Precedent No. 13/2017/AL stems from the Cassation Decision 17/2016/KDTM-GDT dated November 10, 2016, regarding the commercial business case "Dispute over the sales contract" in Ho Chi Minh City, promulgated according to Decision 299/QD-CA in 2017 on the publication of precedents.
Precedent No. 13/2017/AL on the validity of payment by letter of credit (L/C) in cases where the international sales contract that forms the basis of the L/C is canceled
Endorsed by the Council of Judges of the Supreme People's Court on December 14, 2017, and published under Decision No. 99/QD-CA dated December 28, 2017 by the Chief Justice of the Supreme People's Court.
Source of the precedent:
Supervisory Review Decision No. 17/2016/KDTM-GDT dated November 10, 2016, by the Council of Judges of the Supreme People's Court regarding a commercial trading dispute “Dispute over the international sales contract” in Ho Chi Minh City between the plaintiff, Single-member Limited Liability Company A (represented by Mr. Nguyen Duy T by authorization), and the defendant, Company B; with parties having related rights and obligations including Joint Stock Commercial Bank E (represented by Mr. Hua Anh K by authorization) and Bank N (represented by Mrs. Nguyen Thi V by authorization).
Position of the content in the precedent:
Paragraphs 34 and 36 of the “Court’s assessment” section.
Summary of the content of the precedent:
- Precedent situation:
An international sales contract stipulates payment by letter of credit (L/C), the implementation of which follows international commercial practices (Uniform Customs and Practice for Documentary Credits, 6th Edition, 2007 (UCP 600) by the International Chamber of Commerce) and complies with Vietnamese law. The international sales contract forming the basis of the L/C was canceled.
- Legal solution:
In this case, the court must determine that the letter of credit (L/C) does not lose its validity of payment due to the cancellation of the international sales contract forming the basis of the letter of credit (L/C).
Provisions of the law related to the precedent:
- Article 3 of the Civil Code 2005 (corresponding to Article 5 of the Civil Code 2015);
- Decision No. 226/2002/QD-NHNN dated March 26, 2002, by the State Bank on “Regulations on payment operations through organizations providing payment services”;
- The 6th edition 2007 amendments of the Uniform Customs and Practice for Documentary Credits (UCP 600) by the International Chamber of Commerce.
Keywords of the precedent:
“Letter of credit”; “L/C”; “UCP 600”; “International commercial practices”; “Sales contract”; “International sales contract”; “Contract cancellation”.
CASE CONTENT:
According to the complaint dated September 15, 2011, the amended supplemental complaint dated September 22, 2011, and the litigation process, the plaintiff represented by Mrs. Mai Thi Tuyet N - the legal representative of Company A Limited Liability Company (Company A) stated:
On June 7, 2011, Company A (referred to as the Buyer, Company A) and Company B (referred to as the Seller) signed an international goods purchase contract No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 (referred to as the June 7, 2011 Purchase Contract). According to the content of the June 7, 2011 Purchase Contract, the Buyer would purchase raw cashew nuts of Ivory Coast origin, in the quantity of 1000 tons x 1,385.50 USD/ton with the payment method of 98% deferred L/C within 90 days from the date of delivery based on the bill of lading (B/L) according to the following quality standards:
- Recovery: 47 lbs/80kg and the right to reject goods when the recovery is below 45 lbs/80kg.- Nuts: maximum of 205/kg. Rejection rate is 220 nuts/kg.- Maximum moisture content is 10%. Rejection rate for moisture is above 12%.
The goods would be inspected for quality and quantity by Vinacontrol at the time of delivery at the Destination Port of Ho Chi Minh City.
Since the payment method is deferred L/C within 90 days, on July 7, 2011, the Buyer requested E Joint Stock Commercial Bank, branch D, to open deferred L/C No. 1801ILUEIB110002 (hereafter referred to as L/C No. 1801) for the Buyer to complete the purchase procedure for the batch of goods from the Seller.
