The content of the Precedent No. 13/2017/AL on payment validity of letters of credit (L/C) in Vietnam

The content of the Precedent No. 13/2017/AL on payment validity of letters of credit (L/C) in Vietnam (Image from the Internet)

According to Decision 299/QD-CA in 2017, the Precedent No. 13/2017/AL on the payment validity of letters of credit (L/C) in cases an international goods sale contract that is the basis of the L/ C is canceled with the following specific content:

Source of the Precedent:

Cassation Decision No. 17/2016/KDTM-GDT dated November 10, 2016 of the Council of Judges of the Supreme People's Court on the business and commercial case "Dispute on goods purchase and sale contract" in Ho Chi Minh City between plaintiff Single-Member Limited Liability Company A (authorized representative by Mr. Nguyen Duy T) and defendant Company B; People with related rights and obligations include Joint Stock Commercial Bank E (authorized representative by Mr. Hua Anh K) and Bank N (authorized representative by Ms. Nguyen Thi V).

Location of the Precedent content:

Paragraph 34 and Paragraph 36 of "Court's Opinions".

Overview of the content of the Precedent:

- The Precedent situation:

The international sales contract stipulates the payment method by letter of credit (L/C), the implementation of L/C in accordance with international commercial practices (Uniform Customs and Practice for Documentary Credits, 6th edition 2007 (UCP 600) of the International Chamber of Commerce) and in compliance with Vietnamese legal regulations. The international sales contract is the basis for the cancellation of the L/C.

- Legal solutions:

In this case, the Court must determine that the letter of credit (L/C) is not invalid for payment because the international goods sales contract that is the basis of the letter of credit (L/C) is canceled. .

Legal provisions related to the Precedent:

- Article 3 of the 2005 Civil Code (corresponding to Article 5 of the 2015 Civil Code);

- Decision No. 226/2002/QD-NHNN dated March 26, 2002 of the State Bank on "Regulations on payment activities through payment service providers";

- Amendment to the Uniform Customs and Practice for Documentary Credits, 6th edition 2007 (UCP 600) of the International Chamber of Commerce.

Keywords of the Precedent:

“Letter of credit”; “L/C”; “UCP 600”; “International trade practices”; "Commodity trading contracts"; “Contract for the international sale of goods”; “The contract is canceled.”

CONTENTS OF THE CASE:

In the petition dated September 15, 2011, the amended petition dated September 22, 2011 and the proceedings, the plaintiff is responsible for Ms. Mai Thi Tuyet N - the legal representative of the Single-Member Limited Liability Company A presents:

On June 7, 2011, Single-Member Limited Liability Company A (referred to as Buyer, Company A) and Company B (referred to as Seller) signed an international goods purchase and sale contract No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 (referred to as Sales Contract dated June 7, 2011). According to the content of the Sales Contract dated June 7, 2011, the Buyer purchases raw cashew nuts of Ivory Coast origin, the quantity is 1,000 tons x 1,385.50 USD/tons by payment method of 98% L/C deferred payment in within 90 days from the date of delivery based on the bill of lading (B/L) according to the following quality standards:

- Recall 47 lbs/80 kg and have the right to refuse to accept goods when recovered less than 45 lbs/80kg.

- Seeds: maximum number of seeds is 205/kg. Rejection is 220 seeds/kg.

- Maximum humidity is 10%. Moisture rejection is above 12%.

Goods will be assessed for quality and quantity by Vinacontrol at the time of delivery at the port of destination, Ho Chi Minh City.

Payment method of L/C with deferred payment within 90 days, so on July 7, 2011, the Buyer requested Joint Stock Commercial Bank E branch to open a deferred L/C No. 1801ILUEIB110002 (hereinafter referred to as L/C No. 1801) for the Buyer to complete procedures for purchasing the shipment from the Seller.

