Precedent no. 13/2017/AL on validity of letter of credit (l/c) in case where đá bóng trực tiếp contract for international sale of goods providing for đá bóng trực tiếp use of đá bóng trực tiếp l/c is cancelled

- Situation:

A contract for international sale of goods provides for đá bóng trực tiếp use of Letter of Credit (L/C) as đá bóng trực tiếp method of payment and L/C shall be used in conformity with international trade practices (đá bóng trực tiếp sixth revision of đá bóng trực tiếp Uniform Customs and Practice for Documentary Credits 2007 (UCP 600) of International Chamber of Commerce) and in accordance with laws of Vietnam. Such contract for international sale of goods was cancelled.

- Legal solution:

In this case, đá bóng trực tiếp Court should have determined that đá bóng trực tiếp L/C will not cease to be valid on đá bóng trực tiếp ground that đá bóng trực tiếp contract for international sale of goods providing for đá bóng trực tiếp use of such L/C was cancelled.

Law provisions relating to đá bóng trực tiếp precedent:

- Article 3 of đá bóng trực tiếp Civil Code 2005 (corresponding to Article 5 of đá bóng trực tiếp Civil Code 2015);

- Decision No. 226/2002/QD-NHNN dated March 26, 2002 of đá bóng trực tiếp State Bank on “Regulation on payment activities through payment service suppliers";

- đá bóng trực tiếp sixth revision of đá bóng trực tiếp Uniform Customs and Practice for Documentary Credits 2007 (UCP 600) of International Chamber of Commerce.

Representation of đá bóng trực tiếp plaintiff A Single Member Limited Company, represented by Mrs. Mai Thi Tuyet N, in đá bóng trực tiếp lawsuit petition dated September 15, 2011, đá bóng trực tiếp additional lawsuit petition dated September 22, 2011 and during đá bóng trực tiếp legal proceedings:

On June 7, 2011, A Single Member Limited Company (hereinafter referred to as đá bóng trực tiếp Buyer, Company A) and Company B (hereinafter referred to as đá bóng trực tiếp Seller) signed a contract for international sale of goods No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 (hereinafter referred to as đá bóng trực tiếp sales contract dated June 7, 2011). Under this contract, đá bóng trực tiếp Buyer buys raw cashew nuts, Ivory Coast origin, with quantity of 1,000 tonnes x price 1,385.50 USD/tonne, using deferred L/C 98% within 90 days from đá bóng trực tiếp shipment date based on đá bóng trực tiếp bill of lading (B/L) with đá bóng trực tiếp quality standards below:

- Outturn: 47 lbs/80kg and đá bóng trực tiếp Buyer has đá bóng trực tiếp right to reject cargoes if outturn is lower than 45 lbs/80kg.

- Nut count: 205 nuts/kg (max). 220 nuts/kg: rejection.

- Moisture: 10% (max). Moisture more than 12%: rejection.

đá bóng trực tiếp cargoes will be inspected by Vinacontrol in terms of quality and quantity at đá bóng trực tiếp loading time at đá bóng trực tiếp discharge port in Ho Chi Minh City.

According to agreement on đá bóng trực tiếp deferred L/C 90 days, on July 7, 2011, đá bóng trực tiếp Buyer asked D Branch of E Joint-Stock Commercial Bank to issue a deferred L/C No. 1801ILUEIB110002 (hereinafter referred to as L/C No. 1801) in order for đá bóng trực tiếp Buyer to complete đá bóng trực tiếp purchase procedures.

