Precedent No. 12/2017/AL on determining cases where a party is properly summoned for the first time after the Court has adjourned the trial in Vietnam

1. What is precedent?

Precedents are arguments and judgments in judgments and decisions that have come into legal effect of the Court on a specific case selected by the Council of Judges of the Supreme People’s Court and announced by the Chief Justice of the Supreme People’s Court as precedents for the Courts to study and apply in adjudication. (Article 1 of Resolution 04/2019/NQ-HDTP)

The selected precedent must meet the following criteria:

– Has the value of clarifying legal provisions that can be understood differently, analyzing and explaining legal issues and events, and pointing out principles, handling guidelines, and legal norms that need to be applied in a specific case or demonstrating fairness for issues that do not have specific legal provisions;

– Have standards;

– Has guiding value in uniform application of law in trials.

2. Precedent No. 12/2017/AL on determining cases where a party is properly summoned for the first time after the Court has adjourned the trial

2.1. Source of case law

Final judgment No. 14/2017/KDTM-GDT dated June 6, 2017 of the Council of Judges of the Supreme People’s Court on the business and commercial case “Dispute over goods sale contract” in Quang Tri province between the plaintiff, Q Joint Stock Company (legal representative is Mr. Dang Cong D, authorized representative is Mr. Ho Nghia A) and the defendant, T Limited Liability Company (legal representative is Mr. Vo Van T, authorized representative is Ms. Vo Thi T).

Location of case law:

Paragraph 1 of the “Court’s Opinion” section.

2.2. Overview of the content of the precedent

– Case law :

The court has decided to postpone the trial and the reason for the postponement is not due to the fault of the parties (plaintiff, defendant, person with related rights and obligations) or the representative, person protecting the legal rights and interests of the parties. The trial is reopened but the parties or representatives, people protecting the legal rights and interests of the parties who were duly summoned are absent.

– Legal solutions:

The court must determine that this is a case where the litigant or the representative or protector of the litigant’s legal rights and interests, who has been properly summoned for the first time, is absent from the court session.

Legal provisions related to precedents:

Clause 1, Article 199, Article 202, Clause 2, Article 266 of the Civil Procedure Code of Vietnam 2015 (Clause 1, Article 227, Article 228, Clause 2, Article 296 of the Civil Procedure Code of Vietnam 2015).

Keywords of the case:

“Valid summons”; “First valid summons”; “Party absent from court”; “Adjournment of court”.

CASE CONTENT:

In the Petition dated November 5, 2012; the Amendment and Supplement to the Petition dated May  26, 2013 and the statements at the Court, the Plaintiff, Q Joint Stock Company  , stated that:

On January 3, 2011, Q Joint Stock Company (hereinafter abbreviated as Q Company) and T Limited Liability Company (hereinafter abbreviated as T Company) signed the Rubber Seedling Purchase Contract No. 011/2011/HDKT; on February 23, 2011, the two parties continued to sign Contract No. 021/2011/HDKT with the same content. The total number of trees in the two contracts is 400,000 rubber seedlings with 2 layers of leaves, worth 2,800,000,000 Lao Kip (each contract is 200,000 trees, worth 1,400,000,000 Lao Kip). After signing the contract, Q Company advanced 930,000,000 Lao Kip to T Company (equivalent to 2,511,000,000 VND).

During the contract implementation, Company T requested to borrow 449,455 bare Stump trees and was accepted by Company Q. Company Q signed a contract to buy these trees from Company V at a price of 6,500 VND/tree. Company T paid Company Q 40,600 trees, and currently owes 408,855 trees. In the first phase, Company T only delivered 79,924 trees and then did not perform the contract. Company Q invited Company T many times to resolve the issue, but Company T did not come. On October 5, 2011, Mr. Vo Van T sent his daughter, Ms. Vo Thi T, to work. To limit the damage, Company Q conducted an inventory of all existing trees. As of September 14, 2011, there were a total of 194,776 trees, but this was only the inventory number, not the delivery number. If the delivery time ends in September 2011, the number of delivered trees will only reach 20% of the total amount of 76% that Company T has received in advance from Company Q. Therefore, Company Q agreed with Ms. Vo Thi T to let Company Q send workers to take advantage of and continue to uproot the second batch of 117,833 trees, bringing the total number of delivered trees to 197,757 Stump trees, equivalent to a total value of 3,623,897,000 VND.