After receiving the goods, according to Article 8 of the Contract, the Buyer has rechecked the quality and quantity of the batch at the unloading port, which is Cat Lai Port in Ho Chi Minh City under the supervision of Vinacontrol, then found that the goods of the Seller do not ensure quality. Specifically, according to two Vinacontrol certificates No. 11G04HN05957-01 and No. 11G04HN05939-01 dated August 31, 2011, assessing the quantity, quality, and condition of goods, the inspection result shows the average recovery rate of cashew nuts for two samples of cashew nuts is 37,615 lbs/80kg (this ratio is too low compared to the condition to reject nearly 10 lbs). Before that commercial fraud incident, the Buyer tried many times to contact the Seller to resolve problems arising about the quality of imported cashew nuts but did not receive any response from the Seller. 

Therefore, on September 15, 2011, the Buyer filed a lawsuit with the People's Court of Ho Chi Minh City requesting the Court to force the Seller to take back the 1,000-ton cashew nut shipment because the quality of the recalled kernels was within the conditions to accept the Contract goods under 45 lbs, do not agree to pay the purchase price, and request the Court to apply temporary emergency measures forcing Joint Stock Commercial Bank E to temporarily suspend payment to the Seller. The amount of 1,313,308.85 USD of L/C No. 1801 according to the Buyer's payment commitment until otherwise decided by the Court.

On August 12, 2013, the Buyer paid the court fee advance for the additional lawsuit request, which is the request to cancel the Sales Contract dated June 7, 2011, and at the same time request to cancel L/C No. 1801.

At the first instance trial, the plaintiff requested:

1. Cancel the Sales Contract dated June 7, 2011.

2. Force the Seller to come to the Buyer's warehouse at Hamlet C2, National Highway 1A, Commune C, District L, Linh Dong Nai as soon as the judgment takes legal effect to receive back the entire shipment according to the delivered Contract. After 30 days from the date the judgment takes legal effect, if the Seller does not come to the Buyer's warehouse to receive back the shipment, the Judgment Executioner has the right to sell the above shipment to return the warehouse premises to the Buyer.

3. Cancel the Buyer's payment obligation for L/C No. 1801 and request Joint Stock Commercial Bank E to immediately refund the deposit amount to ensure L/C payment of 1,313,308.85 USD to plaintiff.

4. Request the Court to continue to maintain the Decision to apply temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 until the judgment takes effect. At the same time, let the Buyer receive back the amount of 1,500,000,000 VND that the Buyer has guaranteed according to the Court's Decision at Bank T branch P when the judgment takes effect.

The Defendant is the Company B (Seller) with headquarters in a foreign country and has been validly served by the Court for the Seller through the Ministry of Justice of Vietnam in accordance with the provisions of the Civil Procedure Code, the Legal Aid Law 2007, and Joint Circular No. 15/2011/TTLT-BTP-BNG-TANDTC dated September 15, 2011, but the Seller is still absent, with no feedback.

The person with related rights and obligations is Joint Stock Commercial Bank E, presenting:

At the request of the Buyer, on July 7, 2011, Joint Stock Commercial Bank E, branch D issued L/C No. 1801 with the following content:

- L/C value 1,357,790 USD

- Purpose of importing 1,000 tons of raw cashew nuts from Ivory Coast;

- Beneficiary bank: Bank N, Singapore.

- Beneficiary: Company B.

- Deferred L/C opened according to UCP 600; with confirmable terms.

- Security measures: third party guarantee, collateral; saving credit card.

- Payment due date: September 29, 2011 (961,813.66 USD) and October 17, 2011 (351,495.19 USD).

After receiving the valid set of documents, the Buyer signed to receive payment in full value and on time for the L/C. Based on the Buyer's confirmation, Joint Stock Commercial Bank E branch D has signed to accept the bill of exchange.

Based on the L/C confirmation, based on the status of the documents, Bank N gave the Seller a discount without recourse for 03 sets of documents worth 1,313,308.85 USD on July 25, 28. -7 and August 8, 2011.

According to the content of the issued L/C, the L/C is governed and applied according to the latest version of the "Uniform Code of Practice for Documentary Credits " (currently UCP 600). According to the provisions of UCP 600, Joint Stock Commercial Bank E, as the Bank, issues a payment commitment based on a set of documents and payment commitment, meaning that the Buyer has paid the Seller. Based on the valid set of documents and acceptance of payment by the Buyer, Joint Stock Commercial Bank E has signed to accept the bill of exchange. Bank N has discounted without recourse to the Seller for 03 sets of documents of the L/C mentioned above.