Upon receipt of cargoes, as specified in Article 8 of đá bóng trực tiếp agreement, đá bóng trực tiếp Buyer checked đá bóng trực tiếp quality and quantity of đá bóng trực tiếp shipment at đá bóng trực tiếp discharge port, which is Cat Lat Port in Ho Chi Minh City, under đá bóng trực tiếp supervision of Vinacontrol, and then detected that đá bóng trực tiếp cargoes of đá bóng trực tiếp Seller do not meet đá bóng trực tiếp quality assurance. Based on two inspection certificates No. 11G04HN05957-01 and No. 11G04HN05939-01 issued by Vinacontrol on August 31, 2011 in terms of quantity, quality and conditions of cargoes, đá bóng trực tiếp inspection result shows that đá bóng trực tiếp average outturn in two cutting tests performed on samples of raw nuts is 37.615 lbs/80kg (this outturn is too lower than đá bóng trực tiếp outturn mentioned in clause of rejection, approximately 10 lbs).  Facing that commercial fraud, đá bóng trực tiếp Buyer has attempted to contact with đá bóng trực tiếp Seller many times to deal with đá bóng trực tiếp issue relating to đá bóng trực tiếp quality of imported cashew nuts but no response from đá bóng trực tiếp Seller has been received.

Thus, on September 15, 2011, đá bóng trực tiếp Buyer filed a lawsuit petition with People’s Court of Ho Chi Minh City, requesting đá bóng trực tiếp Court to force đá bóng trực tiếp Seller to receive back 1,000 tonnes of cashew nuts because their outturn is lower than 45lbs, falling on đá bóng trực tiếp clause of rejection, đá bóng trực tiếp Buyer refuses to make đá bóng trực tiếp payment and requests đá bóng trực tiếp Court to adopt temporary emergency measures to force E Joint-Stock Commercial Bank to suspend đá bóng trực tiếp payment of USD 1,313,308.85 under đá bóng trực tiếp L/C No. 1801 to đá bóng trực tiếp Seller according to đá bóng trực tiếp undertaking of đá bóng trực tiếp Buyer until there is any other decisions of đá bóng trực tiếp Court.

On August 12, 2013, đá bóng trực tiếp Buyer paid đá bóng trực tiếp court fee advance for đá bóng trực tiếp additional lawsuit petition, which requests cancellation of đá bóng trực tiếp sales contract dated June 7, 2011 and cancellation of L/C No. 1801.

At đá bóng trực tiếp first instance court hearing, đá bóng trực tiếp plaintiff requested:

1. Canceling đá bóng trực tiếp sales contract dated June 7, 2011.

2. Forcing đá bóng trực tiếp Seller to receive back đá bóng trực tiếp whole delivered shipment at đá bóng trực tiếp warehouse of đá bóng trực tiếp Buyer at C2, Highway 1A, Commune C, District L, Dong Nai Province as soon as possible after đá bóng trực tiếp Judgment takes effect. 30 days after đá bóng trực tiếp Judgment takes effect, if đá bóng trực tiếp Seller fails to receive back đá bóng trực tiếp shipment at đá bóng trực tiếp warehouse of đá bóng trực tiếp Buyer, đá bóng trực tiếp enforcement agency has đá bóng trực tiếp right to sell đá bóng trực tiếp above-mentioned shipment so as to leave đá bóng trực tiếp empty warehouse to đá bóng trực tiếp Buyer.

3. Canceling đá bóng trực tiếp payment obligation of đá bóng trực tiếp Buyer to L/C No. 1801 and requesting E Joint-Stock Commercial Bank to refund đá bóng trực tiếp plaintiff đá bóng trực tiếp deposit secured for L/C of USD 1,313,308.85.

4. Requesting đá bóng trực tiếp Court to keep implementing đá bóng trực tiếp decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 until đá bóng trực tiếp Judgment takes effect. Concurrently, refunding đá bóng trực tiếp Buyer VND 1,500,000,000 as đá bóng trực tiếp security under đá bóng trực tiếp decision of đá bóng trực tiếp Court at Branch P of Bank T after đá bóng trực tiếp Judgment takes effect.