In addition, Company Q also lent Company T materials and fertilizers with a total value of VND 243,913,211, but up to now Company T has not returned them.

Company T has delivered to Company Q 163,376 processed soil pots, worth 39,414,000 Lao Kip, equivalent to 105,629,500 VND; artificial wood garden worth 20,491,200 Lao Kip, equivalent to 54,916,000 VND and 18,096,000 VND; total is 178,641,500 VND. Now Company Q requests the Court to resolve:

– Force Company T to compensate for damages due to breach of obligation to perform the two contracts mentioned above with a total of 202,243 seedlings not fully delivered (worth VND 3,706,102,975). According to the contract, the two parties have agreed that if there is a breach, they will also be fined 5 times the value of the seedlings not fully delivered, which is VND 18,530,514,875;

– Force Company T to return 408,855 bare Stump seedlings borrowed from Company Q, with a total value of VND 2,657,557,500;

– Force Company T to return the materials borrowed from Company Q including: PE bags (18 x 40) 5,170kg, Potassium fertilizer 500kg, DAP fertilizer 1,000kg, phosphate fertilizer 2,800kg with a total value of 91,212,392 Lao Kip, equivalent to 243,913,211 VND.

At the trial, Company Q only requested a penalty of 8% for breach of contract for the value of the trees not fully delivered, which was VND 296,488,000. In total, Company T had to pay Company Q VND 3,088,822,500. After deducting the amount that Company Q had to pay Company T, which was VND 1,367,934,000, Company T still had to pay Company Q VND 1,720,888,500.

The defendant is T Limited  Liability Company, which presents:

Confirm the contract content as presented by Company Q. Company T performed the contract correctly, but when the deadline for delivering the trees came, Company Q delayed receiving the trees, citing the lack of workers and means of transporting the trees. Company Q’s representative said that because the company’s rubber tree planting plan at that time had been reduced in area compared to the previous year, it did not know where to plant the trees after receiving them. Therefore, on July 19, 2011, Company Q only accepted the first batch of 79,924 trees and on September 21, 2011, all the trees were transported. Company T requested Company Q to receive the remaining trees many times, but Company Q did not come to receive them. By early September 2011, Company Q made an appointment with Company T on September 14, 2011 to send a technician to check the remaining trees. If they were usable, they would count and receive them and ask to leave them at Company T’s nursery. When there was a plan, they would plant them. The number of trees that Company Q counted on September 14, 2011 was 194,766 trees. Combined with the number of trees received in the first batch, 79,924 trees, Company Q had received a total of 274,690 trees. The number of trees that Company Q did not receive after the deadline and died was 125,310 trees. Thus, for the quantity of 400,000 trees of the two contracts, Company T had provided enough. The fault of not receiving the trees that led to the death of the trees was caused by Company Q. The obligation to deliver the trees from the two contracts had been fulfilled by Company T. The remaining amount from the two contracts had been requested by Company T many times to be paid but Company Q refused to pay.

Company Q advanced money to Company T under two contracts of 930,000,000 Lao Kip, equivalent to 2,511,000,000 VND, the amount of fertilizer and materials that Company Q lent to Company T was 91,212,392 Lao Kip. The total amount that Company T must pay to Company Q is 1,021,212,392 Lao Kip, equivalent to 2,757,273,454 VND.

