Verdict no. 244/2009/HC-ST dated february 13, 2009 on lawsuit against administrative decisions on and administrative acts in issuance, revocation of capital construction and business permits; business registration certificates and practising certificates

THE PEOPLE’S COURT OF HO CHI MINH CITY

FIRST INSTANCE VERDICT NO. 244/2009/HC-ST DATED FEBRUARY 13, 2009 ON LAWSUIT AGAINST ADMINISTRATIVE DECISIONS ON AND ADMINISTRATIVE ACTS IN ISSUANCE, REVOCATION OF CAPITAL CONSTRUCTION AND BUSINESS PERMITS; BUSINESS REGISTRATION CERTIFICATES AND PRACTISING CERTIFICATES 

On February 13, 2009, at the head office of People’s Court of Ho Chi Minh City, a first-instance trial was conducted to hear the case of lawsuit against “administrative decisions on and administrative acts in issuance, revocation of capital construction and business permits; business registration certificates and practising certificates or lawsuit against other administrative decisions and administrative acts relevant to business and finance of traders" according to the Decision to Bring the Case to Trial No. 333/2009/QDXX-HC dated February 5, 2009 of People’s Court of Ho Chi Minh City between the following litigants:

The petitioner: 

1. Mrs. Kwan Po Ping, born in 1947. Present

Nationality: China

2. Mr. Lui Lik Chee, born in 1970.

Nationality: Canada

Co-address:  80A Tran Dinh Xu, Cau Kho Ward, District 1, Ho Chi Minh City.

Mr. Lui Lik Chee filed a request for trial in absentia.

Interpreter for the plaintiff:

Mr. Luong Quan Thach, born in 1947,

Address: 313/2 Nguyen Trai, Ward 7, District 5 (Mr. Thach is an interpreter chosen by the petitioner and accepted by the Court).

The protector of legitimate rights and interests of the petitioner: 

Lawyer Le Thi Minh Nhan - member of Bar Association of Ho Chi Minh City.

The respondent:  The Department of Planning and Investment of Ho Chi Minh City.

Address: 32 Le Thanh Ton, District 1, Ho Chi Minh City.    

Authorized representative of the petitioner:  Mr. Ha Huu Tri;

Position: Deputy Manager of Business Investment Registration of the Department of Planning and Investment of Ho Chi Minh City, according to the Letter of Authorization of the Director of the Department of Planning and Investment of Ho Chi Minh City.

Persons with related interests and obligations:

1. Food Center of SaiGon represented by Mr. Tran My Dai - Deputy General Director according to the Letter of Authorization of the Chairperson of the Executive Board (the Letter of Authorization bears no seal because Mr. Lui Lik Chee has held it and has been in dispute).

Address: 393B Tran Hung Dao, Cau Kho Ward, District 1. Present.

2. 990 production, business and service company

Address: 214 Nguyen Trai, Nguyen Cu Trinh Ward, District 1, Ho Chi Minh City.

Represented by Mr. Tran My Dai as authorized by the Chairperson of the Executive Board. Present.

3. Madarin Hong Kong Company

Represented by Mr. Lui Kwong Wah.

Nationality: China (Hongkong)

Address: 52/22 Cu Lao, Ward 2, Phu Nhuan District, Ho Chi Minh City.

Address: 3/18 No Trang Long, Ward 7, Binh Thanh District. Present. Mr. Lui Kwong Wah is able to speak Vietnamese and he authorized a representative to appear in the court, so Mr. Wah does not request an interpreter.

Authorized representative of Mr. Lui Kwong Wah: Mr. Tran Trung Dung, born in 1965, address: 177 Tran Phu, Ward 4, District 5. Present.

FINDING THAT

In the lawsuit petition dated January 24, 2008, the petitioners, Mrs. Kwan Po Ping and Mr. Lui Lik Chee present lawsuit requirements and legal bases against “administrative acts of the Department of Planning and Investment of Ho Chi Minh City in issuance of the Certificate No. 7726/SKHDTDN dated November 30, 2007” as follows:

1.1 Content of lawsuit petition:

Mr. Lui Lik Chee and Mrs. Kwan Po Ping has a mother-child relationship, Mr. Lui Lik Chee and Mr. Lui Kwong Wah has a father-child relationship. Mr. Lui Lik Chee has held the positions of General Director and member of Board of Directors of Food Center of Sai Gon since 1997.

Mrs. Kwan Po Ping has held the position of member of Board of Directors of Food Center of Sai Gon (the Joint Venture).

On December 1, 2007, Mr. Lui Lik Chee and Mrs. Kwan Po Ping received a copy of the Certificate No. 7726/SKHDT–DN dated November 30, 2007 of the Department of Planning and Investment of Ho Chi Minh City certifying the status of members of Board of Directors of the foreign party in the Joint Venture. In specific, the Department of Planning and Investment of Ho Chi Minh City certifies as follows:

 “The foreign party in the Food Center of Sai Gon (Madarin HongKong Company) assigned the following:

1. Mr. Nguyen Son Tra (born on December 16, 1941; Vietnamese nationality; ID No. 020077493, issued on June 7, 1978 in Ho Chi Minh City. Permanent residence: 105, 3/2 Street, Ward 11, District 10, Ho Chi Minh City) and

2. Mrs. Thai Thi Cam Tu (born on December 6, 1972; Vietnamese nationality; ID No. 022254857, issued on March 24, 1995 in Ho Chi Minh City, permanent residence: 5/41A No Trang Long, Ward 7, Binh Thanh District, Ho Chi Minh City) to replace

1. Mr. Lui Lik Chee

2. Mrs. Kwan Po Ping

to hold the position of members of Board of Directors of Food Center of Sai Gon”.

