Will the decision to enforce the judgment against the dissolved company in Vietnam be issued?

Issuance of decision to enforce the judgment against the dissolved company in Vietnam

Details of the case:

According to the construction contract No. 01/HDTC dated March 5, 2011, between Mr. Duong Minh D and Construction Company S, both parties agreed on a construction period of 6 to 7 months for a house in Ho Chi Minh City, with Construction Company S being responsible for all design, construction, and materials without organizing construction supervision.

After the house was handed over in December 2011, on January 10, 2012, when Construction Company S liquidated the contract, the investor, Mr. Duong Minh D, believed that the company had delivered the house of unsatisfactory quality. Therefore, he filed a lawsuit demanding compensation for the contract based on the inspection results from Appraisal Joint Stock Company N, with a total cost of 5,011,169,000 VND.

The district-level People's Court accepted all of Mr. Duong Minh D's claims and ordered Construction Company S to pay him 5,011,169,000 VND. After receiving the first-instance verdict, Construction Company S filed an appeal. During the appellate process, Construction Company S was dissolved. Since the court could not summon the heirs with rights and obligations in the lawsuit against the defendant, the appellate court suspended the appellate trial, and the first-instance verdict became legally effective.

Subsequently, on November 29, 2016, the Civil Execution Department issued a Decision to enforce the judgment upon request, enforcing the judgment against Construction Company S (which had been dissolved on March 25, 2016), and identifying the heirs with rights and obligations in the lawsuit, including Mr. Hoang The B, Mr. Hoang Van T, and Mr. Nguyen The H. These individuals are jointly responsible for fulfilling the obligations stated in the first-instance judgment.

Regarding the Decision to enforce the judgment upon request, there are three viewpoints, as follows:

The first viewpoint: according to the provisions of Article 204 of the Law on Enterprises 2014, "Members of the Board of Directors of a Joint Stock Company, members of the Board of Directors of a Limited Liability Company, company owners, private business owners, Directors or General Directors, joint venture members, and legal representatives of the enterprise are responsible for the accuracy and truthfulness of the dissolution dossier. In case the dissolution dossier is inaccurate or fraudulent, the individuals specified in this Article shall be jointly responsible for the payment of unpaid debts, unpaid taxes, and the rights of unresolved employees, and shall bear personal liability for the legal consequences arising within a period of 5 years from the date of submission of the dissolution dossier to the Business Registration Office." Furthermore, "Related managers and enterprises specified in point d, clause 1 of this Article shall be jointly responsible for the debts of the enterprise" (clause 2, Article 201 of the Law on Enterprises).

According to the provisions of point d, clause 1 of Article 54 of the Law on Enforcement of Civil Judgments 2008 (amended in 2014), "in case of dissolution, the competent authority must notify the civil execution authority before making a dissolution decision. In the event that the rights and obligations of the dissolved organization are transferred to another organization, the new organization shall continue to exercise the rights and perform the obligations of the civil execution. The civil execution authority, the person to be executed, and the related person with rights and obligations have the right to request the competent authority to review the dissolution decision according to the provisions of the law. In case the assets for execution are no longer available due to the unlawful dissolution decision, the dissolving authority shall be responsible for executing the corresponding obligations of the dissolved organization." Based on the above-mentioned legal provisions, the Civil Execution Department issued the Decision to enforce the judgment upon request and identified the heirs with rights and obligations in the lawsuit, including the individuals who are the successors of Company S and also the managers of the enterprise according to the Business Registration Certificate, who are obligated to fulfill the obligations stated in the first-instance judgment.

The second viewpoint: according to the provisions of point đ, clause 1 of Article 50 of the Law on Civil Execution (amended and supplemented in 2014), which stipulates that the head of the civil execution agency must suspend the execution of the judgment in the case of: ... "d) The obligated person is an organization that has been dissolved, no longer has assets, and their obligations are not transferred to another organization." Accordingly, when an organization is dissolved and its obligations are not transferred to another organization, the Civil Execution Department shall issue a decision to suspend the resolution of the case instead of being able to transfer the obligations to the individual managers of the enterprise as stipulated in Article 54 of the Law on Civil Execution (amended and supplemented in 2014) and Article 202 of the Law on Enterprises 2014. Therefore, in this case, the district-level Civil Execution Department should have issued a decision to suspend the resolution of the case as their obligations are not transferred to another organization. The Decision to enforce the judgment upon request, which determines that the individual managers of the enterprise bear joint responsibility for fulfilling the obligations according to the first-instance verdict, is incorrect.

The third viewpoint, also the author's viewpoint: the Law on Enterprises 2014 has detailed provisions regarding the cases and conditions for the dissolution of enterprises. According to these provisions, an enterprise can only be dissolved when it ensures the full payment of debts and other asset obligations and is not in the process of resolving disputes in court or arbitration. In this case, it is clear that Company S is still in the process of resolving disputes and still has to fulfill its obligations according to the legally effective judgment. Therefore, the conditions for dissolving the enterprise are not met. If the agency that issued the dissolution decision (Department of Planning and Investment) is acting unlawfully and Company S no longer has assets to enforce the judgment, the agency issuing the dissolution decision must be responsible for enforcing the corresponding obligations of the dissolved organization according to the provisions of Article 54 of the Law on Civil Execution 2014. If the individual managers of the enterprise fail to fulfill or fail to fulfill the dissolution procedures in accordance with the provisions of Article 203 of the Law on Enterprises 2014, the individuals related to the company's management must bear personal responsibility for the damages caused by the failure to fulfill or failure to fulfill the legal provisions. If there is evidence of evasion of obligations or fraud for personal gain, the case should be transferred to the investigating agency for resolution according to criminal procedure to serve as a deterrent and educational measure.

The above are different viewpoints surrounding the decision to enforce the judgment upon request by the Civil Execution Department. Due to the lack of consistency between Article 54 and Article 50 of the Law on Civil Execution 2014 and between the Law on Civil Execution 2014 and the Law on Enterprises 2014, confusion has arisen in the practical process of resolution.

Source: "Tạp chí Kiểm sát" (Procuracy Magazine)

Key word: civil judgment | judgment | in Vietnam | Vietnam | company |

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