The total value of the two contracts that Company T has completed is 2,800,000,000 Lao Kip. Company Q has received the artificial wood garden from Company T worth 20,491,200 Lao Kip and 18,096,000 VND. The PE bags that Company Q received from Company T in the first phase were 32,865,000 Lao Kip, the second phase was 7,875,000 Lao Kip, the processing fee for the soil was 39,406,291 Lao Kip. Thus, the total amount that Company Q is obliged to pay to Company T is 2,900,637,491 Lao Kip, equivalent to 7,831,721,225 VND. After deducting the obligations of the parties, Company T counterclaimed and requested Company Q to pay the amount of 1,879,425,009 Lao Kip (equivalent to 5,074,447,767 VND) and 18,096,000 VND. Total is 5,092,543,767 VND.

At the trial, Company T only requested payment of the following amounts:

– The value of 400,000 seedlings implemented according to the contract is 1,870,000,000 Lao Kip (after deducting the amount advanced by Company Q of 930,000,000 Lao Kip), equivalent to 4,895,288,000 VND;

– The value of the artificial wood garden is 20,491,200 Lao Kip, equivalent to 53,642,000 VND and 18,096,000 VND;

– The value of 163,376 m2 of soil is 39,414,000 Lao Kip, equivalent to 103,158,000 VND. In total, Company T requires Company Q to pay 4,967,026,000 VND;

– For the 449,455 trees that Company T borrowed from Company Q, 40,600 trees have been returned. For the remaining 408,855 trees, Company T agreed to return in kind and did not accept payment in cash.

In the First Instance Commercial Judgment No. 08/2013/KDTM-ST dated September 4, 2013, the People’s Court of Quang Tri province decided:

Applying Clause 1, Article 34, Clause  1  , Article 35, Clause 1, Article 37, Articles 54, 55, 56, 300, 301 of the Commercial Law; Clause  1 , Article 131 of the Civil  Procedure Code ; Clause 4, Clause 5, Article 27 of the Ordinance on Court Fees and Charges, to handle:

– Accept the plaintiff’s request to initiate a lawsuit: Force the defendant T Limited Liability Company to pay the plaintiff Q Joint Stock Company the amount of  VND 1,720,888,500 .

– Do not accept the defendant ‘s counterclaim  for the amount of VND 3,602,837,000.

The court of first instance also decides on court fees and the parties’ right to appeal.

On September 4, 2013, Company T filed an appeal against the entire first instance judgment.

On October 1, 2013, the Chief Prosecutor of the People’s Procuracy of Quang Tri province issued Decision No. 2110/QDKNPT-P12 to protest the First Instance Commercial and Business Judgment No. 08/2013/KDTM-ST dated September 4, 2013 of the People’s Court of Quang Tri province.

In the Commercial and Business Appeal Judgment No. 19/2014/KDTM-PT dated February 26, 2014, the Supreme People’s Court of Appeal in Da Nang decided:

– Suspend the appeal trial of the defendant T. Limited Liability Company.

– Not accepting Protest No. 2110/QDKNPT-P12 dated October 1, 2013 of the Chief Prosecutor of Quang Tri Provincial People’s Procuracy. Upholding the original judgment at first instance .

After the appeal trial, Company T filed a request for a final review of the above-mentioned commercial appeal judgment.

In the Appeal for Review No. 01/2017/KN-KDTM dated February 24, 2017, the Chief Justice of the Supreme People’s Court appealed the Appellate Business and Commercial Judgment No. 19/2014/KDTM-PT dated February 26, 2014 of the Appellate Court of the Supreme People’s Court in Da Nang, requesting the Council of Judges of the Supreme People’s Court to annul the above-mentioned Appellate Business and Commercial Judgment and the First Instance Business and Commercial Judgment No. 08/2013/KDTM-ST dated September 4, 2013 of the People’s Court of Quang Tri province; and transfer the case file to the People’s Court of Quang Tri province for retrial according to the first-instance procedure in accordance with the provisions of law.

At the appeal hearing, the representative of the Supreme People’s Procuracy requested the Supreme People’s Court’s Judicial Council to accept the appeal of the Chief Justice of the Supreme People’s Court.