đá bóng trực tiếp defendant, Company B (đá bóng trực tiếp Seller),is situated abroad and was duly served by đá bóng trực tiếp Court through đá bóng trực tiếp Ministry of Justice of Vietnam in accordance with đá bóng trực tiếp Civil Procedure Code, đá bóng trực tiếp Law on Mutual Legal Assistance 2007 and Joint Circular No. 15/2011/TTLT-BTP-BNG-TANDTC dated September 15, 2011 but đá bóng trực tiếp Seller was still absent and gave no response.

Representation of đá bóng trực tiếp person with relevant rights and obligations, E Joint-Stock Commercial Bank:

At đá bóng trực tiếp request of đá bóng trực tiếp Buyer, on July 7, 2011, Branch D of E Joint-Stock Commercial Bank issued L/C No. 1801 as follows:

- Value of L/C: USD 1,357,790

- Purpose: import of 1,000 tonnes of raw cashew nuts from Ivory Coast;

- Beneficiary bank: Bank N, Singapore.

- Beneficiary: Company B.

- Deferred L/C issued under UCP 600; with confirmation term.

- Security interests: guarantee by a third party, collateral: a passbook.

- Latest payment date: on September 29, 2011 (USD 961,813.66) and on October 17, 2011 (USD 351,495.19).

Upon receipt of đá bóng trực tiếp set of complying documents, đá bóng trực tiếp Buyer confirmed to make full payment on schedule under đá bóng trực tiếp L/C. According to đá bóng trực tiếp confirmation of đá bóng trực tiếp Buyer, E Joint-Stock Commercial Bank accepted đá bóng trực tiếp draft.

Based on đá bóng trực tiếp confirmation of L/C and đá bóng trực tiếp conditions of đá bóng trực tiếp set of documents, đá bóng trực tiếp Bank N negotiated 3 sets of documents without recourse for USD 1,313,308.85 on July 25, July 28 and August 8, 2011.

According to đá bóng trực tiếp issued L/C, L/C is governed by đá bóng trực tiếp latest version of“đá bóng trực tiếp Uniform Customs and Practice for Documentary Credits”(UCP 600). Pursuant to UCP 600, E Joint-Stock Commercial Bank as đá bóng trực tiếp issuing bank undertakes to honour after receiving đá bóng trực tiếp documents, it means that đá bóng trực tiếp Buyer made đá bóng trực tiếp payment to đá bóng trực tiếp Seller.  According to đá bóng trực tiếp complying documents and acceptance of đá bóng trực tiếp Buyer, E Joint-Stock Commercial Bank accepted đá bóng trực tiếp draft. đá bóng trực tiếp Bank N negotiated 3 said sets of documents without recourse.

E Joint-Stock Commercial Bank disagrees with đá bóng trực tiếp plaintiff’s claim, requesting đá bóng trực tiếp Court to cancel L/C No. 1801 and requesting E Joint-Stock Commercial Bank to refund đá bóng trực tiếp deposit of USD 1,313,308.95 to đá bóng trực tiếp plaintiff. E Joint-Stock Commercial Bank requests đá bóng trực tiếp Court to annul đá bóng trực tiếp decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 in order for E Joint-Stock Commercial Bank to pay đá bóng trực tiếp Bank N as agreed in L/C.

Representation of đá bóng trực tiếp person with relevant rights and obligations, đá bóng trực tiếp Bank N:

Under đá bóng trực tiếp sales contract dated June 7, 2011 and L/C No. 1801, đá bóng trực tiếp Bank N (branch in Singapore) is đá bóng trực tiếp nominated bank of đá bóng trực tiếp Seller at which đá bóng trực tiếp letter of credit issued by E Joint-Stock Commercial Bank is available.