Joint Stock Commercial Bank E disagrees with the plaintiff's request to ask the Court to cancel L/C No. 1801 and request that Joint Stock Commercial Bank E immediately refund the deposit amount of 1,313. 308.85 USD to the plaintiff. Joint Stock Commercial Bank E requests the Court to immediately annul the Decision to apply temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 so that Joint Stock Commercial Bank E pays the Bank N according to the agreement in L/C.

The person with related rights and obligations, Bank N, presented:

Pursuant to the Sales Contract dated June 7, 2011 and L/C No. 1801, Bank N (branch in Singapore) is the Seller's designated bank to execute a letter of credit guaranteeing payment issued by the Joint Stock Commercial Bank E issued.

In accordance with the content of UCP Rule 600, Bank N discounted the valid documents presented by the Seller and paid the value of the letter of credit to the Seller on July 25, 2011, dated July 28, 2011 and August 8, 2011. Thus, Bank N legally purchased L/C No. 1801 and related documents and became the direct beneficiary of all and any payments of this letter of credit. After the set of documents was presented in accordance with the provisions of the letter of credit mentioned above, Joint Stock Commercial Bank E confirmed accepting the set of documents and committed to make payment to Bank N on September 29, 2019. 2011 and October 17, 2011, but the payment was not made due to the Buyer's request and the Court issued Decision to apply temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011. 2011.

Bank N requests the Court to immediately annul the Decision to apply temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 and request the Buyer to compensate for the damage caused to Bank N Due to the illegal act of requesting the application of temporary emergency measures, Bank N did not receive payment for the above letter of credit value from Joint Stock Commercial Bank E. The amount of compensation requested by Bank N The damage is the loan interest that Bank N is currently paying based on the total amount payable according to 03 sets of appropriate documents presented to Joint Stock Commercial Bank E corresponding to the calculated payment delay period from the payment due date according to the commitment of Joint Stock Commercial Bank E (September 29, 2011) to the date Bank N filed a request to participate in the proceedings in the lawsuit and based on the USD loan interest rate not interbank term at the time of application (3.8%/12 months). The total amount of damage that Bank N requires the Buyer to compensate is 33,270.49 USD, equivalent to 694,188,774 VND.

In First Instance Business and Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014, the People's Court of Ho Chi Minh City decided:

"1. Cancel the Sales Contract No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 between the Seller, Company B, and the Buyer, Company A.

Force Company B to receive back the entire shipment of raw Ivory Coast cashew nuts with a quantity of 1,000 tons delivered under Sales Contract No. FARCOM/RCN/IVC/036/2011 at the address: warehouse of One Member Company Limited A Hamlet C2, Highway 1A, Commune C, District L, Dong Nai Province. After 30 days from the date the judgment takes legal effect, if Company B does not come to receive the above shipment, the Judgment Enforcement Agency has the right to sell the shipment for sale in accordance with the law and return the warehouse premises to Single-Member Limited Liability Company A.

2. Deferred L/C No. 1801ILUEIB110002 issued by Joint Stock Commercial Bank E branch D on July 7, 2011 is no longer valid for payment. Joint Stock Commercial Bank E has no obligation to pay Bank N according to the deferred payment L/C No. 1801ILUEIB110002 issued by Joint Stock Commercial Bank E branch D on July 7, 2011.

Forcing Joint Stock Commercial Bank E to return to Single-Member Limited Liability Company A the collateral for L/C payment which is the deposit amount of 1,313,308.85 USD.

3. Continue to maintain the temporary emergency measures applied in Decision No. 101/2011/QD-BPKCTT dated September 23, 2011 of the People's Court of Ho Chi Minh City and the security measures applied in the Decision Decision No. 100/2011/QD-BPDB dated September 23, 2011 of the People's Court of Ho Chi Minh City until the judgment takes legal effect. One-member LLC A will receive back the entire amount of 1,500,000,000 VND (one billion five hundred million dong) deposited in the blocked account number 1022130.3441.012 at Bank T branch P that the Single-Member Limited Liability Company A has deposited collateral according to Decision forcing the implementation of security measures No. 100/2011/QD-BPDB dated September 23, 2011 of the People's Court of Ho Chi Minh City when the judgment takes effect. 

