la clause d’arbitrage. Les cours arbitrales peuvent elles aussi rendre des mesures provisoires. Dans ce cas, une clause d’ouverture est à envisager au lieu où les cours et autorités vietnamiennes telles que le Bureau de Management du Marché, émettent en temps normal des mesures provisoires plus efficaces.

Choice of jurisdiction

Juridictions vietnamiennes

Arbitrage au Centre d’Arbitrage International du Vietnam (VIAC)

Arbitrage à l’étranger

souvent déconseillées

projets de moins de 5 millions $

projets supérieurs a 5 millions $

Seulement dans les cas particuliers de propriété intellectuelle, une clause d’ouverture peut être ajoutée dans la clause de résolution des conflits e.g. pour faire réaliser une mesure provisoire par une autorité telle que le Bureau de Management du Marche

les biens saisissables de l’associé contractant sont situés au Vietnam

pour des questions juridiques moins complexes

le contrat a trait à plusieurs domaines juridiques e.g. le droit de la consommation
le partenaire contractuel n’est pas une entreprise publique
capacité financière propre limitée, la pression du coût peut être une menace

les biens saisissables de l’associé contractant sont situés à l’étranger

pour des questions juridiques plus complexes

le contrat a trait à des domaines nécessitant des professionnels spécialisés

le partenaire contractuel est une entreprise publique

capacité financière propre plus importante, la pression du coût n’est pas une menace

Aucune clause de résolution Clause de résolution Clause de résolution des

des conflits nécessaire des conflits nécessaire ! conflits nécessaire !

3. Comment la rédiger ?

La loi vietnamienne admet explicitement les clauses de résolution des conflits dans les contrats commerciaux dans la Loi 54/2010 sur l’arbitrage commercial (« LCA »). Une clause de résolution des conflits efficace retire la compétence des tribunaux vietnamiens sur l’affaire en question et établit la compétence du tribunal arbitral désigné. La LCA suit le modèle de loi de la CNUDCI comme standard international pour les règles procédurales, d’autant que la volonté du législateur est d’adopter une position pro-arbitrage.

Une fois que la décision est prise de savoir quel tribunal d’arbitrage retenir pour les litiges issus du contrat, les points suivants doivent être clarifiés :

La loi applicable: elle doit être choisie en toute liberté dans les cas comprenant un élément étranger d’après l’article !$ de la LCA. La loi applicable choisie pourra influencer le choix des arbitres, s’ils ont une expérience juridique sur ce droit national en particulier.

La langue de la cour : Cela est choisi librement selon l’article 10 de la LCA.

Le nombre d’arbitres : Plusieurs arbitres peuvent rendre une décision plus équilibrée en tant que formation collégiale. Les couts de l’arbitrage vont néanmoins être accrus en conséquence.

Le choix nominatif d’un arbitre : Cela est important dans le cas où des experts seront nécessaires à l’affaire.

La clause de résolution des conflits devient effective lorsque les requis des articles 16, 18 et 19 de la LCA sont remplis, soit à travers un accord écrit.

Conclusion

La question de savoir s’il faut ou non une clause de résolution des conflits dans les contrats au Vietnam se répond par un oui net. Toutefois, décider au bon moment de la résolution d’un litige peut s’avérer très complexe, puisqu’un certain nombre de facteurs doivent être pris en considération. On peut espérer que la LCA pro-arbitrage de 2010 tienne ses promesses dans sa mise en pratique, et que la justice vietnamienne exécute de façon fiable les décisions arbitrales internes autant qu’internationales. Ainsi serait émis un signal positif à l’égard des investisseurs étrangers qui auraient des réserves dans le fait d’engager un litige au Vietnam.

—

Oliver Massmann est un associé dans le bureau d’ Hanoï du cabinet américain international Duane Morris LLP. Il est spécialisé dans les domaines de fiscalité internationale des sociétés et sur les projets d’eau ou d’énergie, sur les affaires liées aux compagnies pétrolières et gazières et de télécommunications, la privatisation et transformation d’entreprise (pour les entreprises publiques), les fusions-acquisitions et les affaires commerciales de clients multinationaux désirant investir ou établir une entreprise au Vietnam. Massmann est un arbitre officiel du Centre d’Arbitrage International du Vietnam. Oliver Massmann est le Directeur Général de Duane Morris Vietnam LLC.
Il est joignable par mail : omassmann@duanemorris.com

August 12, 2016 by Dr. Oliver Massmann

Lawyer in Vietnam Oliver Massmann WTO Dispute Shrimp Case Agreement reached

On 18^th July 2016, the United States (US) and Vietnam reached an Agreement on the Imposition of Anti-dumping Duty on Certain Frozen Warm-water Shrimp from Vietnam to resolve two long standing WTO disputes brought by Vietnam: United States – Anti-dumping Measures on Certain Shrimp from Vietnam (DS404) and United States – Anti-dumping Measures on Certain Shrimp from Vietnam (DS429).