JUDGMENT OF THE COURT:

[1] Regarding the proceedings: According to the Minutes of the appeal hearing dated November 26, 2013, at the trial, all the parties were present in full as summoned by the Court. However, the Trial Panel decided to postpone the trial so that the parties could provide additional evidence. At the appeal hearing which was reopened on February 26, 2014, the defendant and the lawyer protecting the defendant’s legal rights and interests were absent. In the case where the Trial Panel decided to postpone the trial and the postponement was due to the Court, at the reopened trial, the party or the representative, the person protecting the legal rights and interests of the party was absent, it was considered the first absence. The Court of Appeal should have determined that the defendant and the lawyer protecting the defendant’s legal rights and interests were duly summoned by the Court for the first time and were absent from the trial according to the provisions of Clause 1, Article 199, Clause 2, Article 266 of the Civil Procedure Code to postpone the trial. The Court of Appeal determined that at the appeal hearing, the defendant and the lawyer protecting the defendant’s legitimate rights and interests were duly summoned by the Court for the second time but were absent from the hearing, thereby suspending the appeal hearing of the defendant’s appeal request, which was not in accordance with the provisions of Articles 199, 202, and 266 of the Civil Procedure Code, depriving the defendant of the right to appeal and affecting the defendant’s legitimate rights and interests.

[2] Regarding the determination of the parties’ faults: According to Article 3 of the Rubber Seedling Purchase and Sale Contract dated January 3, 2011, the parties agreed that by July 31, 2011 at the latest, Party B (Company T) ​​must deliver a sufficient quantity of 200,000 trees that meet quality standards to Party A (Company Q). In the Minutes of Meeting dated July 15, 2011 between Mr. Ho Duy L, an employee of the Agricultural Engineering Department of Company Q, and Ms. Vo Thi T, a representative of Company T, on the inspection and evaluation of the quality of seedlings at the gathering site up to July 15, 2011, the results were recorded as follows:  “Stump of leaf-layer seedlings transferred to site  1: 5,550 seedlings; Stump of leaf-layer seedlings transferred to site 2-3 or more; leaf layer is stable, quality of Stump of leaf -layer seedlings is good “ . From July 15, 2011 to July 31, 2011 (the last day to deliver the trees according to the contract), the two parties did not deliver the trees and there was no written agreement to extend or prolong the delivery period. Company Q claimed that on July 15, 2011, Company T only had 15,550 quality trees, but by July 31, 2011, it could not have enough 400,000 trees to deliver, so it violated the contract. Company T claimed that by the end of July 31, 2011, Company Q had only received 3,268 trees (although Company T already had 15,550 trees to deliver), so Company Q violated the contract.

[3] In the Minutes of the appeal hearing on November 26, 2013, Company Q explained the reason: by July 31, 2011 (the last day to deliver the trees according to the contract), Company Q did not make a record of the delivery of the trees and by September 2011, it continued to perform the contract to receive the trees because Company Q had inspected them but Company T had only delivered more than 79,000 trees. The remaining trees did not meet the contract standards for delivery, so Company Q agreed to extend the time for delivery to pay off the debt and allowed Company T to continue to take care of the trees to meet the conditions for delivery. At the same time, Mr. H (Head of Agricultural Engineering Department of Company Q – a witness) explained that the reason why Company Q only received 3,000 trees on July 31, 2011 was because Company Q only had 3 cars (2 Kazma cars and 1 Isuzu car), at that time in Laos it was raining, the roads were muddy, Ms. T called Company Q to ask to get the trees but due to difficulties, Company Q could not get them in time.

