Court Flip-Flops in Vietnam
Don't count on the Vietnamese courts to recognize and
enforce foreign arbitration awards. That lesson hit home
on January 21, when the Supreme Court of southern
Vietnam's Ho Chi Minh City decided not to recognize
two awards granted in April 2000 by arbitrators in the
Australian state of Queensland. It was a legal flip-flop
because last year a lower court in Vietnam had upheld
the Queensland decision that Leighton Contractors
Vietnam, an Australian firm, should pay a total of
almost $2.3 million to Tyco Services Singapore, an
affiliate of the Bermuda-registered Tyco International.
The dispute arose in 1998 after Leighton subcontracted
Tyco for construction work on the Indochina Beach
Hotel in Danang, central Vietnam.
But the Supreme
Court ruled that construction contracts don't fall within
Vietnam's legal definition of "commercial relations," so
the awards are invalid. Some analysts say the decision
highlights another risk of doing business in Vietnam. "It
is more than worrisome for future investment and future
arbitrations," says Walter Blocker, chairman of the
American Chamber of Commerce in Ho Chi Minh City.
However, Leighton's attorney, Mark Fraser, maintains
that the ruling sends "a positive statement to legitimate
foreign investors that their rights and interests will be
protected in Vietnam."
The Far Eastern Economic Review - January 30, 2003.
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