After receiving such Certificate, Mr. Lui Lik Chee and Mrs. Kwan Po Ping disagree because this Certificate apparently terminates their status of members of Board of Directors in Food Center of Sai Gon and obviously terminates their related rights and interests while such termination has not been passed through procedures prescribed in the Charter of Joint Venture and in accordance with investment law. Mr. Lui Lik Chee and Mrs. Kwan Po Ping claim that the Certificate of the Department of Planning and Investment seriously prejudices their legitimate interests, so they exercise their right to claim as per the law against such acts of the Department of Planning and Investment.

As stated by the petitioner, since the submission of complaint petition, it is beyond the time limit for handling of complaint as prescribed by law, but the Department of Planning and Investment has not handled the complaint petition as prescribed in Article 36 of the Law on Complaints and Denunciations. Thus, Mr. Lui Lik Chee and Mrs. Kwan Po Ping filed a lawsuit petition with the Court, requesting annulment of the Certificate No. 7726/SKHDT-DN dated November 30, 2007 of the Department of Planning and Investment of Ho Chi Minh City. 

On February 28, 2008, Mr. Lui Lik Chee and Mrs. Kwan Po Ping filed a lawsuit petition stating that “file a lawsuit against the Certificate No. 8206/SKHDT-DN dated December 21, 2007 of the Department of Planning and Investment”.  Content of lawsuit petition:

On December 25, 2007, Mr. Lui Lik Chee and Mrs. Kwan Po Ping continued receiving the Certificate No. 8206/SKHDT-DN on certification of the Board of Directors and Board of Management of Food Center of Sai Gon. To be specific, it is certified that:

The Board of Directors:

1. President Mr. Duong Ngoc Cu

2. Deputy President: Mr. Lui Kwong Wah

3. Member: Mr. Pham Van Khuoc

4. Member: Mrs. Thai Thi Cam Tu

5. Member: Mr. Nguyen Son Tra

The Board of Management:

1. Director General: Mr. Lui Kwong Wah

2. Deputy Director General: Mr. Tran My Dai

This Certificate replaces the Certificate No. 1732/GXN-KHDT dated May 8, 2003 and No. 7726/SKHDT-DN dated November 30, 2007 of the Department of Planning and Investment and is valid for Food Center of Sai Gon to engage in transactions with business entities and managing authorities of Vietnam.

Disagreeing with the content of the Certificate No. 8206, Mr. Lui Lik Chee and Mrs. Kwan Po Ping continued filing a complaint petition; nothing changes this time, their complaint petition has not been handled by the Department of Planning and Investment in accordance with the Law on Complaints and Denunciations. Thus, Mr. Lui Lik Chee and Mrs. Kwan Po Ping filed a lawsuit petition with the Court, requesting annulment of the Certificate No. 8206/SKHDT-DN dated December 21, 2007 of the Department of Planning and Investment of Ho Chi Minh City.

At today’s court hearing, Mr. Lui Lik Chee is absent. According to his request for trial in absentia, he upholds his lawsuit petition and Mrs. Kwan Po Ping also upholds her lawsuit petition.

Mrs. Kwan Po Ping states that although the Certificate No. 8206/SKHDT-DN issued on December 21, 2007 replaced the Certificate No. 7726/SKHDT-DN dated November 30, 2007, the Certificate No. 7726/SKHDT-DN obviously determines status of members of Board of Directors of the foreign party including Mr. Nguyen Son Tra and Mrs. Thai Thi Cam Tu, the meetings on December 3, 2007 and December 18, 2007 (as the basis for the Department of Planning and Investment to issue the Certificate No. 8206/SKHDT-DN) of the Board of Directors attended by these two members are considered holding with proper participants. So, they uphold the lawsuit petition against the Certificate No. 7726/SKHDT-DN although this Certificate was replaced by the Certificate No. 8206/SKHDT-DN.

On February 12, 2008, the petitioners filed an additional petition, requesting the Court to summon the Civil Enforcement Agency of Ho Chi Minh City and the executor of the Civil Enforcement Agency of Ho Chi Minh City as persons with relevant rights and obligations in the issuance of the Dispatch No. 849/THA dated November 16, 2006 (as the respondent has determined in relevant documents and at the court hearing that the Dispatch No. 849/THA was one of deciding bases for the Department of Planning and Investment of Ho Chi Minh City to issue such two Certificates).

The petitioners claim that the Dispatch No. 849/THA was issued entirely in contravention of Decision No. 20/06 dated December 30, 2006 of Vietnam International Arbitral Centre (VIAC) and beyond the authority prescribed in the ordinance of judgment enforcement. This dispatch has caused serious damage to legitimate of the petitioners. However, Mr. Lui Lik Chee and Mrs. Kwan Po Ping has not brought a claim for damages against the administrative acts of the Department of Planning and Investment in issuance of such two Certificates, and has not brought a claim for damages against the executor in issuance of the Dispatch No. 849/THA dated November 16, 2006.

1.2 Legal bases: The petitioners and the lawyer present legal bases for request for annulment of the said two Certificates as follows:

the Certificate No. 7726/SKHDT-DN dated November 30, 2007 and the Certificate No. 8206/SKHDT-DN dated December 21, 2007 of the Department of Planning and Investment of Ho Chi Minh City which both have format and content violations.