The history of these disputes could be traced back to 31^st December 2003, after the very first anti-dumping case against Vietnam carried out by the U.S. in June, 2002 when the Vietnamese fishing industry had to confront another anti-dumping petition against certain frozen and canned warm-water shrimp imported into the U.S. by the U.S Shrimp Trade Action Committee, an ad hoc representative of the U.S. Southern Shrimp Alliance.

In this case, Vietnam was not the only respondent but there were five other countries including Brazil, Ecuador, India, Thailand and China. The case was investigated by the US Department of Commerce (DOC) and the US International Trade Commission (ITC). According to the ITC, shrimp imports account for eighty-seven percent of the one billion pounds of shrimp consumed in the U.S. annually.[1] Of that, shrimp imports from the six countries in the petition make up seventy-five percent of the total shrimp imports into the U.S. market. According to the petitioner, the alleged dumped products from these countries caused the price of the U.S. shrimp harvest to decrease by fifty percent from 2000 to 2002, falling from $1.25 billion to $560 million;[2] thus the U.S. shrimpers could not compete, leading to nearly 70,000 job losses in the shrimp industry within the eight states.[3] The DOC then initiated its dumping investigation on 8 January, 2004.

The DOC again upheld its conclusion from the Catfish case that Vietnam is a non-market economy (“NME”) after examining six criteria prescribed in the Tariff Act of 1930 in determining whether a country operates on market economy principles. Upon determining that Vietnam is a NME, in order to determine the normal values and export values of Vietnamese fish, the DOC had to find “an economically comparable ME that is a significant producer of comparable merchandise”[4] that could substitute for Vietnam’s costs of production. In this case, Bangladesh was chosen as a surrogate country.

The US utilized zeroing method to determine dumping margin in the case at hand. As a matter of general understanding, zeroing referred to the practice of some WTO Members in calculating dumping margin by comparing weighted-average normal value to individual export prices. Under this methodology, the difference between normal value and export price was calculated per transaction. Positive margins, i.e., the export price is lower than the normal value, were taken as is. However, negative margins, i.e., the export price is higher than the normal value, were counted as zero. Zeroing drops transactions that have negative margins, thus resulting in higher overall dumping margins and as a matter of fact, higher applied anti-dumping duty.

In contrast with the E.U.’s prospective zeroing system, under the U.S. retrospective system, the anti-dumping duty imposed at the end of the original investigation following the calculation of the dumping margin only serves as a temporary estimation for future liability.[5] The actual payment of anti-dumping duties will be determined during the annual administrative or duty assessment reviews. As mentioned above, zeroing increases the level of dumping margin. When used in the retrospective system, the impact of zeroing is amplified as it adds an element of uncertainty. The importer of goods subject to anti-dumping order only has an estimate of its extra duty. He will be unwilling to import goods from the subject exporter because of the possibility of a higher duty when the U.S. authority conducts the administrative review.[6]

During the process, several companies were investigated. The mandatory defendants were Minh Phu Seafood Corporation, Kim Anh Limited Company, Minh Hai Joint Stock Seafoods Processing Company and Camau Frozen Seafood Processing Import – Export Corporation (Camimex). Some voluntary defendants that could be mentioned are Cai Doi Vam Seafood Import Export Company, Can Tho Agriculture and Animal, Products Import Export Company; Can Tho Animal Fisheries Product Processing Export Enterprise, Cuu Long Seaproducts Company, Danang Seaproducts Import Export Company. However, Kim Anh Limited Company, one of the compulsory defendants, refused to cooperate due to abundant amount of data that needs to be collected, resulting it being subject to the very high country-wide rate.