In compliance with UCP 600, đá bóng trực tiếp Bank N negotiated đá bóng trực tiếp comply documents presented by đá bóng trực tiếp Seller and paid đá bóng trực tiếp Seller đá bóng trực tiếp value of L/C on July 25, 2011, July 28, 2011 and August 8, 2011. Accordingly, đá bóng trực tiếp Bank N purchased L/C No. 1801 and relevant documents legally and became đá bóng trực tiếp direct beneficiary of all and any payments under this L/C. After receiving đá bóng trực tiếp complying presentation in accordance with đá bóng trực tiếp said L/C, E Joint-Stock Commercial Bank confirmed đá bóng trực tiếp presentation and committed to pay đá bóng trực tiếp Bank N on September 29, 2011 and October 17, 2011 but đá bóng trực tiếp payments were not made because đá bóng trực tiếp Buyer requested and đá bóng trực tiếp Court issued đá bóng trực tiếp decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011.

đá bóng trực tiếp Bank N requests đá bóng trực tiếp Court to cancel đá bóng trực tiếp decision on temporary emergency measures No. 101/2011/QD-BPKCTT dated September 23, 2011 immediately and requires đá bóng trực tiếp Buyer to compensate for damage suffered by đá bóng trực tiếp Bank N from its illegal request for temporary emergency measures, leading to đá bóng trực tiếp Bank N’s failure to receive đá bóng trực tiếp payment of L/C amount from E Joint-Stock Commercial Bank. đá bóng trực tiếp amount of damages claimed by đá bóng trực tiếp Bank N is đá bóng trực tiếp interest amount incurred by đá bóng trực tiếp Bank N on đá bóng trực tiếp sum payable for 3 sets of complying documents corresponding to đá bóng trực tiếp late payment period from đá bóng trực tiếp latest payment date as undertaken by E Joint-Stock Commercial Bank (September 29, 2011) to đá bóng trực tiếp date on which đá bóng trực tiếp Bank N filed a request for participating in legal proceedings and this interest amount is calculated according to đá bóng trực tiếp USD interest rate on demand loan of interbank on đá bóng trực tiếp date of submission of đá bóng trực tiếp request (3.8%/12 months). Total amount of damages claimed by đá bóng trực tiếp Bank N against đá bóng trực tiếp Buyer is USD 33,270.59, equivalent to VND 694,188,774.

In đá bóng trực tiếp First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014, People’s Court of Ho Chi Minh City judged:

“1. Cancel đá bóng trực tiếp sales contract No. FARCOM/RCN/IVC/036/2011 dated June 7, 2011 between đá bóng trực tiếp Seller, Company B, and đá bóng trực tiếp Buyer, A Single-Member Limited Liability Company.

Compel Company B to receive back đá bóng trực tiếp shipment of 1,000 tonnes of raw cashew nuts Ivory Coast which has been delivered under đá bóng trực tiếp sales contract No. FARCOM/RCN/IVC/036/2011 at đá bóng trực tiếp address: đá bóng trực tiếp warehouse of Company A, Village C2, Highway 1A, Commune C, District L, Dong Nai Province. 30 days after đá bóng trực tiếp Judgment takes effect, if Company B fails to receive đá bóng trực tiếp said shipment bank, đá bóng trực tiếp enforcement agency shall sell it by order of đá bóng trực tiếp court as per đá bóng trực tiếp law to leave đá bóng trực tiếp empty warehouse to Company A.

2. đá bóng trực tiếp deferred L/C No. 1801ILUEIB110002 issued by đá bóng trực tiếp Branch D of E Joint-Stock Commercial Bank on July 7, 2011 shall cease to be valid. E Joint-Stock Commercial Bank does not have đá bóng trực tiếp payment obligation to đá bóng trực tiếp Bank N under deferred L/C No. 1801ILUEIB110002 issued by đá bóng trực tiếp Branch D of E Joint-Stock Commercial Bank on July 7, 2011.

Compel E Joint-Stock Commercial Bank to refund Company A đá bóng trực tiếp collateral secured for đá bóng trực tiếp payment of L/C which is đá bóng trực tiếp deposit of USD 1,313,308.85.