After receiving the goods, according to clause 8 of the Contract, the Buyer re-checked the quality and quantity of the batch at Cat Lai Port, Ho Chi Minh City, under the supervision of Vinacontrol and found the Seller's goods did not meet the quality standards. Specifically: according to two Vinacontrol certifications No. 11G04HN05957-01 and No. 11G04HN05939-01 dated August 31, 2011, which inspected the quantity, quality, and condition of the goods, the inspection results showed an average recovery rate of 37.615 lbs/80kg for two samples cut from the cashew nuts (this rate is almost 10 lbs lower than the refusal condition). Given this commercial fraud, the Buyer made multiple attempts to contact the Seller to resolve the quality issue of the imported cashew nut batch but received no response from the Seller.
Therefore, on September 15, 2011, the Buyer submitted a lawsuit to the People's Court of Ho Chi Minh City requesting the Court oblige the Seller to take back the 1,000 tons of cashew nuts because the recovery quality condition was below 45 lbs, does not agree to the payment of the purchase price and simultaneously requests the Court to apply temporary urgent measures to suspend E Joint Stock Commercial Bank from paying the Seller the amount of 1,313,308.85 USD of L/C No. 1801 according to the Buyer's commitment to payment until there is another decision from the Court.
On August 12, 2013, the Buyer paid the court fee for the additional lawsuit request, which was to cancel the Purchase Contract of June 7, 2011, and simultaneously request the cancellation of L/C No. 1801.
At the first instance trial, the plaintiff requested:
- Cancel the Purchase Contract of June 7, 2011.
- Compel the Seller to come to the Buyer's warehouse at the address hamlet C2, National Highway 1A, commune C, district L, Dong Nai province immediately when the judgment becomes legally effective to take back the entire lot handed over under the Contract. After 30 days from the effective date of the judgment, if the Seller does not arrive at the Buyer's warehouse to take back the lot, the enforcement agency has the right to sell the lot to clear the warehouse space for the Buyer.
- Cancel the Buyer's payment obligation to L/C No. 1801 and request E Joint Stock Commercial Bank to immediately refund the letter of credit guarantee amount of 1,313,308.85 USD to the plaintiff.
- Request the Court to continue maintaining the Temporary Urgent Measure Decision No. 101/2011/QD-BPKCTT dated September 23, 2011, until the judgment takes effect. Allow the Buyer to retrieve the amount of 1,500,000,000 VND that the Buyer used for the guarantee according to the Court's decision at T Bank, branch P when the judgment takes effect.
The defendant is Company B (the Seller) whose headquarters are located abroad, and the Court has duly served them through the Ministry of Justice of Vietnam in compliance with the Civil Procedure Code, the 2007 Law on Judicial Assistance, and Inter-Circular No. 15/2011/TTLT-BTP-BNG-TANDTC dated September 15, 2011, but the Seller remained absent and did not provide any feedback.
The party with related interests and obligations, E Joint Stock Commercial Bank stated:
At the Buyer's request, on July 7, 2011, E Joint Stock Commercial Bank, branch D, issued L/C No. 1801 with the following content:
- L/C value: 1,357,790 USD.- Purpose: import of 1,000 tons of raw cashew nuts from Ivory Coast.- Beneficiary bank: N Bank, Singapore.- Beneficiary: Company B.- Deferred L/C opened under UCP 600; with confirmable clause.- Guarantee measures: third-party guarantees, TSBĐ; savings cards.- Due dates for payment: September 29, 2011 (961,813.66 USD) and October 17, 2011 (351,495.19 USD).
Upon receiving the legitimate document set, the Buyer signed off on the full and timely payment for the L/C. Based on the Buyer's confirmation, E Joint Stock Commercial Bank, branch D, endorsed the bills.
Based on the L/C confirmation, under the document status, N Bank had recourse-free discounted for the Seller for 03 document sets valued at 1,313,308.85 USD on July 25, 28, and August 8, 2011.