[4] With the above developments, it can be determined that the two parties signed a contract stipulating the time for delivery of trees from June 30, 2011 to July 31, 2011 with a quantity of 200,000 trees (the total to be delivered under the two contracts is 400,000 trees). Although by July 15, 2011, Company T had 15,500 trees to deliver, Company Q only received 3,200 trees due to rain, muddy roads and only 3 transport vehicles. Although not stated in writing, by October 5, 2011, Company Q agreed to extend the time for delivery of trees and continued to commit to receiving all trees within 12 days. As of September 21, 2011, Company Q had received 79,924 trees and as of October 24, 2011, the two parties were still delivering and receiving the trees (according to the Minutes of delivery and receipt of seedlings dated October 24, 2011, which determined that from October 6, 2011 to October 24, 2011, 83,867 PB260 seedlings of the 2-layer leaf type, good quality seedlings, had been delivered and received). Therefore, there is a basis to determine that both Company T and Company Q were at fault in delivering and receiving the trees. The Court of First Instance and the Court of Appeal determined that Company T was entirely at fault and applied the highest penalty under Article 301 of the Commercial Law (8%) to Company T, which was inappropriate; it is necessary to re-determine the level of fault of the parties to decide on the correct penalty level.

[5] Regarding the number of trees borrowed: The case file shows that the two parties did not have any documents regarding the borrowing of trees, but both parties confirmed that Company Q lent Company T 449,455 trees, Company T returned 40,600 trees, still owing 408,855 trees. Company T said that it had enough trees to pay and agreed to pay in trees, not accepting the conversion to pay in cash. Company Q said that because Company T was unable to pay in trees, it requested payment in cash. Pursuant to Articles 471 and 474 of the 2005 Civil Code on property loan contracts; Article 514 of the 2005 Civil Code on property loan contracts stipulates that the borrower must return the same type of property to the lender, but the Court of First Instance and the Court of Appeal have not considered whether Company T has the ability to return the same type of tree or not, which is not in accordance with the provisions of law. If Company T does not have the ability to return the same type of tree, it will be forced to pay in cash.

For the above reasons,

DECISION:

Pursuant to Clause 2, Article 337, Clause 3, Article 343, Article 345 of the 2015 Civil Procedure Code; Resolution No. 103/2015/QH13 dated November 25, 2015 of the National Assembly on the implementation of the Civil Procedure Code.

1. Accept the Chief Justice’s Appeal for Final Review No. 01/2017/KN-KDTM dated February 24, 2017 of the Chief Justice of the Supreme People’s Court against the Appellate Business and Commercial Judgment No. 19/2014/KDTM-PT dated February 26, 2014 of the Appellate Court of the Supreme People’s Court in Da Nang on the business and commercial case “Dispute over a contract for the sale of goods” between the plaintiff, Q Joint Stock Company, and the defendant, T Limited Liability Company.

2. Annul the Commercial and Business Appeal Judgment No. 19/2014/KDTM-PT dated February 26, 2014 of the Supreme People’s Court of Appeal in Da Nang and the Commercial and Business First Instance Judgment No. 08/2013/KDTM-ST dated September 4, 2013 of the People’s Court of Quang Tri province.

3. Transfer the case file to the People’s Court of Quang Tri province for retrial according to first instance procedures in accordance with the provisions of law.

CONTENT OF PRECEDENT

“[1] Regarding the proceedings: According to the Minutes of the appeal hearing dated November 26, 2013, at the trial, all the parties were present in full as summoned by the Court. However, the Trial Panel decided to postpone the trial so that the parties could provide additional evidence. At the appeal hearing which was reopened on February 26, 2014, the defendant and the lawyer protecting the defendant’s legal rights and interests were absent. In the case where the Trial Panel decided to postpone the trial and the postponement was due to the Court, at the reopened trial, the absent party or the representative, the person protecting the defendant’s legal rights and interests was considered absent for the first time. The Court of Appeal should have determined that the defendant and the lawyer protecting the defendant’s legal rights and interests were duly summoned by the Court for the first time and were absent from the trial according to the provisions of Clause 1, Article 199, Clause 2, Article 266 of the Civil Procedure Code to postpone the trial. The Court of Appeal determined that at the appeal hearing, the defendant and the lawyer protecting the defendant’s legitimate rights and interests were duly summoned by the Court for the second time but were absent from the hearing, thereby suspending the appeal hearing of the defendant’s appeal request, which is not in accordance with the provisions of Articles 199, 202, 266 of the Civil Procedure Code, depriving the defendant of the right to appeal, affecting the defendant’s legitimate rights and interests.”