Representation of the plaintiff A Single Member Limited Company, represented by Mrs. Mai Thi Tuyet N, in the lawsuit petition dated September 15, 2011, the additional lawsuit petition dated September 22, 2011 and during the legal proceedings:
On June 7, 2011, A Single Member Limited Company (hereinafter referred to as the Buyer, Company A) and Company B (hereinafter referred to as the Seller) signed a contract for international sale of goods No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 (hereinafter referred to as the sales contract dated June 7, 2011). Under this contract, the Buyer buys raw cashew nuts, Ivory Coast origin, with quantity of 1,000 tonnes x price 1,385.50 USD/tonne, using deferred L/C 98% within 90 days from the shipment date based on the bill of lading (B/L) with the quality standards below:
- Outturn: 47 lbs/80kg and the Buyer has the right to reject cargoes if outturn is lower than 45 lbs/80kg.
- Nut count: 205 nuts/kg (max). 220 nuts/kg: rejection.
- Moisture: 10% (max). Moisture more than 12%: rejection.
The cargoes will be inspected by Vinacontrol in terms of quality and quantity at the loading time at the discharge port in Ho Chi Minh City.
According to agreement on the deferred L/C 90 days, on July 7, 2011, the Buyer asked D Branch of E Joint-Stock Commercial Bank to issue a deferred L/C No. 1801ILUEIB110002 (hereinafter referred to as L/C No. 1801) in order for the Buyer to complete the purchase procedures.
Upon receipt of cargoes, as specified in Article 8 of the agreement, the Buyer checked the quality and quantity of the shipment at the discharge port, which is Cat Lat Port in Ho Chi Minh City, under the supervision of Vinacontrol, and then detected that the cargoes of the Seller do not meet the quality assurance. Based on two inspection certificates No. 11G04HN05957-01 and No. 11G04HN05939-01 issued by Vinacontrol on August 31, 2011 in terms of quantity, quality and conditions of cargoes, the inspection result shows that the average outturn in two cutting tests performed on samples of raw nuts is 37.615 lbs/80kg (this outturn is too lower than the outturn mentioned in clause of rejection, approximately 10 lbs). Facing that commercial fraud, the Buyer has attempted to contact with the Seller many times to deal with the issue relating to the quality of imported cashew nuts but no response from the Seller has been received.
Thus, on September 15, 2011, the Buyer filed a lawsuit petition with People’s Court of Ho Chi Minh City, requesting the Court to force the Seller to receive back 1,000 tonnes of cashew nuts because their outturn is lower than 45lbs, falling on the clause of rejection, the Buyer refuses to make the payment and requests the Court to adopt temporary emergency measures to force E Joint-Stock Commercial Bank to suspend the payment of USD 1,313,308.85 under the L/C No. 1801 to the Seller according to the undertaking of the Buyer until there is any other decisions of the Court.
On August 12, 2013, the Buyer paid the court fee advance for the additional lawsuit petition, which requests cancellation of the sales contract dated June 7, 2011 and cancellation of L/C No. 1801.
At the first instance court hearing, the plaintiff requested:
1. Canceling the sales contract dated June 7, 2011.
2. Forcing the Seller to receive back the whole delivered shipment at the warehouse of the Buyer at C2, Highway 1A, Commune C, District L, Dong Nai Province as soon as possible after the Judgment takes effect. 30 days after the Judgment takes effect, if the Seller fails to receive back the shipment at the warehouse of the Buyer, the enforcement agency has the right to sell the above-mentioned shipment so as to leave the empty warehouse to the Buyer.
3. Canceling the payment obligation of the Buyer to L/C No. 1801 and requesting E Joint-Stock Commercial Bank to refund the plaintiff the deposit secured for L/C of USD 1,313,308.85.
4. Requesting the Court to keep implementing the decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 until the Judgment takes effect. Concurrently, refunding the Buyer VND 1,500,000,000 as the security under the decision of the Court at Branch P of Bank T after the Judgment takes effect.
The defendant, Company B (the Seller), is situated abroad and was duly served by the Court through the Ministry of Justice of Vietnam in accordance with the Civil Procedure Code, the Law on Mutual Legal Assistance 2007 and Joint Circular No. 15/2011/TTLT-BTP-BNG-TANDTC dated September 15, 2011 but the Seller was still absent and gave no response.
Representation of the person with relevant rights and obligations, E Joint-Stock Commercial Bank:
At the request of the Buyer, on July 7, 2011, Branch D of E Joint-Stock Commercial Bank issued L/C No. 1801 as follows:
- Value of L/C: USD 1,357,790
- Purpose: import of 1,000 tonnes of raw cashew nuts from Ivory Coast;
- Beneficiary bank: Bank N, Singapore.
- Beneficiary: Company B.
- Deferred L/C issued under UCP 600; with confirmation term.
- Security interests: guarantee by a third party, collateral: a passbook.
- Latest payment date: on September 29, 2011 (USD 961,813.66) and on October 17, 2011 (USD 351,495.19).
Upon receipt of the set of complying documents, the Buyer confirmed to make full payment on schedule under the L/C. According to the confirmation of the Buyer, E Joint-Stock Commercial Bank accepted the draft.
Based on the confirmation of L/C and the conditions of the set of documents, the Bank N negotiated 3 sets of documents without recourse for USD 1,313,308.85 on July 25, July 28 and August 8, 2011.
According to the issued L/C, L/C is governed by the latest version of “the Uniform Customs and Practice for Documentary Credits” (UCP 600). Pursuant to UCP 600, E Joint-Stock Commercial Bank as the issuing bank undertakes to honour after receiving the documents, it means that the Buyer made the payment to the Seller. According to the complying documents and acceptance of the Buyer, E Joint-Stock Commercial Bank accepted the draft. The Bank N negotiated 3 said sets of documents without recourse.