According to the content of the issued L/C, it is governed and applied under the “Uniform Customs and Practice for Documentary Credits” the latest version (currently UCP 600). According to UCP 600, E Joint Stock Commercial Bank, as the issuing bank, commits to payment based on the document set and the payment commitment, meaning the Buyer has paid the Seller. Based on the legitimate documents and Buyer's payment endorsement, E Joint Stock Commercial Bank signed off on the bills. N Bank had recourse-free discounted the Seller for 03 sets of the above-stated L/C documents.
E Joint Stock Commercial Bank did not agree with the plaintiff's request to cancel L/C No. 1801 and to request E Joint Stock Commercial Bank to immediately refund the guarantee amount of 1,313,308.85 USD to the plaintiff. E Joint Stock Commercial Bank requested the Court to immediately cancel the Temporary Urgent Measure Decision No. 101/2011/QD-BPKCTT dated September 23, 2011, to allow E Joint Stock Commercial Bank to pay N Bank as agreed in the L/C.
The party with related interests and obligations, N Bank stated:
According to the June 7, 2011 Purchase Contract and L/C No. 1801, N Bank (Singapore branch) is the bank designated by the Seller to fulfill the letter of credit guaranteeing payment issued by E Joint Stock Commercial Bank.
In conformity with UCP 600, N Bank discounted the legitimate document set presented by the Seller and paid the letter of credit value to the Seller on July 25, 2011, July 28, 2011, and August 8, 2011. Thus, N Bank legally acquired L/C No. 1801 along with the related documents and became the direct beneficiary of any payment under this letter of credit. After the document set was presented per the letter of credit's terms, E Joint Stock Commercial Bank confirmed the acceptance of the document set and committed to paying N Bank on September 29, 2011, and October 17, 2011, but the payment was not made due to the Buyer's request and the Court’s issuance of the Temporary Urgent Measure Decision No. 101/2011/QD-BPKCTT dated September 23, 2011.
N Bank requested the Court to immediately cancel the Temporary Urgent Measure Decision No. 101/2011/QD-BPKCTT dated September 23, 2011, and to compel the Buyer to compensate for the damages caused to N Bank due to the request for unlawful temporary urgent measures that resulted in N Bank not receiving the letter of credit value payment from E Joint Stock Commercial Bank. N Bank demanded compensation for loan interest that N Bank is currently paying based on the total payable amount of the 03 document sets presented appropriately to E Joint Stock Commercial Bank and the delay period from the agreed payment date by E Joint Stock Commercial Bank (September 29, 2011) to the date N Bank submitted a request to participate in the litigation, based on the non-term USD loan interest rate of the interbank at the time of submission (3.8%/12 months). The total damage amount N Bank requested the Buyer to compensate is 33,270.49 USD, equivalent to 694,188,774 VND.
In the first-instance business and commercial verdict No. 356/2014/KDTM-ST dated April 7, 2014, the People's Court of Ho Chi Minh City ruled:
"1. Cancel the Purchase Contract No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011, between the Seller - Company B, and the Buyer - Company A Limited Liability Company.
Compel Company B to take back all batches of raw Ivory Coast cashew nuts amounting to 1,000 tons delivered under Purchase Contract No. FARCOM/RCN/IVC/036/2011 stored at the address: warehouse of Company A Limited Liability Company hamlet C2, National Highway 1A, commune C, district L, Dong Nai province. After 30 days from the effective date of the judgment, if Company B does not collect the batch, the enforcement agency has the right to sell the batch according to the laws to clear the warehouse space for Company A Limited Liability Company.
- Deferred L/C No. 1801ILUEIB110002 issued by E Joint Stock Commercial Bank, branch D, on July 7, 2011, is no longer effective for payment. E Joint Stock Commercial Bank has no obligation to pay N Bank under deferred L/C No. 1801ILUEIB110002 issued by E Joint Stock Commercial Bank, branch D, on July 7, 2011.
Compel E Joint Stock Commercial Bank to refund Company A Limited Liability Company the letter of credit guarantee amount of 1,313,308.85 USD.