4. Do not accept Bank N's request for Single-Member Limited Liability Company A to compensate for damages in the amount of 33,270.49 USD equivalent to 694,188,774 VND".

In addition, the judgment also states court fees, late payment interest and appeal deadlines.

On April 21, 2014, Joint Stock Commercial Bank E filed an appeal against the entire content of the above-mentioned First Instance Commercial Business Judgment.

In Decision to suspend the appeal trial No. 29/2015/QDPT-KDTM dated August 26, 2015, the High People's Court in Ho Chi Minh City decided:

1. Suspension of the appellate trial of the business and commercial case accepted No. 40/2014/TLKDTM-PT dated August 18, 2014 on "Disputes on goods purchase and sale contracts".

2. First Instance Commercial Business Judgment No. 356/2014/KDTM-ST dated April 7, 2014 of the People's Court of Ho Chi Minh City took legal effect from August 26, 2015.

In addition, the Court also decides on court fees.

On September 10, 2015, Joint Stock Commercial Bank E submitted a request to the Chief Justice of the Supreme People's Court to review the first-instance commercial business judgment and the Decision to suspend the appellate trial mentioned above according to the above procedures. 

In Decision No. 11/2016/KN-KDTM dated March 7, 2016, the Chief Justice of the Supreme People's Court appealed the Decision to suspend the appeal trial of the commercial business case No. 29/2015/QDPT-KDTM dated August 26, 2015 of the High People's Court in Ho Chi Minh City; request the Council of Judges of the Supreme People's Court to conduct a cassation trial and cancel the Decision to suspend the appeal trial No. 29/2015/QDPT-KDTM dated August 26, 2015 of the High People's Court in Ho Chi Minh City. Ho Chi Minh City and cancel the first instance commercial and business judgment No. 356/2014/KDTM-ST dated April 7, 2014 of the People's Court of Ho Chi Minh City; hand over the case file to the People's Court of Ho Chi Minh City for retrial according to first instance procedures in accordance with the provisions of law.

At the cassation trial, the representative of the Supreme People's Procuracy requested the Council of Judges of the Supreme People's Court to accept the appeal of the Chief Justice of the Supreme People's Court.

COURT'S OPINION:

[1] On June 7, 2011, Single-Member Limited Liability Company A (Buyer) and Company B (Seller) signed a Sales Contract dated June 7, 2011 with the content: Buyer purchases 1,000 tons Cashew nuts with payment method 98% L/C deferred payment within 90 days from the date of delivery based on the bill of lading.

[2] To carry out the above contract, Company A requested and paid a deposit amount of 1,313,308.85 USD for Joint Stock Commercial Bank E to issue L/C No. 1801.

[3] When the goods arrived at Ho Chi Minh City port, the Buyer requested Vinacontrol Ho Chi Minh City to assess the quality and quantity of the goods according to Article 8 and Article 11 of the contract.

[4] According to Vinacontrol's Certificate of Inspection on quantity, quality and condition of goods dated August 31, 2011: The proportion of cashew kernels recovered for 2 sample cuts: The 1st time was 38.2 lbs /80kg; The second time was 37.03 lbs/80kg.

[5] Because the rate of recovered cashew kernels was lower than agreed in the Contract, the Buyer complained by email to the Seller but the Seller did not cooperate. Therefore, the Buyer sued to cancel the Sales Contract dated June 7, 2011, return the entire shipment to the Seller and cancel the payment obligation according to L/C No. 1801 issued by Joint Stock Commercial Bank. E issued on July 7, 2011 and requested E Commercial Joint Stock Bank to return the deposit amount of 1,313,308.85 USD to ensure payment of L/C No. 1801 dated July 7, 2011.

[6] Based on the documents and evidence in the case file, it is found that: The form and content of the Sales Contract dated June 7, 2011 do not violate the provisions of the law, comply with the provisions in Articles, Clauses, Section 2 on the rights and obligations of the parties in the contract for the sale of goods of the Commercial Law 2005; in Article 15 of the contract, the two parties agree that in case of disputes, Vietnamese law shall be applied to resolve them.