Representation of the lawyer:

Regarding authority to issue Certificate: Pursuant to Law on Enterprises, the Law on Investment and Decision No. 9087/BKH-KCN-KCX dated December 7, 2006 of the Ministry of Planning and Investment, no provision sets forth that the Department of Planning and Investment has authority to issue a certificate of replacement of status of members of company. The Ministry of Planning and Investment has replied to certain questions about the Law on Investment and Law on Enterprises as follows: “Law on Enterprises and the Law on Investment has no regulation, but in necessary cases at the request of the enterprise to determine the status of key member of the enterprise related to seal carving, office lease, etc., the Department of Planning and Investment may be entitled to certify”, thus, the Certificate of the Department of Planning and Investment of Ho Chi Minh City was issued beyond the authority. Regarding the content: Legal bases referred to by the Department of Planning and Investment for issuance of Certificates go against the law, to be specific:

a) The Award of the case No. 20/06 dated December 30, 2006 of VIAC is unlawful because:

- The arbitration agreement seriously violates the law and Clause 2, 3, 4 Article 10 of Ordinance on Commercial Arbitration 2003 since:

- Since the date of incorporation of Food Center of Sai Gon, Madarin HongKong Company ceased operation 330 days ago (Mr. Lui Kwong Wah admitted that in the lawsuit petition), so Mr. Lui Kwong Wah is not entitled to file a lawsuit under arbitration jurisdiction.

- In fact, the capital of the foreign party to Food Center of Sai Gon (Madarin HongKong Company) was contributed by 5 members according to the certificate of capital contribution of Madarin HongKong Company to the Joint Venture and the record bearing the signature of Mr. Lui Kwong Wah dated February 14, 2000; all these contributors have not authorized Mr. Lui Kwong Wah to file a lawsuit or go to arbitration on behalf of members of the Board of Directors;

- An arbitral procedural error was made when Mr. Lui Lik Chee and Mrs. Kwan Po Ping was not invited to go to arbitration as persons with relevant rights and obligations and the Award was not given to them;

- Mr. Lui Lik Chee and Mrs. Kwan Po Ping were capital contributors of the Joint Venture, so they do not accept that Mr. Lui Kwong Wah claims to be the sole owner of Madarin HongKong Company. Thus, Mr. Lui Kwong Wah is not entitled to unilaterally replace two members of Board of Directors of the foreign party in the Joint Venture.

Mr. Lui Lik Chee and Mrs. Kwan Po Ping filed petitions to competent authorities of Vietnam for consideration and the Ministry of Planning and Investment sent documents to the Ministry of Justice, the Supreme People’s Court and VIAC for consideration. Furthermore, Mr. Lui Lik Chee and Mrs. Kwan Po Ping’s lawsuit against Mr. Lui Kwong Wah for the dispute over loan and contribution to Food Center of Sai Gon was accepted by the Supreme’s Court of Hong Kong Special Administrative Region (the case has not resolved because Mr. Lui Kwong Wah was still absent despite many summonses).

b) The Dispatch No. 849/THA of Department of Civil Judgment Enforcement of Ho Chi Minh City claimed by the Department of Planning and Investment as the basis for issuance of two Certificates is in contravention of the Ordinance on Civil Judgment Enforcement because the content of this document goes beyond and does not exist in the Award of the case No. 20/06 dated December 30, 2006 and it is poorly-grounded because the Board of Directors of Food Center of Sai Gon has not held the meetings as per the procedures prescribed in Article 8 of the Charter of Joint Venture.

c) In fact, the Request No. 63/07 dated December 3, 2007 and enclosures submitted on December 5, 2007, December 10, 2007 and December 21, 2007 of Food Center of Sai Gon claimed by the Department of Planning and Investment as legal bases are illegal documents, because Madarin Hong Kong Company ceased to exist on July 2, 1991. The newly-registered Madarin Hong Kong Company in 2007 was registered after the date of issue of these documents, and this is not the Madarin Hong Kong Company going to the arbitration proceedings.

Base on above facts and matters, Mr. Lui Lik Chee and Mrs. Kwan Po Ping and the lawyer request the Court to annul two Certificates issued by the Department of Planning and Investment of Ho Chi Minh City.

Representation of the respondent - Mr. Ha Huu Tri, authorized representative of the Director of the Department of Planning and Investment of Ho Chi Minh City:

The Department of Planning and Investment of Ho Chi Minh City still upholds two Certificates against which the petitioner brought a lawsuit. As for the legal bases for issuance of these Certificates, the Department of Planning and Investment determined them in the document No. 1996/SKHDT-DN dated April 8, 2008 sent to the Court of Ho Chi Minh City. Therefore, at the court hearing, the representative of the respondent only presents some extra opinions as follows:

- The Department of Planning and Investment admits that, upon receipt of complaint petition of Mr. Lui Lik Chee and Mrs. Kwan Po Ping against the two Certificates, it was late dealing with the complaint petition as prescribed in the Law on Complaints and Denunciations, this was an inadequacy. This inadequacy came from objective reasons such as heavy workload, limited personnel, and short time limit for complaint handling. Although no decision on handling of complaint filed by Mr. Lui Lik Chee and Mrs. Kwan Po Ping was made, the Department of Planning and Investment has worked with complainants to listen to opinions of complainants and the Department of Planning and Investment facilitated the information communication and provided complainants with relevant issues in issuance of two Certificates;

- The two Certificates issued by the Department of Planning and Investment only certify key members of the enterprise as required by the enterprise. The Certificate No. 8206/SKHDT-DN dated December 21, 2007 determines all members of Board of Directors and the Board of Management of Joint Venture as the replacement content of the Certificate No. 7726/SKHDT-DN dated November 30, 2007 and the Certificate No. 1732/GXN-KHDT dated May 8, 2003, the Certificate No. 7726 only states the replacement of two members of the Board of Directors (no replacing all members in the Certificate No. 1732). Thus, only the member indicated in the Certificate No. 7726 was replaced, other members in the Certificate No. 1732 remained unreplaced. Therefore, the Certificate No. 7726 does not necessarily state that “This Certificate replaces the Certificate No. 1732/GXN-KHDT dated May 8, 2003. The lawyer was wrong when claiming that the Certificate No. 7726 does not state that it replaces the Certificate No. 1732, so the Certificate No. 1732 is still valid and the status of Mr. Lui Lik Chee and Mrs. Kwan Po Ping still exists.

