UPHOLDING THE DECISION TO RECOGNISE AND ENFORCE A SINGAPOREAN JUDGMENT IN A DISPUTE OVER THE SALE OF TOYOTA FORKLIFTS

 U E & E PTE LTD v. CDK Trading and Engineering Company Limited – High Court in Ho Chi Minh City, Appellate Decision No. 25/2019/QDPT-KDTM

The dispute in this case arose from a contract for the sale of five TOYOTA forklifts (the “Toyota Contract”) between U E & E PTE LTD (“UMW”) and CDK Trading and Engineering Company Limited (“CDK”), under which CDK failed to pay the remaining 80% of the contract price, equivalent to USD 82,000, as committed. Based on UMW’s statement of claim, the Singapore Court of first instance rendered Judgment of case No. DC 1169/2011/F dated 24 November 2011. Subsequently, UMW filed an application with the Vietnamese Court for recognition and enforcement in Vietnam of the above-mentioned commercial judgment. At the appellate level, the High Court in Ho Chi Minh City issued Appellate Decision No. 25/2019/QDPT-KDTM dismissing CDK’s appeal and upholding the first-instance decision, thereby reaffirming the application of the principle of reciprocity in the recognition and enforcement in Vietnam of commercial judgments of Singaporean Courts.

BACKGROUND

The sale contract and the Singaporean Court judgment

UMW is a company incorporated and operating under the laws of Singapore; CDK is a Vietnamese enterprise with its registered office and a transaction office at Binh Thanh District, Ho Chi Minh City. The parties had a long-standing trading relationship and entered into the Toyota Contract. UMW delivered all five TOYOTA forklifts to CDK at Hai Phong Port on 16 August 2009 on CIF Hai Phong terms; however, CDK failed to pay the remaining 80% of the contract value, equivalent to USD 82,000.

On 12 April 2011, based on UMW’s statement of claim, the Singapore Court of first instance (subordinate Court) accepted and docketed the lawsuit No. DC 1169/2011/F against CDK in relation to the Toyota Contract. On 24 November 2011, the Singapore Court of first instance rendered a judgment, ordering CDK to pay UMW the total sum of USD 84,718.15 and SGD 3,300. Specifically:

• USD 82,000 as the outstanding principal under the Toyota Contract;
• USD 2,718.15 as interest accrued on the principal amount at the rate of 5.33% per annum from 12 April 2011 (the date of filing the Writ of Summons) to 24 November 2011 (the date of the final judgment);
• SGD 3,000 as costs of the proceedings upon the defence being struck out; and
• SGD 300 as costs for the application in Summons No. 17178 of 2011/L.

As there were no appeal against the above judgment of case No.  DC 1169/2011/F, such judgment was final and had taken legal effect, but CDK failed to perform its payment obligations under the judgment.

Application for recognition in Vietnam and First-instance decision of the Ho Chi Minh City Court

On 16 October 2014, UMW filed an application for recognition and enforcement in Vietnam of the Singaporean first instance Court judgment, and paid the fee at the Ministry of Justice of Vietnam.

The first-instance Court determined that this was a foreign commercial judgment and, given that no treaty on mutual judicial assistance for recognition and enforcement of judgments exists between Vietnam and Singapore, applied the principle of reciprocity under Article 423.1.b of the 2015 Civil Procedure Code (“CPC”) as the legal ground for its consideration.

By its First-instance Decision No. 1495/2018/QDST-KDTM dated 25 October 2018, the Ho Chi Minh City Court accepted UMW’s request, recognizing and enabling enforcement in Vietnam the Singaporean Court’s final judgment. The Court also ruled on the first-instance Court fees and informed the parties of their right to appeal.

Appellate application

Disagreeing with First-instance Decision No. 1495/2018/QĐST-KDTM of the Ho Chi Minh City Court, CDK lodged an appeal, requesting the High Court in Ho Chi Minh City to amend the entire first-instance decision in the manner of refusing to recognise and enforce the said judgment in Vietnam. The main grounds invoked by CDK were:

• Failure to serve the judgment through judicial entrustment: CDK argued that the final judgment had not been served to CDK via judicial entrustment through the Ministry of Foreign Affairs, the Ministry of Justice and the competent Vietnamese authorities in accordance with Vietnamese procedural law, and therefore CDK was unable to exercise its right to appeal against the Singaporean judgment.
• The content and timing of service affected the right to appeal: CDK argued that the material served was merely an “excerpt of the final judgment” recording CDK’s monetary payment obligations, without fully setting out the Court’s findings and legal grounds; this excerpt, moreover, was delivered at the end of 2014, leading CDK to misunderstood that the judgment was no longer appealable or what was the statute of limitations for appeal. As a result, CDK claimed it had no basis to exercise its right to appeal in Singapore. CDK therefore asserted that the manner of service, the content served and the timing of service of the judgment were contrary to the fundamental principles of Vietnamese law and requested the Vietnamese Court not to recognise and not to enforce the Singaporean judgment.
• No basis for applying the principle of reciprocity: Relying on the above alleged deficiencies in service and in the exercise of the right to appeal, CDK maintained that the Ho Chi Minh City Court had no proper basis to apply the principle of reciprocity to recognise and enforce judgment of case No. DC 1169/2011/F in Vietnam and requested the appellate Court to dismiss the request for recognition.