3. Keep adopting temporary emergency measures under đá bóng trực tiếp decision No. 101/2011/QD-BPKCTT dated September 23, 2011 of People’s Court of Ho Chi Minh City and security interest under đá bóng trực tiếp decision No. 100/2011/QD-BPDB dated September 23, 2011 of People’s Court of Ho Chi Minh City until đá bóng trực tiếp Judgment takes effect. Company A may receive VND 1,500,000,000 (one billion five hundred million dong) of deposit in đá bóng trực tiếp blocked account No. 1022130.3441.012 at đá bóng trực tiếp Branch P of Bank T put up by Company A under đá bóng trực tiếp decision on compulsory security interest No. 100/2011/QD-BPDB dated September 23, 2011 of People’s Court of Ho Chi Minh City until đá bóng trực tiếp Judgment takes effect.

4. Do not accept đá bóng trực tiếp Bank N’s claim for damages against Company A of USD 33,270.49, equivalent to VND 694,188,774”.

In addition, đá bóng trực tiếp Judgment also announces đá bóng trực tiếp court fee, late payment charge and time limit for appeal.

On April 21, 2014, E Joint-Stock Commercial Bank filed an appeal against đá bóng trực tiếp entire First Instance Commercial Judgment.

In đá bóng trực tiếp decision on suspension of appellate trial No. 29/2015/QDPT-KDTM dated August 26, 2015, đá bóng trực tiếp Superior People’s Court in Ho Chi Minh City judged:

1. Suspend appellate trial of commercial case No. 40/2014/TLKDTM-PT dated August 18, 2014 on “dispute over contract for sale of goods”.

2. đá bóng trực tiếp First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014 of đá bóng trực tiếp People's Court of Ho Chi Minh City takes effect from August 26, 2015.

In addition, đá bóng trực tiếp Court decided đá bóng trực tiếp court fee.

On September 10, 2015, E Joint-Stock Commercial Bank requested đá bóng trực tiếp Chief Justice of đá bóng trực tiếp Supreme People’s Court in writing to review đá bóng trực tiếp First Instance Commercial Judgment and decision on suspension of appellate trial under cassation procedure.

In đá bóng trực tiếp Appeal No. 11/2016/KN-KDTM dated March 7, 2016, đá bóng trực tiếp Chief Justice of đá bóng trực tiếp Supreme People’s Court appealed đá bóng trực tiếp decision on suspension of appellate trial of đá bóng trực tiếp commercial case No. 29/2015/QDPT-KDTM dated August 26, 2015 of đá bóng trực tiếp Superior People’s Court in Ho Chi Minh City and requested đá bóng trực tiếp Council of Judges of đá bóng trực tiếp Supreme People’s Court in charge of cassation trial to quash đá bóng trực tiếp above decision on suspension of appellate trial No. 29/2015/QDPT-KDTM dated August 26, 2015 of đá bóng trực tiếp Superior People’s Court in Ho Chi Minh City and quash đá bóng trực tiếp First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014 of People’s Court of Ho Chi Minh City, and then refer đá bóng trực tiếp case to People’s Court of Ho Chi Minh City for re-conduct đá bóng trực tiếp first instance trial as per đá bóng trực tiếp law.

At đá bóng trực tiếp cassation court hearing, representative of đá bóng trực tiếp Supreme People’s Procuracy requests đá bóng trực tiếp Council of Judges of đá bóng trực tiếp Supreme People’s Court to accept đá bóng trực tiếp Appeal of đá bóng trực tiếp Chief Justice of đá bóng trực tiếp Supreme People’s Court.

[1] On June 7, 2011, Company A (đá bóng trực tiếp Buyer) and Company B (đá bóng trực tiếp Seller) concluded a sales contract dated June 7, 2011 as follows: đá bóng trực tiếp Buyer buys 1,000 tonnes of cashew nuts using deferred L/C 98% within 90 days, from đá bóng trực tiếp shipment date indicated in đá bóng trực tiếp bill of lading.

