Jurisdiction for international sale of goods contract dispute resolution in Vietnam

International sale of goods is one of the rapidly growing international trade activities in Vietnam, becoming a driving force for the country’s economic growth. This means that disputes about this type of contract are increasingly occurring. In the article below, Viet An Law Firm would like to provide advice on jurisdiction for international sale of goods contract dispute resolution in Vietnam.

Legal basis

• Civil Code 2015;
• Civil Procedure Code 2015.

What is an international sale of goods contract dispute?

International sale of goods contract disputes is a type of commercial dispute with international elements. In the simplest terms, a dispute over an international sale of goods contract is a disagreement or conflict over the rights, obligations, and economic interests between the subjects, based on an international sale of goods contract that is agreed between the parties.

Determine the jurisdiction for international sale of goods contract dispute resolution in Vietnam

The authority to resolve disputes over international sale of goods contracts is determined based on two sources of law:

• International treaties to which Vietnam is a member
• Domestic law.

The principle of applying the law to determine the authority to resolve disputes in international sale of goods contracts is to prioritize the application of international treaties to which Vietnam is a member first. Vietnamese law will be applied if there is no international treaty.

The court’s jurisdiction based on international treaties

According to the provisions of international treaties to which Vietnam is a member, specifically the Mutual Legal Assistance Treaty that Vietnam has signed, determining the authority to resolve disputes on international sale of goods contracts of the court is carried out according to different criteria. For example: The jurisdiction of the court of the country where the defendant resides or is headquartered; the jurisdiction of the court of the country where the contract is signed or where the contract is performed or the country whose territory is the subject of the dispute.

The court’s jurisdiction based on Vietnamese law

According to Vietnamese law, the jurisdiction for international sale of goods contract dispute resolution in Vietnam is determined through two steps:

Step 1: Determine whether the international sale of goods contract dispute resolution belongs to the jurisdiction of Vietnamese courts or not.

Accordingly, Vietnamese law regulates the issue of general jurisdiction and specific jurisdiction of Vietnamese Courts to the international sale of goods contract dispute as follows:

First, the general jurisdiction of the Vietnamese Court is determined based on signs of nationality and territory

Vietnamese courts will have jurisdiction to resolve sale of goods contract dispute resolution in the following cases:

• The defendant is an individual who lives, does business, and lives permanently in Vietnam.
• The defendant is an agency or organization headquartered in Vietnam or the defendant is an agency or organization with a branch or representative office in Vietnam for cases related to the operations of the branch or representative office of that organization in Vietnam. According to this regulation, enterprises participating as defendants in international sale of goods contract disputes resolved at the Court will include two cases (i) Enterprises headquartered in Vietnam or (ii) Foreign enterprises with branches and representative offices in Vietnam.
• The defendant has assets in Vietnamese territory.
• The establishment, change, or termination of international sale and purchase of goods contract dispute relationships occur in Vietnam, the object of the contract is property in the territory of Vietnam, or the contract takes place in the territory of Vietnam.
• The establishment, change, and termination of international sale and purchase of goods contract dispute relationships occur outside the territory of Vietnam but are related to the rights and obligations of Vietnamese agencies, organizations, and individuals with headquarters or residence in Vietnam

Second, determine the separate jurisdiction of the Court

Vietnamese Courts will have exclusive authority to handle disputes over the international sale and purchase of goods contracts in cases where the parties choose Vietnamese Courts to resolve following Vietnamese law or international treaties in which Vietnam is a member. The choice of the parties is the basis for determining the dispute resolution jurisdiction of the Vietnamese Court. The consequence of this regulation is that once a dispute over an international sale of goods contracts has been resolved by a foreign court, that judgment will not be accepted and enforced by you in the territory of Vietnam.

Step 2: Determine the specific Court with jurisdiction to resolve the dispute

Determine the level of Court with jurisdiction over the international sale of goods contract dispute. Vietnam’s current court model is organized at 4 levels including the Supreme People’s Court, the High People’s Court, the People’s Court of Provinces and centrally run cities, and The People’s Courts of rural districts, urban districts, towns, cities, and the equivalents. Therefore, when parties request to initiate a lawsuit to resolve an international sale of goods contract dispute at Vietnamese Courts, they need to pay attention to this issue to avoid being refused acceptance.

Section 2 of the Civil Procedure Code in 2015 regulates the jurisdiction of Courts at all levels. Accordingly, Point b, Clause 1, Article 35 stipulates that commercial business disputes specified in Clause 1, Article 30 of the Law now fall under Business and/or trade disputes falling under the courts’ jurisdiction according to first instance procedures.

However, according to the provisions of Clause 3, Article 35 of the Civil Procedure Code in 2015, disputes and petitions prescribed which involve parties or properties in foreign countries or which must be judicially entrusted to representative agencies of the Socialist Republic of Vietnam overseas or to foreign courts/competent agencies, shall not fall under the jurisdiction of people’s Courts of districts.

In this case, the international goods sale contract dispute will fall under the dispute resolution jurisdiction of the People’s Courts of provinces based on Point a, Clause 1, Article 37 of the 2015 Civil Procedure Code as follows:

“People’s Courts of provinces shall have the jurisdiction to settle according to first-instance procedures the following disputes:

1. Civil, marriage- and family-related, business, trade, or labor disputes prescribed in Articles 26, 28, 30, and 32 of this Code, except for disputes falling under the jurisdiction of the district-level people’s Courts as provided for in Clause 1 and Clause 4 Article 35 of this Code;”

This means that the international goods sale contracts will be resolved by the People’s Courts of provinces according to the first-instance trial procedures of civil cases.

Above is the consulting content of Viet An Law on the jurisdiction for international sale of goods contract dispute resolution in Vietnam. If you have any questions about arbitration law or dispute resolution, please contact Viet An Law Firm for our best support!