[7] During the resolution process, the Court of First Instance properly followed the judicial mandate procedure in summoning the defendant (Seller) and notifying the defendant of the plaintiff's request to sue; At the same time, request the defendant to send a document stating the defendant's opinion on the lawsuit request; Although the defendant received these summons and notices, the defendant did not object to the plaintiff's request to sue.

[8] Based on the 02 Inspection Certificates of Vinacontrol presented by the Buyer, there is a basis to determine that the Seller has made a delivery error that is not in accordance with the Sales Contract dated June 7, 2011, so according to Article 39 Commercial Law, the Buyer has the right to refuse to accept the goods. On the other hand, after obtaining Vinacontrol's inspection certificate, the Buyer complained about the quality of the goods but the Seller did not cooperate. Because the Seller did not deliver goods of the correct quality as agreed in the Contract, causing the Buyer to fail to achieve the purpose of entering into the Contract, there is a basis to determine that the Seller has fundamentally violated the obligations of the Contract. Therefore, the First Instance Court's decision to cancel the Contract is based on the correct grounds as prescribed in Clause 13, Article 3 and Article 312 of the Commercial Law. However, when resolving the legal consequences of contract cancellation, the Court of First Instance has not resolved the issue of forcing the Seller to return the money received (if any) and compensating for damage to the Buyer is not resolving the case correctly.

[9] Regarding the resolution of the request to cancel L/C No. 1801:

[10] Based on the Buyer's request to open a deferred payment L/C, Joint Stock Commercial Bank E Branch D opened L/C No. 1801 on July 7, 2011, specifically:

[11] - L/C value: 1,357,790 USD;

[12] - Form of document: Irrevocable;

[13] - Purpose: buy 1,000 tons of raw cashew nuts from Ivory Coast;

[14] - Beneficiary bank: Bank N, Singapore;

[15] - Beneficiary: Company B;

[16] - Requester: Company A;

[17] - Applicable rules: Latest version of UCP.

[18] After that, Joint Stock Commercial Bank E received 03 sets of documents demanding money from Bank N, with a total value of 1,313,308.85 USD, specifically:

[19] July 25, 2011: Set of documents 961,813.66 USD, due September 29, 2011;

[20] July 29, 2011: Set of documents 312,517.11 USD, due October 17, 2011;

[21] August 9, 2011: Set of documents 38,978.08 USD, due October 17, 2011.

[22] After receiving the documents in compliance with the L/C terms, Joint Stock Commercial Bank E sent the Letter and the documents to the Buyer and the Buyer confirmed "Received full documents and committed to pay full value on time as above; on that basis, Joint Stock Commercial Bank E has notified acceptance of payment of the bill on the due date of the 03 aforementioned documents to Bank N."

[23] According to Vietnamese law on document payment, then:

[24] In Clause 4, Article 3 of the Law on Credit Institutions 2010, it is stipulated: "Organizations and individuals participating in banking activities have the right to agree to apply commercial practices, including: Commercial practices international standards issued by the International Chamber of Commerce; Other commercial practices not contrary to Vietnamese law."

[25] In Clause 1, Article 16, Decision No. 226/2002/QD-NHNN dated March 26, 2002 of the State Bank on "Regulations on payment activities through payment service providers" stipulates: “A letter of credit is a conditional commitment document opened by the Bank at the request of the payment service user (applicant to open a letter of credit) to:

[26] Pay or authorize another bank to pay immediately according to the beneficiary's order upon receipt of a set of presented documents in accordance with the conditions of the letter of credit; or agree to pay or authorize another bank to pay to the beneficiary's order at a certain time in the future upon receipt of a set of presented documents in accordance with the payment conditions of the letter of credit”.

[27] Clause 1, Article 19 of Decision No. 226/2002/QD-NHNN stipulates: "Payment by letter of credit: Opening, issuance, amendment, notification, confirmation, document inspection, payment and rights, The obligations of related parties in payment of letters of credit comply with the general rules on documentary credits issued by the International Chamber of Commerce ICC, agreed upon by the participating parties and according to the provisions of Vietnamese law”.