Eventually, after over a year of investigation, ITC announced that Vietnamese shrimp are sold at dumping prices and the import of this shrimp is detrimental to the shrimp industry of the US. As a result, Vietnamese shrimp were subjected to anti-dumping duties at varying rates depending on the results of the investigation. In the second and third administrative reviews, the DOC decided to impose an insignificant duty rate of 0-0.01 percent on mandatory respondents, but not on voluntary respondents. These voluntary respondents were subject to the initial rate of 4.57 percent. The country-wide rate was the same as in the initial determination, i.e., 25.76 percent.

These results have raised a lot of controversial responses. Beside Vietnamese companies whose rights and benefits were directly affected by this decision, some US parties have also shown disagreements towards this announcement. Mr. Adam Sitkoff, Executive Director of Amcham Vietnam in Hanoi, stated during his interview with VnExpress that the duties applied on Vietnamese shrimp were unreasonable as Vietnam, similar to other shrimp exporters, utilized the most advanced shrimp production methods, something that American shrimp providers did not have. As a result, the Vietnamese shrimp prices became lower, which is not a sign of dumping.

For fear that the DOC would continue using the same calculation methodology used in the second and third administrative reviews, resulting in unfair treatment for Vietnamese enterprises in the fourth administrative review, the Vietnam Association of Seafood Exporters and Producers (“VASEP”) and the Vietnam Chamber of Commerce and Industry (“VCCI”) recommended the Government to initiate the WTO dispute settlement mechanism by first holding consultation with the U.S. on this matter on 01 February 2010. The consultation failed and the Government of Vietnam requested the establishment of a panel on 07 April 2010. Vietnam challenged, inter alia, “(i) the application of zeroing to individually-investigated respondents in the second and third administrative reviews, and its continued application in the subsequent reviews; (ii) the U.S zeroing methodology ‘as such’; and (iii) the use of the zeroing methodology to calculate the “all others” rate in the second and third administrative reviews.”[7] On 11 July 2011, the Panel issued its report of the case.

The Panel ruled in favor of Vietnam that the DOC’s zeroing methodology in determining dumping margin for mandatory respondents in the second and third administrative reviews was inconsistent with Article 2.4 of the Anti-Dumping Agreement (“ADA”). Moreover, the Panel also ruled that the using of zeroing in any administrative review constituted a violation under Article 9.3 of the ADA and Article VI:2 of the GATT 1994.[8]

This ruling of the Panel is considered to be consistent with the decisions of other WTO panels and Appellate Body in previous cases regarding the U.S. zeroing methodology. Although the US never opposed to this decision, they did continue applying zeroing methodology for subsequent administrative reviews and the first sunset review.

The case would not have been a success without the active participation of several associations, including VASEP and the VCCI. From the very beginning, these associations did evaluate the case from Vietnam’s viewpoint and in accordance with international practice. Then, they recommended the government to start the proceedings based on convincing arguments, as well as propaganda to gain support from the public. VASEP and VCCI also contributed a lot to the success of the case by proposing experienced international trade lawyers.

Although the case is among more than 480 WTO disputes since 1995, US – Shrimp marks a significant and critical change in Vietnam’s use of WTO dispute settlement mechanism, leaving a lot of lessons learned by Vietnamese enterprises and associations.

On 20^th May 2016, upon Vietnam’s request, the DOC has implemented procedures to comply with the WTO Panel’s decision. Eventually, on July 18^th, 2016 Vietnam and the US finally signed an agreement, according to which a Vietnamese exporter of frozen warm-water shrimp – Minh Phu Group – will no longer be subject to the antidumping duty order. In addition, certain domestic litigation will be resolved and duty deposits will be refunded to the Minh Phu Group. The antidumping duty order will remain in place for all other exporters of warm-water shrimp from Vietnam.

This move shows negotiation efforts of Vietnam and the US’ goodwill to respect its WTO obligations. It also reflects the US’s goodwill to strengthen its multi-faceted cooperation with Vietnam, especially in the context that the two countries participate in the Trans-Pacific Partnership (TPP) agreement.

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions or want to know more details on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

THANK YOU !

[1] U.S. Slaps Tariffs on Shrimp from China, ‘Vietnam: Commerce Department Acts after Complaints from American Harvesters’, Chicago Sun Times, 2004, p. 62.

[2] Burnett, Richard, ‘Struggling U.S. Shrimpers File Anti-dumping Petition: An Industry Group Says Six Countries Sold Shrimp at Artificially Low Prices’, 2004, http://articles.orlandosentinel.com/2004-01-01/news/0401010416_1_shrimp-petition-industry).