- The Department of Planning and Investment of Ho Chi Minh City issued the Certificate No. 7726/SKHDT-DN dated November 30, 2007 based on the Dispatch No. 849/THA dated November 16, 2007 of Department of Civil Judgment Enforcement of Ho Chi Minh City. The Department claims that this Dispatch is sufficient to issue the Certificate. When issuing the Certificate, the Department only based on the content of the Dispatch 849 - it did not require the meeting minutes of the Board of Directors of Food Center of Sai Gon in the certification dossier as prescribed in Article 8 of the Charter of Joint Venture because the Department considers that this request cannot be performed because Mr. Lui Lik Chee and Mrs. Kwan Po Ping who were replaced will not show cooperation attitude. In fact, before issuing the Certificate, the Department has got information about conflicts, dispute over capital, legal status of the foreign party in the Joint Venture.

- The legal basis for the Department to issue the Certificate No. 8206 are meeting minutes of the Board of Directors of Joint Venture dated December 3, 2007, December 18, 2007 and these meetings minutes indicate the absolute consensus of opinion about replace of two members of the Board of Directors and replacement of Director General . The representative of the respondent explains that since the Certificate No. 7726/SKHDT-DN dated November 30, 2007 determined the status of members of Board of Directors of Mr. Nguyen Son Tra and Mrs. Thai Thi Cam Tu, their participation as members of Board of Directors in meeting minutes dated December 3, 2008 and December 18, 2008 are consistent with Article 8 of Charter of Joint Venture in terms of procedures.

- Because Mr. Lui Kwong Wah submitted the Department of Planning and Investment his affidavit certified by the Supreme Court of Hong Kong that he is the sole owner of Madarin Hong Kong Company, the Department accepted the request of Mr. Wah to issue the Certificate.

- Decisions No. 1787/2007/QDST-KDTM dated September 25, 2007 and No. 970/2007/QDST-KDTM dated June 13, 2007 of People’s Court of Ho Chi Minh City. Decision No. 137/2007/QDPT-KDTM dated December 26, 2007 of the Appellate Court of the Supreme People’s Court in Ho Chi Minh City;

Representation of persons with relevant rights and obligations:

Representation of the representatives of Food Center of Sai Gon and Company 990 (Mr. Tran My Dai):

- The Joint Venture (Vietnam’s party) only accepts the replacement of members of Board of Directors in the foreign party when the replacement is carried out following the procedures and Charter of Joint Venture as follows:

 “each party is only entitled to replace its own staff member;

 if there are plausible grounds;

not negatively affecting the operation of the company”.

The Department of Planning and Investment was poorly-grounded when issuing two Certificates because:

- The replacement has not been carried out following procedures as per the law and Charter of Joint Venture. To be specific, pursuant to Article 8 of Charter of Joint Venture, the replacement of members of Board of Directors (Mr. Lui Lik Chee and Mrs. Kwan Po Ping) must be accepted by at least 2/3 of members of Board of Directors and replacement of Director General  must be accepted by 100% of members of Board of Directors. The meeting minutes of the Board of Directors dated July 10, 2007 only has personal opinion of Mr. Lui Kwong Wah, other members did not have opinions. Apart from this meeting, the Board of Directors does not have any other meeting, so the Department was ungrounded to issue the Certificate No. 7726 as prescribed in Charter of Joint Venture (remains effective). Therefore, the Certificate No. 7726/SKHDT-DN was illegally issued. (It is unable to accept the explanation of the respondent that these factors are ignored because the meeting cannot be held as prescribed in Article 8 of Charter of Joint Venture as the petitioner definitely disagrees with that);

- The request for replacement in the foreign party cannot be performed because the condition below is not satisfied “not negatively affecting the operation of company”. Before the Department issued the Certificate, the Department got much information to determine that “The foreign party has internal serious conflicts over capital and legal status in the company”. So, once this conflict has not been handled, it is not advisable to replace but remain the status of members and completely resolve conflicts. Misusing the issuance of the Certificate issued by the Department, the foreign party sold all assets and failed to pay salaries and interests of members in the company…the company cannot operate because of lack of the seal… The Certificate issued by the Department makes the conflicts become more serious and cause damage to the Vietnam’s party. However, in this lawsuit, as the representative of company 990 and the JV’s party, Mr. Dai may possibly claim damages in other lawsuits.

-  The meeting minutes dated December 3, 2007 and December 18, 2007 with the participation of Mr. Nguyen Son Tra and Mrs. Thai Thi Cam Tu are not valid because Article 8 of Charter of Joint Venture stipulates “members of the Board of Directors will attend meetings” who are members of the Board of Directors in office (before the replacement). Mr. Dai presents that these meetings are not valid because there was no consensus and voluntariness but only pressure from the foreign party.

- Mr. Dai was right when making determinations based on documents on capital contribution of Mrs. Kwan Po Ping with the witness of the Joint Venture, receipts of capital contribution in the case file, seal of the Joint Venture, seal of the President of the Board of Directors and the person who made the receipts.

- Madarin Hong Kong Company ceased operation before official date of joint venture contract so it was not entitled to impose the replacement; company 990 determined that Mr. Lui Kwong Wah is not the sole owner of Madarin Hong Kong Company because Mr. Lui Kwong Wah’s capital assignment to Mrs. Kwan Po Ping were certified by company 990, and Mr. Lui Kwong Wah’s claim that he is the only owner is in contravention of documents made by him (the document dated September 9, 1995 and the record of capital contribution dated February 14, 2000 includes 5 members);

- Mr. Dai adds that the successful arbitration reconciliation is unclear but the Department of Planning and Investment’s failure to require explanation from arbitration participants or arbitrator lacks of basis. This decision does not determine specific members of Board of Directors to be replaced or the replacement of Director General. Thus, the Dispatch No. 849/THA by the Department of Planning and Investment and executor claims the successful arbitration concillation as basis for issuance of the Certificate is subjective, voluntarism, subject to pressure and in contravention of the arbitral award.