APELLATE COURT’S FINDINGS AND DECISION

On the basis of the case file, the documents submitted by the parties and the arguments presented at the appellate hearing, the appellate panel held as follows:

• Validity of the application, limitation period, and jurisdiction: The final judgment of case No. DC 1169/2011/F of the Singaporean subordinate Court dated 24 November 2011. UMW’s application (dated 31 December 2013) was consularly legalised on 26 February 2014 and filed via the Ministry of Justice on 16 October 2014, within the three-year limitation period under Article 432.1 of the 2015 CPC. The application and supporting documents complied with Articles 433 and 434. The Ho Chi Minh City Court had proper jurisdiction to resolve the request for recognition and enforcement under Articles 31.4, 35.2.c, 37.1.b and 39.1.a of the 2015 CPC.
• Legal nature of the Singaporean judgment and principle of reciprocity: Judgment of case No. DC 1169/2011/F is a foreign commercial judgment. Vietnam and Singapore have no treaty on mutual judicial assistance for recognition and enforcement of judgments and decisions, and Vietnam is not a party to any relevant multilateral convention to which Singapore is a member. UMW’s application was therefore to be examined on the principle of reciprocity under Article 423.1.b. As the judgment falls within a category that may be recognised under Vietnamese law, UMW was entitled to made request under Article 425 of the 2015 CPC.
• Singaporean procedures, documents serving, and CDK’s right to appeal: Under Singapore law, the judgment is enforceable for twelve years from pronouncement; the usual time limit for appeal is fourteen days and may be extended for parties outside of Singapore. CDK was duly served with the writ and summons, engaged counsel and, after counsel ceased to act, the Singapore Court rightly proceeded in its absence in accordance with Singapore procedures, without breaching any fundamental principles of Vietnamese law. The judgment and its Vietnamese translation were both consularly legalised, and properly served to CDK.
• Grounds for refusal to recognise the foreign judgment: Having tested CDK’s arguments against Articles 438 and 439, the appellate panel found that CDK had not proved that it was unlawfully deprived of its right to defence, nor that the judgment lacked legal effect, nor that the judgment conflicted with the fundamental principles of Vietnamese law. No ground for refusal under Article 439 was therefore established.

Decision: The appellate panel dismissed CDK’s appeal and upheld First-instance Decision No. 1495/2018/QDST-KDTM dated 25 October 2018 of the Ho Chi Minh City Court on recognition and enforcement in Vietnam of the final judgment of the Singaporean Court.

OUR COMMENT

The 2015 Civil Procedure Code provides that the recognition of foreign civil judgments and decisions is based on either (i) an international treaty to which both Vietnam and the state of origin of the judgment are contracting parties, or (ii) the principle of reciprocity.

As of now, Vietnamese law has not provide any official guidance on the “principle of reciprocity”, which may create diffrences in interpretation and the scope of such principle during the resolution of legal matters at Court. In 2020, the Judges Panel of the Supreme Court had a drafted Resolution regarding guidance on recognizing and enforcing foreign Courts’ judgments; in which, Article 7 provided specific regulation on how to apply the principle of reciprocity. However, this draft has not been approved for issuance.

For general understanding in the legal context, “reciprocity” meaning that the Vietnamese judicial bodies will conduct checking with the judicial bodies of the country where the foreign judgment was rendered, to determine whether such country had recognized and enforced a Vietnamese judgment pursuant to the “principle of reciprocity” or not; if it did, then the Vietnamese Courts may recognize the foreign judgment in question. This principle enables the Courts to expand international cooperation in jurisdictions where no treaty has been concluded.

Specifically in practice, as illustrated by a notable 2017–2021 precedent involving a Singaporean bank’s loan agreement: The Ho Chi Minh City Court and High Court initially recognised a Singaporean High Court judgment in 2017, but the Supreme Court set aside both decisions in 2021. The Supreme Court ruled that, absent a treaty, Vietnamese courts must consult the Ministry of Foreign Affairs and Ministry of Justice on reciprocity, a step not taken in that case. Consequently, the Ho Chi Minh City Court, High Court, and relevant Procuracies that rendered the decisions face criticism for violating the application of reciprocity principle in Vietnam.

Accordingly, to apply the reciprocity mechanism, the Vietnamese Courts need to consult the Ministry of Foreign Affairs and Ministry of Justice on the reciprocity practice and result of the judgment’s origin country – Singapore. Without this conduct, or should the result be that Singapore have not, in a similar manner, recognize a Vietnamese judgment, then the Vietnamese Court shall have ground to reject the request for recognition of the Singaporean judgment.

In UMW v. CDK, as there was no treaty on mutual legal assistance between Vietnam and Singapore, both levels of Court applied the principle of reciprocity as the legal basis for recognising the Singaporean judgment. The active enactment of the principle of reciprocity in the 2015 CPC in general, and the recognition of the above-mentioned Singaporean judgment in particular, reinforces Vietnam’s commitment on progress and amalgamation to the evolving international legal scene.

Service of documents and conduct of foreign proceedings

The appellate Court closely analysed the manner in which UMW’s counsel sent the judgment and documents to CDK by courier; the recipient signed for receipt at the company’s registered office address and passed them on to CDK’s legal representative. Accordingly, despite CDK claiming that the recipient was merely “a friend” of the former director, the Vietnamese Court examined the facts of the case and determined that such friend was an administrative staff of CDK, and had on another occasion signed for Court summon sent to CDK.

On the other hand, CDK was aware of the proceedings and had instructed their lawyer to participate in the proceedings in Singapore. The Court held that proceeding to trial in CDK’s absence was in conformity with Singaporean procedural law and did not deprive CDK of its right to appeal; accordingly, the alleged “lack of proper service” could not be relied upon to refuse recognition.

In hindsight, the party opposing recognition must produce clear evidence that there was violation in the foreign proceedings; particularly in this case being CDK was deprived of the rights to be informed of the proceedings, to present its case and file appeal – which the respondent failed to prove. For the lack of sufficient supporting evidence, the Vietnamese Court dismiss CDK’s argument entirely and sustained the recognition of the Singaporean judgment.

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