[3] Southern Shrimp Alliance, Press Release: Shrimpers Hail Finding of Dumped Shrimp from China and Vietnam, 30 November 2004, http://www.shrimpalliance.com/Press%20Releases/ 11-30-04%20DOC%20Final.pdf.

[4] Section 773(c)(4), Tariff Act of 1930.

[5] Chad P. Bown and Thomas J. Prusa, US Anti-dumping – Much Do about Zeroing, 2010, p.30.

[6] Ibid., p.33.

[7] http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds404_e.htm.

[8] Panel Report, US – Shrimp, para. 8.1.

March 30, 2015 by Dr. Oliver Massmann

Intellectual Property Rights Enforcement in Vietnam

Vietnam is currently negotiating a Free Trade Agreement with the European Union (EVFTA) as well as the Trans-Pacific Partnership with the United States (TPP). In addition, the ASEAN Economic Community will be established by the end of 2015. Thus, Vietnam will soon expect a significant increase in foreign investment, most of which will depend on the effectiveness of intellectual property protection and enforcement in Vietnam. In this context, Vietnamese enforcement agencies and the courts have been actively issuing decisions with harsh sanctions on the infringers serving as good precedents and clear warnings on future violations.

Administrative relief or civil proceeding?

However, it should be noted that presently in Vietnam, rights holders mainly seek administrative relief and border control measures before competent authorities such as the Ministry of Science and Technology Inspectorate or the Vietnam Intellectual Property Research Institute rather than pursuing lawsuits before civil courts. They view that administrative route would take less time and money compared with civil actions, taking into account the unclear legal basis of IP disputes and lack of experience of judges. The non-binding opinions of these administrative agencies could then be included in the customs record, which effectively prevent the physical entry of infringing goods at the border. However, administrative decisions only result in the fine and destruction of infringing goods without compensating for the rights holders or even payment of legal fees. As such, there has been a recent increase in litigation in courts in patent area for the past few years. With the agriculture accounts for the majority of Vietnam’s economy (80%), it is not a big surprise that the first majors patent suits took place in this area. In these cases, the courts have issued decisions in favor of the foreign agroscience companies, which would set precedents for future judgments.

Preliminary injunctive relief and permanent injunction

In civil proceedings, especially in IP area, it is sometimes importance to seek for injunctive relief. Preliminary injunctive relief has its legal basis in Articles 99-126 of the 2004 Civil Procedures Code as amended in 2011 and Articles 206-210 of the IP Law promulgated in 2005. Rights holders can request a preliminary injunctive relief if they can prove either of the following: (i) there is a threat of irreparable damage; or (ii) there is a threat of dispersal or destruction of suspected infringing goods and related evidence if they are not protected in time. The aim of injunctive relief measure is the protection of the rights holders pending the final decision of the courts. Typical preliminary injunctions are goods seizure, sealing/ freezing, prohibition on status/ ownership change/ transfer, and other measures specified in the Civil Procedure Code. However, for the courts to render an injunctive relief, rights holders are requested to pay a deposit of at least VND20 million as a security. The courts then still take great caution in applying such measure and there is no clear guidance for the court to return the deposit to the rights holders when they have concluded against the infringers. Thus, there lies a risk for rights holders when asking for preliminary injunctive relief.

While the use of preliminary injunctive relief has a clear legal basis in Vietnamese law, permanent injunction is not that case. What is normally stipulated is a cessation of the infringement but not the court order to never commit the infringement again in the future. However, it seems that the Ho Chi Minh City Court for the first time in a case initiated by a European agrochemical company against a pesticide producer in Ho Chi Minh City has ordered the infringer not to infringe the patent until the expiry date of the patent in question. This is a precedent-setting decision for future courts decisions in patent area.

Recent typical IP court litigations in Vietnam:
 Dispute between a major French cement company and a defendant in Vietnam on domain name
 Dispute between US-based Videojet Technologies Inc., and Nam Trinh JSC on trademark infringement
 Dispute between a major European agrochemical company and a pesticide producer in Ho Chi Minh City on patent infringement.

Conclusion

The developments in the IP rights enforcement system shown in the choice of civil proceedings as well as the favorable binding decisions of the courts of foreign parties are good signals for better IP environment in Vietnam. Vietnam is taking steps to assure foreign investors of effective IP rights protection when doing business in Vietnam, especially when the EVFTA and the TPP are concluded by this year.

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

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