Shadow hangs over foreign JV in Vietnam court
HANOI - A Vietnam appeals court
has postponed a verdict in a controversial land case
involving a foreign-invested project that threatens to set
a dangerous precedent, a source from the overseas
partner said on Saturday.
A ruling by the Supreme People's Court in Ho Chi Minh
City in July stunned the foreign partner because the
presiding judge decided not to base the decision on
legally binding contracts, the source said.
The Planning and Investment Ministry, in an official
letter, had asked the Ho Chi Minh City appeals court to
reconsider the issue, but on Friday the court deferred
judgment pending another hearing.
The original verdict had called for the $10 million Thanh
Da Riviera joint venture to make the last two payments
of a six-installment, $700,000 land compensation deal
earlier than contractually agreed.
Delays in project implementation would have left the
plaintiff, Dai Kim Dang, waiting too long to receive his
money, the court had reasoned.
Thanh Da Riviera, a joint venture between Vietnam
Trend Property Investments (VTPI) with 75 percent and
the local Gia Dinh Tourist Co with 25 percent, was
licensed in May 1996.
VTPI is a holding company formed by Vietnam Trend
Investments, a fund based in the British Virgin Islands.
The July verdict was based on the venture's 1996
feasibility study rather than a signed contract which
stated the outstanding monies -- totalling $75,000 -- be
paid at the end of the first and second years of project
profitability.
``For us as well as other foreign investors in Vietnam we
cannot let such decisions take place,'' the source said.
``I am very afraid to see that we are not having open
justice in Vietnam. To take a decision based on a
feasibility study and not the contract is dangerous,'' he
said.
Foreign investors have regularly complained that
Vietnam's legal system offers little protection.
The appeals court asked the venture to provide proof
that its project to build a luxury apartment and leisure
complex in former Saigon was being implemented, the
source said.
The source said his firm was ready to pay the sum as it
was provisioned risk, but that the original verdict
threatened to set a precedent that would send shivers
through the foreign investment community in the
communist country.
The first four installments worth a total of $625,000 had
already been paid, he said.
Do Ngoc Trinh, deputy planning and investment minister,
asked in a letter to the Supreme People's Court dated
October 23 for the original verdict to be overturned.
In the letter, a copy of which was obtained by Reuters,
she said delays to the Thanh Da Riviera project were
due to a variety of reasons and that the company should
not be penalised.
``The economic feasibility study is just an estimated
calculation based on data at the time of issuing the
licence,'' Trinh said, adding that few firms were able to
exactly match feasibility study projections.
``Therefore, it is impossible to base the court's decision
on the economic feasibility study,'' she said.
Reuters - November 06, 1998.
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