~ Le Viêt Nam, aujourd'hui. ~
The Vietnam News

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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.