[28] On the other hand, in the letter requesting to open L/C from the Buyer, it is agreed that: The applicable rules are the latest version of UCP. According to the 6th Amendment to the Uniform Code of Practice for Documentary Credits in 2007 of the International Chamber of Commerce (UCP 600):

[29] “A letter of credit is an arrangement, however described or named, which is irrevocable and which constitutes a firm undertaking of the Issuing Bank to honor upon presentation. appropriate documents” (Article 2).

[30] “In essence, credit is a separate transaction from the Sales Contract and other contracts that are the basis of credit. The Banks are not involved in or bound by such contracts, even if the credit refers to such contracts. Therefore, the undertaking of a Bank to pay or negotiate etc. is not subject to the claims or defenses of the applicant arising out of its relations with the Bank. issuer or beneficiary” (Article 4).

[31 ] “The bank deals with documents and not with the goods, services or other performance to which the documents relate” (Article 5).

[32] “The Issuing Bank is irrevocably bound to make payment from the time the L/C is issued by the Bank” (Article 7).

[33] “When the issuing bank determines that a presentation is complying, it must honor” (Article 15a).

[34] Thus, according to the Buyer's application to open a L/C and the content of the issued L/C, L/C No. 1801 is a separate transaction from the Goods Sales Contract dated June 7. -2011; governed and applied according to UCP 600. According to the provisions of UCP 600, Joint Stock Commercial Bank E, as the Issuing Bank, must make payment when determining that the presented set of documents is suitable at the Bank.

[35] Regarding the set of documents of the L/C mentioned above, it is stipulated: The set of documents includes a Certificate of weight and quality issued by an independent appraiser (Goods are not required to be re-inspected at the port by any inspection agency). In the set of presented documents, there is a Certificate of weight and quality issued by a foreign independent assessor in accordance with L/C regulations; At the same time, the Buyer signed to accept the set of documents and committed to pay the full value on time, but the Court of First Instance relied on the appraisal conclusion of Vinacontrol Ho Chi Minh City (at the port of destination) to conclude that the invalid set of documents is not in accordance with the provisions of the L/C and the Buyer's commitment.

[36] During the process of resolving the case, Bank N said that it had discounted a valid set of documents and made payments to the Seller on July 25, 2011, July 28, 2011 and August 8, 2011, and presented export invoice discount notices to prove payment to the Seller. However, in addition to this document, Bank N could not present any other documents or papers showing that it had paid money to the Seller. Therefore, in this case, the Court of First Instance should have collected sufficient documents and evidence to determine whether Bank N has paid the Seller or not? If paid, how much was paid? In case Bank N has paid the Seller according to L/C No. 1801, Joint Stock Commercial Bank E must resolve it at the request of Bank N. Because the above issues have not been clarified, the Court held that the payment method by L/C No. 1801 is an inseparable part of the Goods Purchase Contract dated June 7, 2011; Therefore, when this contract is completely canceled, the parties do not have to continue to perform the obligations agreed upon in the contract; From there, it is decided that L/C No. 1801 is no longer valid for payment and Joint Stock Commercial Bank E has no obligation to pay Bank N according to the above L/C; At the same time, forcing Joint Stock Commercial Bank E to pay the buyer a deposit amount of 1,313,308.85 USD is not enough basis and not in accordance with the provisions of UCP 600.

[37] After the first instance trial, Joint Stock Commercial Bank E appealed the entire first instance judgment mentioned above. The Court of Appeal issued a decision to bring the case to trial and served summons to the litigants to attend the trial on September 25, 2014, October 27, 2014, October 31, 2014, April 16, 2015, but these trials were postponed for different reasons such as: absence of litigants, absence of representatives of the Procuracy, need for time to carry out judicial mandates,...

[38] In Decision No. 09/2015/QDPT-KDTM dated May 29, 2015, the Court of Appeal of the Supreme People's Court in Ho Chi Minh City decided to temporarily suspend the appeal trial to proceed with the procedure. judicial mandate to summon Company B to participate in the appeal trial.

[39] In Decision No. dated August 10, 2015, the High People's Court in Ho Chi Minh City decided to bring the case to appeal trial on August 26, 2015.