-
Maintain the Temporary Urgent Measure applied in Decision No. 101/2011/QD-BPKCTT dated September 23, 2011, of the People's Court of Ho Chi Minh City and the guarantee measure applied in Decision No. 100/2011/QD-BPDB dated September 23, 2011, of the People's Court of Ho Chi Minh City until the verdict is effective. Company A Limited Liability Company is entitled to retrieve the entire sum of 1,500,000,000 VND (one billion five hundred million VND) deposited in the blocked account No. 1022130.3441.012 at T Bank, branch P, which Company A Limited Liability Company deposited as guarantee according to the Guarantee Application Decision No. 100/2011/QD-BPDB dated September 23, 2011, of the People's Court of Ho Chi Minh City when the verdict is effective.
-
Reject the claim of N Bank requiring Company A Limited Liability Company to compensate damages amounting to 33,270.49 USD, equivalent to 694,188,774 VND."
In addition, the judgment also ruled on court fees, late payment interest, and the time limit for appeals.
On April 21, 2014, E Joint Stock Commercial Bank submitted an appeal against the entire content of the aforementioned first-instance business and commercial verdict.
In Decision on Suspension of Appellate Trial No. 29/2015/QDPT-KDTM dated August 26, 2015, the Higher People’s Court in Ho Chi Minh City decided:
-
Suspend the appellate trial of the business case docket No. 40/2014/TLKDTM-PT dated August 18, 2014, about the "Goods Purchase Contract Dispute".
-
The first-instance business and commercial verdict No. 356/2014/KDTM-ST dated April 7, 2014, of the People’s Court of Ho Chi Minh City is legally effective from August 26, 2015.
In addition, the Court also ruled on court fees.
On September 10, 2015, E Joint Stock Commercial Bank submitted a request to the Chief Justice of the Supreme People's Court to review the first-instance business and commercial verdict and the decision to suspend the appellate trial as mentioned above under supervisory procedures.
In Decision No. 11/2016/KN-KDTM dated March 7, 2016, the Chief Justice of the Supreme People's Court protested the Appellate Trial Suspension Decision of the business case No. 29/2015/QDPT-KDTM dated August 26, 2015, of the Higher People's Court in Ho Chi Minh City; requested the Judicial Council of the Supreme People’s Court to retry under supervisory procedures, overturn the Suspension Decision No. 29/2015/QDPT-KDTM dated August 26, 2015, of the Higher People’s Court in Ho Chi Minh City and annul the first-instance business and commercial verdict No. 356/2014/KDTM-ST dated April 7, 2014, of the People’s Court of Ho Chi Minh City; transfer the case file to the People’s Court of Ho Chi Minh City for re-trial per the legal procedure.
At the supervisory trial, the representative of the Supreme People's Procuracy requested the Judicial Council of the Supreme People's Court to accept the protest of the Chief Justice of the Supreme People’s Court.
COURT'S RULINGS:
[1] On June 7, 2011, Company A Limited Liability Company with One Member (Buyer) and Company B (Seller) signed a Purchase Contract dated June 7, 2011 with the following terms: The Buyer will purchase 1,000 tons of cashew nuts with a payment method of 98% deferred L/C within 90 days from the delivery date based on the bill of lading.
[2] In executing the aforementioned contract, Company A requested and deposited the sum of $1,313,308.85 for the issuance of L/C No. 1801 by Commercial Joint Stock Bank E.
[3] Upon the goods' arrival at Ho Chi Minh City port, the Buyer requested Vinacontrol Ho Chi Minh City to inspect the quality and condition of the goods as per Articles 8 and 11 of the contract.
[4] According to the Inspection Certificate on the quantity, quality, and condition of goods dated August 31, 2011, Vinacontrol determined: the recovery rate of cashew kernel for 2 cut samples: First sample is 38.2 lbs/80 kg; the second sample is 37.03 lbs/80 kg.