[2] Following đá bóng trực tiếp above contract, Company A paid a deposit of USD 1,313,308.85 and asked E Joint-Stock Commercial Bank for issuing đá bóng trực tiếp L/C No. 1801.

[3] When cargoes arrived đá bóng trực tiếp port in Ho Chi Minh City, đá bóng trực tiếp Buyer requested Vinacontrol of Ho Chi Minh City to inspect đá bóng trực tiếp quality and quantity of đá bóng trực tiếp cargoes in accordance with Article 8 and Article 11 of đá bóng trực tiếp contract.

[4] In đá bóng trực tiếp certificate of inspection in terms of quantity, quality and conditions of cargoes dated August 31, 2011, Vinacontrol determined: đá bóng trực tiếp outturns in two cutting tests performed on samples of raw nuts are: first outturn: 38.2 lbs/80kg; second outturn: 37.03 lbs/80kg.

[5] Since đá bóng trực tiếp actual outturn is too lower than đá bóng trực tiếp outturn agreed in đá bóng trực tiếp contract, đá bóng trực tiếp Buyer sent a complain via email to đá bóng trực tiếp Seller but đá bóng trực tiếp Seller did not show cooperation attitude. Thus, đá bóng trực tiếp Buyer filed a lawsuit to request cancellation of đá bóng trực tiếp sales contract dated June 7, 2011, return of đá bóng trực tiếp whole shipment to đá bóng trực tiếp Seller and cancellation of payment obligation under L/C No. 1801 issued by E Joint-Stock Commercial Bank on July 7, 2011 and request E Joint-Stock Commercial Bank to refund đá bóng trực tiếp deposit of USD 1,313,308.85 which has been secured for đá bóng trực tiếp L/C No. 1801 dated July 7, 2011.

[6] According to đá bóng trực tiếp documents and evidence available in đá bóng trực tiếp case file, it can be found that: đá bóng trực tiếp format and content of đá bóng trực tiếp sales contract dated June 7, 2011 were not made against đá bóng trực tiếp law, in accordance with Articles, Clauses, Section 2 on rights and obligations of parties in đá bóng trực tiếp contract for sale of goods in đá bóng trực tiếp Law on Commerce 2005; in Article 15 of đá bóng trực tiếp contract, đá bóng trực tiếp contracting parties agree that any dispute arising out of or in relation with this contract shall be resolved in accordance with Vietnam’s law.

[7] During đá bóng trực tiếp resolution process, đá bóng trực tiếp Court of First Instance duly carried out judicial assistance in summoning đá bóng trực tiếp defendant (đá bóng trực tiếp Seller), notifying đá bóng trực tiếp defendant of lawsuit petition of đá bóng trực tiếp plaintiff; and requiring đá bóng trực tiếp defendant to give opinions in response to đá bóng trực tiếp plaintiff’s lawsuit petition; in fact, although đá bóng trực tiếp defendant received all summons and notices, đá bóng trực tiếp defendant did not give any dissenting opinion against đá bóng trực tiếp plaintiff’s lawsuit petition.

[8] According to đá bóng trực tiếp 2 certificates of inspection issued by Vinacontrol presented by đá bóng trực tiếp Buyer, there are valid grounds for determining that đá bóng trực tiếp Seller was at fault in delivering cargoes not conformable to đá bóng trực tiếp sales contract dated June 7, 2011, so pursuant to Article 39 of đá bóng trực tiếp Law on Commerce, đá bóng trực tiếp Buyer is entitled to reject đá bóng trực tiếp cargoes. On đá bóng trực tiếp other hand, after obtaining đá bóng trực tiếp certificates of inspection issued by Vinacontrol, đá bóng trực tiếp Buyer sent a complaint about poor quality cargoes to đá bóng trực tiếp Seller but đá bóng trực tiếp Seller did not show cooperation attitude. As đá bóng trực tiếp Seller did not deliver qualified cargoes as agreed in đá bóng trực tiếp contract, đá bóng trực tiếp Buyer did not achieve đá bóng trực tiếp purpose of đá bóng trực tiếp contract, hence there are valid grounds for determining that đá bóng trực tiếp Seller committed đá bóng trực tiếp fundamental breach of đá bóng trực tiếp contract. Therefore, đá bóng trực tiếp Court of First Instance was well-grounded when pronouncing cancellation of đá bóng trực tiếp contract in accordance with Clause 13, Article 3, Article 312 of đá bóng trực tiếp Law on Commerce. However, when it comes to resolution of legal consequences of canceling đá bóng trực tiếp contract, đá bóng trực tiếp Court of First Instance made an error when not compelling đá bóng trực tiếp Seller to return đá bóng trực tiếp sum of money which has been received (if any) and pay damages to đá bóng trực tiếp Buyer.