[40] On August 19, 2015, Joint Stock Commercial Bank E received a summons to attend the above trial; On August 24, 2015, Joint Stock Commercial Bank E submitted an application to postpone the trial on the grounds that the authorized representative of Joint Stock Commercial Bank E, Mr. Hua Anh K, was on a business trip. At the trial on August 26, 2015, the Court of Appeal did not accept Mr. K's application to postpone the trial but held that Joint Stock Commercial Bank E (appellant) had been validly summoned a second time but was still absent, thereby issuing a decision to suspend the appeal trial.

[41] The decision of the High People's Court in Ho Chi Minh City to suspend the appellate trial mentioned above is not in accordance with the law, because in Clause 2, Article 13 of Resolution No. 06/2012/NQ -HDTP dated December 3, 2012 of the Council of Judges of the Supreme People's Court stipulates: "In case there is a decision to temporarily suspend the appellate trial of a civil case, the trial preparation period ends on date of decision to suspend. The time limit for preparing for the appellate trial begins to be recalculated from the date the Court of Appeal continues to hear the appeal of the case when the reason for temporary suspension no longer exists. Thus, due to the Decision to temporarily suspend the above case, when the Court of Appeal continues to hear the appeal of the case, the time limit for preparing for the appellate trial begins to be recalculated from the date the Court of Appeal begins. issued a Decision to bring the case to trial (ie August 10, 2015). Therefore, at the appeal court hearing on August 26, 2015, in which the appellant (Commercial Joint Stock Bank E) was absent, this is considered the appellant who was duly summoned by the Court for the first time but was absent. Whether there is a legitimate reason or no legitimate reason, the Court must postpone the trial according to the provisions of Article 266 of the Civil Procedure Code amended and supplemented in 2011 and Article 16 of Resolution No. 06/2012/NQ-HDTP dated December 3, 2012 of the Council of Judges of the Supreme People's Court. However, the Court of Appeal held that the representative of Joint Stock Commercial Bank E had been duly summoned for the second time but was still absent due to force majeure, thereby deciding to suspend the trial. appeal is not correct; The Court of Appeal's decision to suspend the appellate trial is a serious violation of procedural procedures, affecting the legitimate rights and interests of the litigants.

For the above reasons, based on Clause 2, Article 337, Clause 3, Article 343, Article 345 of the Civil Procedure Code.

DECISION:

1- Accept the Appeal Decision No. 11/2016/KN-KDTM dated March 7, 2016 of the Chief Justice of the Supreme People's Court.

2- Cancel the Decision to suspend the appeal trial No. 29/2015/QDPT-KDTM dated August 26, 2015 of the High People's Court in Ho Chi Minh City and cancel the first instance business and commercial judgment No. 356/2014/KDTM-ST dated April 7, 2014 of the People's Court of Ho Chi Minh City.

3- Hand over the case file to the People's Court of Ho Chi Minh City for retrial according to first instance procedures in accordance with the provisions of law.

CONTENT OF THE PRECEDENT

“[34] Thus, according to the Buyer's application to open a L/C and the content of the issued L/C, L/C No. 1801 is a separate transaction from the Goods Sales Contract dated June 7. -2011; governed and applied according to UCP 600. According to the provisions of UCP 600, Joint Stock Commercial Bank E, as the Issuing Bank, must make payment when determining that the presented set of documents is suitable at the Bank.”

[36]... the Court held that the payment method by L/C No. 1801 is an inseparable part of the Goods Purchase Contract dated June 7, 2011; Therefore, when this contract is completely canceled, the parties do not have to continue to perform the obligations agreed upon in the contract; From there, it is decided that L/C No. 1801 is no longer valid for payment and Joint Stock Commercial Bank E has no obligation to pay Bank N according to the above L/C; At the same time, forcing Joint Stock Commercial Bank E to pay the buyer a deposit amount of 1,313,308.85 USD is not enough basis and not in accordance with the provisions of UCP 600.".

Above is the content of Precedent No. 13/2017/AL on the payment validity of a letter of credit (L/C) in case the international goods sales contract that is the basis of the L/C is canceled.

In addition, you can refer to the comprehensive list of 39 Precedents published and applied in Vietnam (Latest) here.

Best regards!