[5] Because the recovery rate of cashew kernel was lower than the contract agreement, the Buyer complained via mail to the Seller, but the Seller did not cooperate. Therefore, the Buyer filed a lawsuit to cancel the Purchase Contract dated June 7, 2011, return the entire batch of goods to the Seller, cancel the payment obligation under L/C No. 1801 issued by Commercial Joint Stock Bank E dated July 7, 2011, and requested Commercial Joint Stock Bank E to refund the deposited amount of $1,313,308.85 to ensure payment under 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 Purchase Contract dated June 7, 2011 do not violate legal regulations, in compliance with the provisions of Articles, Clauses, and Section 2 on the rights and obligations of the parties in the purchase and sale contract according to the Commercial Law of 2005; in Article 15 of the contract, both parties agreed to apply Vietnamese law to resolve any disputes.
[7] During the resolution process, the trial court followed the proper judicial delegation procedures by summoning the defendant (Seller), notifying the defendant of the plaintiff's lawsuit, and requesting the defendant to provide their opinions regarding the lawsuit; although the defendant received these summons and notifications, the defendant did not object to the plaintiff's claim.
[8] Based on the two Inspection Certificates from Vinacontrol presented by the Buyer, it is established that the Seller erred in delivering goods that did not conform to the Purchase Contract dated June 7, 2011. According to Article 39 of the Commercial Law, the Buyer has the right to refuse the goods. Furthermore, after obtaining the Vinacontrol inspection certificate, the Buyer complained about the quality of goods, but the Seller did not cooperate. Because the Seller delivered goods that did not meet the agreed-upon quality, causing the Buyer not to achieve the purpose of entering into the contract, it is established that the Seller fundamentally breached the contract. Therefore, the trial court's decision to cancel the contract is conformable with Clause 13, Article 3, and Article 312 of the Commercial Law. However, in addressing the legal consequences of the contract cancellation, the trial court failed to resolve the matter of requiring the Seller to return the received payment (if any) and compensate the Buyer, thus not correctly addressing the case.
[9] Regarding the resolution of the request to cancel L/C No. 1801:
[10] Based on the Buyer's request to open a deferred L/C, Commercial Joint Stock Bank E, Branch D, issued L/C No. 1801 on July 7, 2011, specifically:
[11] - L/C value: $1,357,790 USD;
[12] - Document type: Irrevocable;
[13] - Purpose: purchase of 1,000 tons of raw cashew nuts from Ivory Coast;
[14] - Beneficiary bank: Bank N, Singapore;
[15] - Beneficiary: Company B;
[16] - Applicant: Company A;
[17] - Applicable rules: The latest version of UCP.
[18] Subsequently, Commercial Joint Stock Bank E received 3 sets of documents claiming payment from Bank N, totaling $1,313,308.85 USD, specifically:
[19] July 25, 2011: Document set $961,813.66 USD, due on September 29, 2011;
[20] July 29, 2011: Document set $312,517.11 USD, due on October 17, 2011;
[21] August 9, 2011: Document set $38,978.08 USD, due on October 17, 2011.
[22] Upon receiving the appropriate document sets as per the L/C conditions, Commercial Joint Stock Bank E sent an Official Dispatch and the documents to the Buyer, who confirmed "Having received complete documents and committed to fully pay on time as stated"; based on this, Commercial Joint Stock Bank E telegraphically accepted payment of the draughts on the due date of the aforementioned document sets to Bank N.
[23] According to Vietnamese law regarding documentary payment:
[24] Clause 4, Article 3 of the 2010 Law on Credit Institutions, stipulates: “Organizations and individuals participating in banking activities may agree to apply commercial practices, including: international commercial practices issued by the International Chamber of Commerce; other commercial practices not contrary to Vietnamese law.”
[25] Clause 1, Article 16 of Decision No. 226/2002/QD-NHNN dated March 26, 2002, by the State Bank on "Regulations on payment activities via payment service providers" stipulates: “A letter of credit is a conditional declaration of commitment issued by a bank at the request of a payment service user (the applicant) to:
[26] Pay or authorize another bank to immediately pay at the order of the beneficiary upon receipt of a document set submitted in accordance with the credit letter conditions; or commit to paying or authorize another bank to pay at the order of the beneficiary at a certain point in the future upon receipt of a document set submitted in accordance with the payment conditions of the credit letter.”