[9] Regarding resolution of request for cancellation of L/C No. 1801:

[10] Following đá bóng trực tiếp request for deferred L/C made by đá bóng trực tiếp Buyer, Branch D of E Joint-Stock Commercial Bank issued L/C No. 1801 dated July 7, 2011, in specific:

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

[12] - Form of L/C: irrevocable;

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

[14] - Beneficiary bank: đá bóng trực tiếp Bank N, Singapore;

[15] - Beneficiary: Company B;

[16] - Applicant: [17] - Applied rules: latest version of đá bóng trực tiếp UCP.

[18] Then, E Joint-Stock Commercial Bank received 3 sets of documents from đá bóng trực tiếp Bank N, totaling USD 1,313,308.85, in specific:

[19] On July 25, 2011: đá bóng trực tiếp set of documents of USD 961,813.66, maturity date: September 29, 2011;

[20] On July 29, 2011: đá bóng trực tiếp set of documents of USD 312,517.11, maturity date: October 17, 2011;

[21] On August 9, 2011: đá bóng trực tiếp set of documents of USD 38.978.08, maturity date: October 17, 2011.

[22] After receiving đá bóng trực tiếp complying documents in conformity with L/C terms and conditions, E Joint-Stock Commercial Bank sent a dispatch enclosed with đá bóng trực tiếp documents to đá bóng trực tiếp Buyer and đá bóng trực tiếp Buyer confirmed “Received sufficient documents and undertakes to honour; then E Joint-Stock Commercial Bank telegraphed that it accepted đá bóng trực tiếp draft on đá bóng trực tiếp maturity date of above-mentioned 3 sets of documents of đá bóng trực tiếp Bank N.

[23] Under Vietnam’s law on payment against documents:

[24] Pursuant to Clause 4 Article 3 of đá bóng trực tiếp Law on Credit Institutions 2010: Organizations and individuals engaging in banking operations are entitled to reach agreement on đá bóng trực tiếp application of commercial practices, including:
International trade practices provided by International Chamber of Commerce; other commercial practices which are not contrary to Vietnam’s laws.

[25] Pursuant to Clause 1 Article 16 of Decision No. 226/2002/QD-NHNN dated March 26, 2002 of đá bóng trực tiếp State Bank on " Regulation on payment activities through payment service suppliers": “Letter of credit shall be a conditional written undertaking opened by banks at đá bóng trực tiếp request of a payment service user (đá bóng trực tiếp applicant for opening đá bóng trực tiếp letter of credit), in order to:

[26] Effect đá bóng trực tiếp payment or authorize other banks to effect đá bóng trực tiếp payment immediately at đá bóng trực tiếp instruction of đá bóng trực tiếp payee upon receipt of a set of presented documents satisfying đá bóng trực tiếp conditions of letter of credit; or accept to make đá bóng trực tiếp payment or authorize other banks to make đá bóng trực tiếp payment at đá bóng trực tiếp instruction of đá bóng trực tiếp payee at a specific future time upon receipt of a set of presented documents satisfying conditions of letter of credit”.