According to above facts and matters, as representative of Food Center of Sai Gon and company 990, Mr. Tran My Dai requires the Court to annul two Certificates of the Department of Planning and Investment of Ho Chi Minh City.  Restore the initial status of Joint Venture.

Representation of persons with relevant rights and obligations Mr. Lui Kwong Wah:

The Certificates issued by the Department of Planning and Investment were issued based on lawful bases - request upholding them. The lawful bases are specified as follows:

- Mr. Lui Kwong Wah is the sole owner of Madarin Hong Kong Company. His affidavit was certified by the Supreme Court of Hong Kong in accordance with international law. Hence, Mr. Lui Kwong Wah is the single owner, Mr. Wah is entitled to designate the replacement of members of Board of Directors of the foreign party, which does not contravene the international law;

- Mr. Lui Lik Chee and Mrs. Kwan Po Ping has not contributed capital to Madarin Hong Kong Company, so they have no status in this company.  When Mr. Lui Kwong Wah signed to certify the capital holding of Madarin HongKong Company in Food Center of Sai Gon including 5 persons, including the capital holding of Mr. Lui Lik Chee and Mrs. Kwan Po Ping in the document dated February 14, 2000, he was forced by Mrs. Ping. Therefore, Mr. Wah made an announcement to cancel this capital contribution.

As for the document made by Mr. Wah on September 9, 1995, he determined that he and Mrs. Kwan Po Ping are co-owners of Food Center of Sai Gon because he considered their spousal attachment, but in fact Mrs. Kwan Po Ping has not contributed capital. Because Mr. Wah is the sole owner, Mr. Lui Lik Chee and Mrs. Kwan Po Ping’s participation in the Board of Directors was only the way that Mr. Wah designated for sufficient members, Mr. Lui Lik Chee and Mrs. Kwan Po Ping did foreign currency participate as capital contributors because at first, in contract documents upon the establishment of the joint venture. Initially, only he has come into transactions with Vietnam's party without the participation of Mr. Lui Lik Chee and Mrs. Kwan Po Ping;

- Under international law, Madarin Hong Kong Company may cease operation locally to invest abroad. Thus, Madarin Hong Kong Company’s shutdown since 1992 cannot be intepreted that it went bankrupt or dissolved. So, the status of Madarin Hong Kong Company still exists.

The capital transfer contract, despite certification of the Joint Venture and Mr. Lui Kwong Wah, is not valid, because this contract does not state the date, the sum transferred and it was made in name only.

Opinions of the representative of the People’s Procuracy of Ho Chi Minh City about the case:

The lawsuit petition of Mr. Lui Lik Chee and Mrs. Kwan Po Ping was submitted within the statutory time limit as per the law. The People's Court of Ho Chi Minh City has accepted and handled in accordance with jurisdiction prescribed in Clause 2 Article 12, Clause 6 Article 11, Article 30 of the Ordinance on Handling of Administrative Cases.

Opinions of the representative of the People’s Procuracy of Ho Chi Minh City about the content of lawsuit petition:

In terms of authority to issue Certificate, despite lack of regulation of law, based on opinions of the Ministry of Planning and Investment in Dispatch No. 9087/BKH-KCN&KCX dated December 7, 2006, the Department of Planning and Investment of Ho Chi Minh City issued the Certificate within its authority;

In terms of the content:

Considering the issuance of the Certificate No. 7726/SKHDT-DN dated November 30, 2007 by the Department of Planning and Investment of Ho Chi Minh City and the Dispatch No. 849/THA dated November 16, 2007 by Department of Civil Judgment Enforcement of Ho Chi Minh City, these documents certify that Mr. Nguyen Son Tra and Mrs. Thai Thi Cam Tu are members of Board of Directors (in the foreign party) in replacement of Mr. Lui Lik Chee and Mrs. Kwan Po Ping although they do not contribute capital to the foreign party. As Mr. Lui Kwong Wah is the sole owner (in the foreign party), such a designation of replacement does not contravene Article 22 of Charter of Joint Venture.

Madarin Hong Kong Company ceased operation since 1991-1992 in Hong Kong, but it has still operated in Vietnam with 1 single owner, Mr. Lui Kwong Wah. In 2007, Madarin Hong Kong Company owned by Mr. Wah registered re-cooperation and accepted by the state, thus, Mr. Wah has the right to replacement of members.

Regarding the Certificate No. 8206/SKHDT-DN - issued according to meetings minutes of Board of Directors of Joint Venture dated December 3, 2007 and December 18, 2007 with 5 memebrs (Vietnam’s party: 2 members - foreign party: Mr. Wah, Mrs. Tu, Mr. Tra, new members based on the Certificate No. 7726/SKHDT-DN dated November 30, 2007), showing the absolute consensus of the Board of Directors, the Department issued it in accordance with Charter of Joint Venture.

Based on above facts and matters, the representative of the People’s Procuracy of Ho Chi Minh City requests non-acceptance of the lawsuit petition for annulment of two Certificates issued by the Department of Planning and Investment.