[27] Clause 1, Article 19 of Decision 226 stipulates: “Payment by letter of credit: The issuance, confirmation, amendment, notification, inspection, payment, and rights and obligations of the parties involved in letter of credit payment shall be governed by the general rules on documentary credit issued by the International Chamber of Commerce ICC, agreed upon by the parties, and in accordance with Vietnamese law.”
[28] Moreover, in the Buyer's L/C opening proposal, it is agreed that the applicable rules are the latest UCP version. According to the Revised Uniform Customs and Practices for Documentary Credits (UCP 600) issued by the International Chamber of Commerce in 2007:
[29] “A letter of credit is an arrangement, irrespective of its occurrence or name, that is irrevocable and thus constitutes a definite commitment by the issuing bank to pay upon presentation of complying documents.” (Article 2).
[30] “In nature, the credit is a separate transaction from the sales or other contracts on which it may be based. Banks are in no way concerned with or bound by such contracts, even if any reference whatsoever to such contracts is included in the credit. Consequently, the undertaking of a bank to pay, negotiate, or to fulfill any other obligation under the credit is not subject to claims or defenses by the applicant resulting from their relationship with the issuing bank or the beneficiary.” (Article 4).
[31 ] “Banks deal with documents, not with goods, services, or performances to which the documents may relate.” (Article 5).
[32] “The issuing bank is irrevocably bound to honor as of the time it issues the credit.” (Article 7).
[33] “When an issuing bank determines that a presentation is complying, it must honor.” (Article 15a).
[34] Thus, according to the L/C opening proposal of the Buyer and the issued L/C content, L/C No. 1801 is a separate transaction from the Purchase Contract dated June 7, 2011, governed and applied under UCP 600. According to UCP 600, Commercial Joint Stock Bank E as the issuing bank must honor payment upon determining the document set is conforming at the bank.
[35] Regarding the document set of the aforementioned L/C: The document set includes a Weight and Quality Certificate issued by an independent inspector (no requirement for re-inspection at the destination port by any appraisal agency). The presented document set contains a Weight and Quality Certificate issued by a foreign independent inspector, conforming to L/C requirements; additionally, the Buyer signed to accept the document set and committed to full and timely payment, but the trial court judged the document set based on the conclusion of Vinacontrol Ho Chi Minh City (at the destination port) that the document set was non-conforming, which contradicts the L/C and the Buyer's commitment.
[36] During the case resolution, Bank N claimed to have discounted the valid document set and paid the Seller on July 25, 2011, July 28, 2011, and August 8, 2011, along with presenting export invoice discount notices to prove the payment. However, aside from these documents, Bank N failed to provide any additional documentation showing it paid the Seller. Therefore, the trial court should have collected sufficient materials and evidence to ascertain whether Bank N had paid the Seller and, if so, the amount paid. If Bank N had paid the Seller under L/C No. 1801, Commercial Joint Stock Bank E should resolve the matter per Bank N's request. As these issues are yet unresolved, but the trial court held that L/C No. 1801 is an inseparable part of the Purchase Contract dated June 7, 2011; thus, when this contract is entirely canceled, parties are not required to fulfill the obligations agreed in the contract; hence deciding that L/C No. 1801 is no longer valid for payment and requiring Commercial Joint Stock Bank E to refund the Buyer's deposit of $1,313,308.85 lacks basis and is inconsistent with UCP 600 regulations.
[37] Post the trial, Commercial Joint Stock Bank E appealed the entire aforementioned trial's verdict. The appellate court decided to bring the case to trial and summoned the litigants to attend on the sessions of September 25, 2014; October 27, 2014; October 31, 2014; April 16, 2015, but these sessions were postponed due to reasons such as the absence of the litigants, the absence of the Prosecutor's representative, or the need for time for judicial delegation...