E Joint-Stock Commercial Bank disagrees with the plaintiff’s claim, requesting the Court to cancel L/C No. 1801 and requesting E Joint-Stock Commercial Bank to refund the deposit of USD 1,313,308.95 to the plaintiff. E Joint-Stock Commercial Bank requests the Court to annul the decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 in order for E Joint-Stock Commercial Bank to pay the Bank N as agreed in L/C.
Representation of the person with relevant rights and obligations, the Bank N:
Under the sales contract dated June 7, 2011 and L/C No. 1801, the Bank N (branch in Singapore) is the nominated bank of the Seller at which the letter of credit issued by E Joint-Stock Commercial Bank is available.
In compliance with UCP 600, the Bank N negotiated the comply documents presented by the Seller and paid the Seller the value of L/C on July 25, 2011, July 28, 2011 and August 8, 2011. Accordingly, the Bank N purchased L/C No. 1801 and relevant documents legally and became the direct beneficiary of all and any payments under this L/C. After receiving the complying presentation in accordance with the said L/C, E Joint-Stock Commercial Bank confirmed the presentation and committed to pay the Bank N on September 29, 2011 and October 17, 2011 but the payments were not made because the Buyer requested and the Court issued the decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011.
The Bank N requests the Court to cancel the decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 immediately and requires the Buyer to compensate for damage suffered by the Bank N from its illegal request for temporary emergency measures, leading to the Bank N’s failure to receive the payment of L/C amount from E Joint-Stock Commercial Bank. The amount of damages claimed by the Bank N is the interest amount incurred by the Bank N on the sum payable for 3 sets of complying documents corresponding to the late payment period from the latest payment date as undertaken by E Joint-Stock Commercial Bank (September 29, 2011) to the date on which the Bank N filed a request for participating in legal proceedings and this interest amount is calculated according to the USD interest rate on demand loan of interbank on the date of submission of the request (3.8%/12 months). Total amount of damages claimed by the Bank N against the Buyer is USD 33,270.59, equivalent to VND 694,188,774.
In the First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014, People’s Court of Ho Chi Minh City judged:
“1. Cancel the sales contract No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 between the Seller, Company B, and the Buyer, A Single-Member Limited Liability Company.
Compel Company B to receive back the shipment of 1,000 tonnes of raw cashew nuts Ivory Coast which has been delivered under the sales contract No. FARCOM/RCN/IVC/036/2011 at the address: the warehouse of Company A, Village C2, Highway 1A, Commune C, District L, Dong Nai Province. 30 days after the Judgment takes effect, if Company B fails to receive the said shipment bank, the enforcement agency shall sell it by order of the court as per the law to leave the empty warehouse to Company A.
2. The deferred L/C No. 1801ILUEIB110002 issued by the Branch D of E Joint-Stock Commercial Bank on July 7, 2011 shall cease to be valid. E Joint-Stock Commercial Bank does not have the payment obligation to the Bank N under deferred L/C No. 1801ILUEIB110002 issued by the Branch D of E Joint-Stock Commercial Bank on July 7, 2011.
Compel E Joint-Stock Commercial Bank to refund Company A the collateral secured for the payment of L/C which is the deposit of USD 1,313,308.85.
3. Keep adopting temporary emergency measures under the decision No. 101/2011/QD-BPKCTT dated September 23, 2011 of People’s Court of Ho Chi Minh City and security interest under the decision No. 100/2011/QD-BPDB dated September 23, 2011 of People’s Court of Ho Chi Minh City until the Judgment takes effect. Company A may receive VND 1,500,000,000 (one billion five hundred million dong) of deposit in the blocked account No. 1022130.3441.012 at the Branch P of Bank T put up by Company A under the decision on compulsory security interest No. 100/2011/QD-BPDB dated September 23, 2011 of People’s Court of Ho Chi Minh City until the Judgment takes effect.
4. Do not accept the Bank N’s claim for damages against Company A of USD 33,270.49, equivalent to VND 694,188,774”.
In addition, the Judgment also announces the court fee, late payment charge and time limit for appeal.
On April 21, 2014, E Joint-Stock Commercial Bank filed an appeal against the entire First Instance Commercial Judgment.
In the decision on suspension of appellate trial No. 29/2015/QDPT-KDTM dated August 26, 2015, the Superior People’s Court in Ho Chi Minh City judged:
1. Suspend appellate trial of commercial case No. 40/2014/TLKDTM-PT dated August 18, 2014 on “dispute over contract for sale of goods”.
2. The First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014 of the People's Court of Ho Chi Minh City takes effect from August 26, 2015.
In addition, the Court decided the court fee.
On September 10, 2015, E Joint-Stock Commercial Bank requested the Chief Justice of the Supreme People’s Court in writing to review the First Instance Commercial Judgment and decision on suspension of appellate trial under cassation procedure.
In the Appeal No. 11/2016/KN-KDTM dated March 7, 2016, the Chief Justice of the Supreme People’s Court appealed the decision on suspension of appellate trial of the commercial case No. 29/2015/QDPT-KDTM dated August 26, 2015 of the Superior People’s Court in Ho Chi Minh City and requested the Council of Judges of the Supreme People’s Court in charge of cassation trial to quash the above decision on suspension of appellate trial No. 29/2015/QDPT-KDTM dated August 26, 2015 of the Superior People’s Court in Ho Chi Minh City and quash the First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014 of People’s Court of Ho Chi Minh City, and then refer the case to People’s Court of Ho Chi Minh City for re-conduct the first instance trial as per the law.
At the cassation court hearing, representative of the Supreme People’s Procuracy requests the Council of Judges of the Supreme People’s Court to accept the Appeal of the Chief Justice of the Supreme People’s Court.