After considering the case file and verifying items of evidence presented at the court hearing;

After considering to opinions of involved parties and the lawyer;

After considering opinions of the representative of the People’s Procuracy of Ho Chi Minh City in terms of the case:

CONSIDERING THAT

At the court hearing, Mr. Lui Lik Chee, the petitioner, was absent although he was duly summoned. Mrs. Kwan Po Ping, Mr. Lui Lik Chee’s mother and the co-petitioner, presents that Mr. Lui Lik Chee could not appear in court because of busy work, Mrs. Kwan Po Ping requests the Court to try in absence of Mr. Lui Lik Chee in conformity with his request. Mr. Lui Lik Chee provided sufficient statements and presented his specific lawsuit request. His absence will not affect his lawsuit request and other litigants in the case do not have any opinion about his absence. Therefore, pursuant to Point a Clause 5 Article 43 of the Ordinance on Handling of Administrative Cases (amended in 2006), the Court hears the case in absence of Mr. Lui Lik Chee. This is a lawful decision.

At the court hearing, Mrs. Kwan Po Ping, Chinese nationality, asks Mr. Luong Quan Thach to act as her interpreter. The participation of Mr. Thach as the interpreter for Mrs. Kwan Po Ping receives no opinion from other involved parties. Article 7 of the Ordinance on Handling of Administrative Cases (2006) stipulates that “Spoken and written language used in administrative proceedings is Vietnamese. Procedural participants may use their own spoken and written languages" and pursuant to Clause 1, 2 Article 26 of the Ordinance. The Court accepts procedural capacity of Mr. Luong Quan Thach. This is a decision in accordance with the Ordinance.

The Certificate No. 7726/SKHDT-DN dated November 30, 2007 and the Certificate No. 8206/SKHDT-DN dated December 21, 2007 of the Department of Planning and Investment of Ho Chi Minh City state that “other administrative decisions, administrative acts in conjunction with the business and finance of the trader, two above Certificates are considered as initial administrative acts; they are administrative decisions and administrative acts within the competence to handle administrative cases prescribed in Clause 6 Article 11 of the Ordinance on Handling of Administrative Cases (amended in 2006).

Mr. Lui Lik Chee and Mrs. Kwan Po Ping lodged a complaint against two Certificates as prescribed in Article 31 of the Law on Complaints and Denunciations. However, the Department of Planning and Investment has not handled the complaint petition as prescribed in Article 36 of the Law on Complaints and Denunciations according to the acknowledgement of lawsuit petition issued by the Department of Planning and Investment to Mr. Lui Lik Chee and Mrs. Kwan Po Ping. At the court hearing, the representative of the respondent determines that the non-handling of complaint is true.  Pursuant to Point a Clause 1 Article 2, Clause 6 Article 11, Point c Clause 2 Article 12 and Point a Clause 2 Article 30 of the Ordinance on Handling of Administrative Cases (amended in 2006), the administrative complaint petition filed by Mr. Lui Lik Chee and Mrs. Kwan Po Ping was made within the time limit and following the procedures and submitted to competent authority as per the law.

The petitioner and the respondent both determine that the Certificate No. 8206/SKHDT-DN dated December 21, 2007 mentions the replacement of the Certificate No. 7726/SKHDT-DN dated November 30, 2007. So, the Certificate No. 7726/SKHDT-DN ceased to be valid because it was replaced. After hearing the explanation at the court hearing, Mrs. Kwan Po Ping still upholds her lawsuit petition, requesting the Court to annul the Certificate No. 7726 and the representative of the respondent also admits that the Certificate No. 7726 is the basis for issuance of the Certificate No. 8206. So, pursuant to guidelines in Point b Section 6 of Resolution No. 04/2006/NQ-HDTP dated August 4, 2006 of Council of Justices of the Supreme People’s Court on guidelines for the Ordinance on Handling of Administrative Cases amended on December 25, 1998 and April 5, 2006, the Court shall continue to handle the lawsuit petition under general procedures.

In the additional petition dated February 12, 2008, the petitioner requested the Court to summon Department of Civil Judgment Enforcement of Ho Chi Minh City and the executor therein as persons with relevant rights and obligations in issuance of the Dispatch No. 849/THA dated November 16, 2006, however, Mrs. Kwan Po Ping has not brought a claim for civil damages against those who issued and executed the Dispatch No. 849/THA. Therefore, within the scope of lawsuit request of Mr. Lui Lik Chee and Mrs. Kwan Po Ping, it is unnecessary to summon Department of Civil Judgment Enforcement of Ho Chi Minh City and the executor therein as persons with relevant rights and obligations.

Comments of the Trial Panel on the authority to issue Certificates of the Department of Planning and Investment of Ho Chi Minh City:

Section 6 of Dispatch No. 9087/BKH-KCN&KCX dated December 7, 2006 of the Ministry of Planning and Investment stipulates as follows:

 “Law on Enterprises and the Law on Investment has no regulation, but in necessary cases at the request of the enterprise to determine the status of key member of the enterprise related to seal carving, office lease, etc., the Department of Planning and Investment may be entitled to certify”, thus, the Certificates of the Department of Planning and Investment of Ho Chi Minh City was issued within the prescribed authority;

- Comments of the Trial Panel on legal bases applied by the respondent to issue two Certificates:

a) The representative of the respondent claims that one of legal bases for the Department to issue two Certificates is the decision on sucessful arbitration reconcillation of Arbitral Tribunal in the case No. 20/06 of VIAC enclosed with the record thereof between Madarin Hong Kong Company and company 990 (necessary condition) and the Dispatch No. 849/THA dated November 16, 2007 of Department of Civil Judgment Enforcement of Ho Chi Minh City on enforcement of the arbitration decision (sufficient condition). However, after comparing the Dispatch No. 849/THA and the decision on successful arbitration reconcillation (enclosed with the record thereof), they both do not determine specific members of Board of Directors to be replaced or the replacement of Director General of Food Center of Sai Gon. So, there is no justifiable ground for the Department of Planning and Investment to claim that it issued two Certificates based on these documents.