[38] In Decision No. 09/2015/QDPT-KDTM dated May 29, 2015, the Appellate Court of the High People's Court in Ho Chi Minh City decided to temporarily suspend the appellate trial to carry out judicial delegation procedures in summoning Company B to the appellate trial.
[39] In the non-numbered decision dated August 10, 2015, the High People's Court in Ho Chi Minh City decided to bring the case for appellate trial on August 26, 2015.
[40] On August 19, 2015, Commercial Joint Stock Bank E received a summon for the aforementioned trial; on August 24, 2015, Commercial Joint Stock Bank E requested a postponement due to their authorized representative, Mr. Hua Anh K, being on a business trip. During the trial on August 26, 2015, the appellate court did not accept the postponement request from Mr. K, arguing that Commercial Joint Stock Bank E (appellant) had been legitimately summoned twice but was still absent; hence, the court decided to suspend the appellate trial.
[41] The High People's Court in Ho Chi Minh City's decision to suspend appellate trial is inconsistent with the law, as Clause 2, Article 13 of Resolution No. 06/2012/NQ-HDTP dated December 3, 2012 by the Judicial Council of the Supreme People's Court stipulates: “In cases where there is a decision to temporarily suspend appellate civil proceedings, the preparation period for trial ends on the date of the temporary suspension decision. The preparation period for appellate trial resumes from the date the appellate court continues the appellate trial when the reason for temporary suspension is resolved.” Therefore, due to the above decision to temporarily suspend the case, when the appellate court resumes the appellate trial, the preparation period for appellate trial commences again from the date the appellate court issued the decision to bring the case to trial (i.e., August 10, 2015). Thus, the appellate trial on August 26, 2015, during which the appellant (Commercial Joint Stock Bank E) was absent is considered the first legitimate summon, regardless of whether there was a justified reason, the court must postpone the trial as per Article 266 of the Revised Civil Procedure Code of 2011 and Article 16 of Resolution No. 06/2012/NQ-HDTP dated December 3, 2012 by the Judicial Council of the Supreme People's Court. However, the appellate court concluded that the representative of Commercial Joint Stock Bank E was legitimately summoned twice but was still absent without justifiable reasons, and thus suspended the appellate trial, which is incorrect; the appellate court's decision to suspend the trial constitutes a severe procedural violation, affecting the legal rights and interests of the litigant.
Based on the above, pursuant to Clause 2, Article 337, Clause 3, Article 343, and Article 345 of the Civil Procedure Code:
DECISION:
1- Accepting the Decision of Appeal No. 11/2016/KN-KDTM dated March 7, 2016, by the Chief Justice of the Supreme People's Court.
2- Annul the Decision to Suspend Appellate Trial No. 29/2015/QDPT-KDTM dated August 26, 2015, by the High People's Court in Ho Chi Minh City and annul the First-instance Commercial Business Judgment No. 356/2014/KDTM-ST dated April 7, 2014, by the Ho Chi Minh City People's Court.
3- Transfer the case file to Ho Chi Minh City People's Court for a first-instance trial in compliance with the law.
CONTENT OF THE PRECEDENT
“[34] Thus, based on the Buyer's L/C opening proposal and the issued L/C content, L/C No. 1801 is a separate transaction from the Purchase Contract dated June 7, 2011, and governed under UCP 600. According to UCP 600, Commercial Joint Stock Bank E as the issuing bank must honor the payment upon ascertaining the conforming documents at the bank...
[36]... the first-instance court, however, judged that the payment method under L/C No. 1801 is an inseparable part of the Purchase Contract dated June 7, 2011; thus, when this contract is entirely canceled, the parties no longer need to fulfill agreed obligations under the contract; hence deciding that L/C No. 1801 is no longer valid for payment and requiring Commercial Joint Stock Bank E to refund the Buyer's deposit of $1,313,308.85 lacks basis and is inconsistent with UCP 600."
- Key word:
- precedent
- Dispute over the sales contract
- Vietnam