b) Furthermore, the representative of the respondent claims that Madarin Hong Kong Company (solely owned by Mr. Lui Kwong Wah in the foreign party, according to Mr. Wah’s affidavit certified by the Supreme Court in Hong Kong and Ma Cao), so Mr. Wah has the right to designate members of Board of Directors (in the foreign party). This presentation of the representative of the respondent is ungrounded as only based on the affidavit of Mr. Wah while the representative, before issuing the Certificate, got information about necessity to re-consider the status of sole ownership of Mr. Lui Kwong Wah and these documents are reliable because they were made by Mr. Lui Kwong Wah himself, in specific:

- The content of the document made by Mr. Lui Kwong Wah on September 9, 1995 sent to the Director of Public Security of Ho Chi Minh City and Director of company 990:

 “…In any legal issues and obvious facts, the foreign investor, Madarin Hong Kong Company, is the sole proprietorship. In accordance with Hong Kong law and in my humble opinion, and under Vietnam’s law, I and my wife, Mrs. Kwan Po Ping are co-owners of Madarin Company, and as a result, we are also co-owners of Food Center of Sai Gon”

 “The share transfer contract made on April 8, 1995 between Mr. Lui Lik Chee and Mrs. Kwan Po Ping bears certification of company 990, Joint Venture - enclosed with receipts - from April 8, 1995, Mrs. Kwan Po Ping has 31.5% of shares of Joint Venture (equivalent to 45% of stake of the foreign party) Mr. Lui Kwong Wah must help Mrs. Kwan Po Ping complete paperwork to transfer shares with Vietnam’s authorities until Mrs. Kwan Po Ping has name in the investment license.”

In the record of share certification of Madarin Hong Kong Company in Food Center of Sai Gon dated February 14, 2000 with signatures of 5 members: Mr. Lui Kwong Wah, Mrs. Kwan Po Ping, Mr. Lui Lik Chee, Mr. Lai Tai, Mr. Lee Bing, certifying that capital holding of Madarin Hong Kong in Food Center of Sai Gon belongs to 5 members (mentioned above);

c) On the other hand, through certification of the petitioner and Mr. Lui Kwong Wah, the internal dispute of the foreign’s party concerning contributed capital in Madarin HongKong Company and the loan between Mr. Lui Lik Chee and Mrs. Kwan Po Ping and internal dispute between both parties have been handled by the Supreme’s Court of Hong Kong Special Administrative Region (after the Court in Vietnam suspended the case as it does falls within its jurisdiction). Although Mr. Lui Kwong Wah and his authorized representative present the fact that Mr. Lui Kwong Wah issued an announcement dated December 15, 2005, annuling the announcement dated September 6, 2001. With regard to documents he previously made to determine the co-ownership of Mr. Lui Lik Chee and Mrs. Kwan Po Ping,...Mr. Wah claims that these documents are no longer valid while Mr. Lui Lik Chee and Mrs. Kwan Po Ping do not certify that. So, the announcement of Mr. Lui Kwong Wah was only unilaterally made and it is invalid in determining him as the sole owner of Madarin Hong Kong Company.

d) Mr. Lui Kwong Wah and his authorized representative present that, under international law, their company may cease operation locally to invest abroad and claim that Madarin Hong Kong Company has still existed. This is an ungrounded statement not in accordance with Section A.1 Section two - Inspection result (page 3) and Section A. I, II Conclusion (page 18) of the Inspection conclusion No. 7392/KLDT-TTr dated November 16, 2007 of the Department of Planning and Investment of Ho Chi Minh City concerning business operation of Food Center of Sai Gon (Inspectorate under Decision No. 094/QD-SKHDT dated May 30, 2007) and not in conformity with the dispatch which Department of Taxation sent to Mr. Wah on February 20, 2004 (recognized by Mr. Lui Kwong Wah), the dispatch states “ Madarin Company (Certificate of Business Registration No. 0636577-000) dated July 2, 1991 because this enterprise ceased operation 10 years ago. Pursuant to Article 4(4) “Regulations on Business Registration”, we deleted data of this company in business registration book. Therefore, we cannot meet his request as prescribed in Article 19 “Regulations on Business Registration” to issue the certificate of inspection and copy of Certificate of Business Registration of this enterprise, or extract of data from the register”.

 e) The decision on recognization of sucessful reconcillation No. 20/06 dated December 30, 2006 of Vietnam International Arbitration Centre (VIAC) recognizes the record of reconcillation made on December 30, 2006. Although Article 2 does not determine the replacement of any specific member, it determines that the replacement of two members of Board of Directors must be carried out in accordance with applicable law, joint venture contract and Charter of Joint Venture of Food Center of Sai Gon, and the inspection conclusion No. 7392/KHDT-TTr dated November 16, 2007 of the Department of Planning and Investment of Ho Chi Minh City Section IX (page 30) also indicates “Division of Foreign Enterprise is assigned to provide guidelines and issue a certificate of replacement of members of Board of Directors in the Joint Venture as per the law and the award of the international arbitration.

Based on the above facts and matters and comments which have been analyzed above. The procedures for issuance of the Certificate No. 7726/SKHDT-DN dated November 30, 2007 are not inaccordant with Article 8 of Charter of Joint Venture. At the court hearing, the involved parties both determine that there is no additional record apart from the meeting minutes of the Board of Directors dated July 10, 2007 (with personal opinion of Mr. Lui Kwong Wah) and not in accordance with Article 22 of the joint venture contract “have justifiable grounds, not negatively affecting the operation of company”. Meanwhile, before issuing the Certificate, the Department's representative admits that the Department knew internal conflicts in the foreign party, joint venture which had affected operation of the joint venture.

Regarding the Certificate No. 8206/SKHDT-DN dated December 21, 2007, the representative of the respondent claims that according to the certification of status of members of Board of Directors (Mr. Nguyen Son Tra and Mrs. Thai Thi Cam Tu) of the Certificate No. 7726/SKHDT-DN dated November 30, 2006, the meetings of the Board of Directors on December 3, 2007 and December 18, 2007 (with participation of these two members) had proper participants. So, these records are bases for the Department of Planning and Investment to issue the Certificate No. 8206/SKHDT-DN dated December 21, 2007.

The inspection conclusion (above) indicates conflict between Article 22 of joint venture contract and Article 8 of Charter of Joint Venture, and Section 6 of Dispatch No. 9087/BKH-KCN&KCX dated December 7, 2006 of the Ministry of Planning and Investment on reply to matters related to implementation of the Law on Investment and Law on Enterprises states:  “Law on Enterprises and the Law on Investment has no regulation, but in necessary cases at the request of the enterprise to determine the status of key member of the enterprise related to seal carving, office lease, etc., if the investor wishes, the Department of Planning and Investment or the Management Board of Industrial Parks may be entitled to certify”.

Because there is no regulation of law, the Dispatch of the Ministry of Planning and Investment clearly states that when the Department of Planning and Investment grants certification to enterprise (investor), it must come from the “demand of investor” and the Department “shall certify” in order for the investor (enterprise) to complete necessary procedures from “other legal documents requiring certification such as visa application, seal carving, etc.”, While the content of the joint venture contract and Charter of Joint Venture of Food Center of Sai Gon has conflict and the dispute of the foreign party over capital, legal status has been handled by the Supreme Court of Hong Kong, the Department of Planning and Investment issued the Certificate. Such an issuance is not accordant with the guiding document of the Ministry of Planning and Investment.

Regarding meetings held in December by the Board of Directors of Food Center of Sai Gon, the Trial Panel judges as follows:

The meeting minutes of Board of Directors of the Joint Venture dated December 3, 2007 states “disclosure of the Certificate No. 7726/SKHDT-DN dated November 30, 2007”;

- Resolution of Board of Directors of Food Center of Sai Gon dated December 3, 2007 states “Receiving and implementing the Certificate No. 7726 to replace the members of Board of Directors in the foreign party”

- Dispatch No. 63/07 dated December 3, 2007 of the Board of Directors states “Conducting the replacement of members of Board of Directors in the foreign party according to the Certificate No. 7726/SKHDT-DN dated November 30, 2007 of the Department of Planning and Investment…request the Director of Department to certify the appointment…”

2 meeting minutes of the Board of Directors dated December 17, 2007 states “dismissal of Mr. Lui Lik Chee and Mrs. Kwan Po Ping” (enclosed with two Resolutions);

The Department of Planning and Investment claims these records and resolutions as legal bases, showing the initiative request of enterprise and the Certificate of the Department of Planning and Investment only means that the State recognizes the initiative of enterprise. This claim is not suitable for the happenings and not in accordance with procedures in the joint venture contract and Charter of Joint Venture.

From above facts and maters, The lawsuit petition of Mr. Lui Lik Chee and Mrs. Kwan Po Ping to annul the Certificate No. 7726/SKHDT-DN dated November 30, 2007 and the Certificate No. 8206/SKHDT-DN dated December 21, 2007 of the Department of Planning and Investment of Ho Chi Minh City is well-grounded to accept.

Regarding first instance administrative court fee:  Mr. Lui Lik Chee and Mrs. Kwan Po Ping do not have to pay first instance administrative court fee, so they are refunded VND 50,000 (fifty thousand) of the paid advance according to the receipts No. 004384, book 088 dated March 7, 2008 of Department of Civil Judgment Enforcement of Ho Chi Minh City;

Pursuant to facts and matters mentioned above;

Pursuant to Article 2, Clause 6 Article 11, Article 29, Article 30 of the Ordinance on Handling of Administrative Cases, amended in 2006;

Pursuant to Article 27 and Clause 1 Article 30 of Decree No. 70/CP dated June 12,1997 of the Government on court fees and charges,

HEREBY DECIDES

1. Judges: Accept the lawsuit petition of Mr. Lui Lik Chee and Mrs. Kwan Po Ping to annul the Certificate No. 7726/SKHDT-DN dated November 30, 2007 and the Certificate No. 8206/SKHDT-DN dated December 21, 2007 of the Department of Planning and Investment of Ho Chi Minh City;

Annul the Certificate No. 7726/SKHDT-DN dated November 30, 2007 and the Certificate No. 8206/SKHDT-DN dated December 21, 2007 issued by the Department of Planning and Investment of Ho Chi Minh City.

2. With reference to court fees:

Mr. Lui Lik Chee and Mrs. Kwan Po Ping do not have to pay first instance administrative court fee, so they are refunded VND 50,000 (fifty thousand dong) of the paid advance according to the receipts No. 004384, book 088 dated March 7, 2008 of Department of Civil Judgment Enforcement of Ho Chi Minh City.

The Department of Planning and Investment of Ho Chi Minh City has to pay the first instance administrative court fee of VND 50,000 (fifty thousand dong).

Litigants may rightfully appeal this judgment within 10 days from the judgment announcement. Mr. Lui Lik Chee who is absent may rightfully appeal this judgment within 10 days from the date on which it is duly served.


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Verdict no. 244/2009/HC-ST dated february 13, 2009 on lawsuit against administrative decisions on and administrative acts in issuance, revocation of capital construction and business permits; business registration certificates and practising certificates

Số hiệu:244/2009/HC-ST
Cấp xét xử:Sơ thẩm
Agency issued: Tòa án nhân dân Hồ Chí Minh
Field:Hành chính
Date issued: 13/02/2009
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