[27] Pursuant to Clause 1 Article 19 of Decision 226: “Payment by letter of credit: đá bóng trực tiếp opening, issuance, amendment, notification, confirmation, examination of documents, payment and rights, obligations, etc. of related parties in payment by letter of credit shall be performed in accordance with general principles on documentary credits issued by đá bóng trực tiếp International Chamber of Commerce (ICC) and applicable upon agreement of parties engaging in đá bóng trực tiếp payment in accordance with current applicable Vietnamese laws”.

[28] On đá bóng trực tiếp other hand, đá bóng trực tiếp request for L/C of đá bóng trực tiếp Buyer indicates that: đá bóng trực tiếp applied rules is đá bóng trực tiếp latest version of đá bóng trực tiếp UCP. According to đá bóng trực tiếp sixth revision of đá bóng trực tiếp Uniform Customs and Practice for Documentary Credits 2007 (UCP 600):

[29] “Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of đá bóng trực tiếp issuing bank to honour a complying presentation” (Article 2).

[30] “A credit by its nature is a separate transaction from đá bóng trực tiếp sale or other contract on which it may be based. Banks are in no way concerned with or bound by such contract, even if any reference whatsoever to it is included in đá bóng trực tiếp credit. Consequently, đá bóng trực tiếp undertaking of a bank to honour, to negotiate or to fulfill any other obligation under đá bóng trực tiếp credit is not subject to claims or defenses by đá bóng trực tiếp applicant resulting from its relationships with đá bóng trực tiếp issuing bank or đá bóng trực tiếp beneficiary” (Article 4).

[31] “Banks deal with documents and not with goods, services or performance to which đá bóng trực tiếp documents may relate” (Article 5).

[32] “An issuing bank is irrevocably bound to honour as of đá bóng trực tiếp time it issues đá bóng trực tiếp credit” (Article 7).

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

[34] Therefore, according to đá bóng trực tiếp request for L/C of đá bóng trực tiếp Buyer and đá bóng trực tiếp content of L/C, L/C No. 1801 is a separate transaction from đá bóng trực tiếp sales contract dated June 7, 2011; governed by UCP 600. Under UCP 600, E Joint-Stock Commercial Bank, as đá bóng trực tiếp issuing bank, must honour if it determines that a presentation is complying.

[35] In respect of documents of đá bóng trực tiếp L/C: Documents consist of a certificate of quantity and quality issued by an independent inspector (without stipulating that đá bóng trực tiếp cargoes must be re-inspected at đá bóng trực tiếp discharge port by any inspection agency). In đá bóng trực tiếp presentation, there is a certificate of quantity and quality issued by a foreign independent inspector which is accordant with L/C; and đá bóng trực tiếp Buyer confirmed đá bóng trực tiếp presentation and undertook to honour. However, đá bóng trực tiếp Court of First Instance, according to đá bóng trực tiếp inspection conclusion of Vinacontrol of Ho Chi Minh City (at discharge port), considered đá bóng trực tiếp presentation not complying. This conclusion was not in conformity with L/C and undertaking of đá bóng trực tiếp Buyer.

[36] During đá bóng trực tiếp lawsuit settlement, đá bóng trực tiếp Bank N claims that it negotiated đá bóng trực tiếp complying documents and honoured đá bóng trực tiếp Seller on July 25, 2011, July 28, 2011 and August 8, 2011, and presented notices of negotiation of export invoices to justify that it honoured đá bóng trực tiếp complying presentation of đá bóng trực tiếp Seller. However, in addition to these invoices, đá bóng trực tiếp Bank N does not present any other document proving that it honoured đá bóng trực tiếp complying presentation of đá bóng trực tiếp Seller. Thus, in this case, đá bóng trực tiếp Court of First Instance should have taken sufficient documents and evidence to determine whether đá bóng trực tiếp Bank N honoured đá bóng trực tiếp complying presentation of đá bóng trực tiếp Seller. How much was đá bóng trực tiếp payment if it was made? Where đá bóng trực tiếp Bank N made payment to đá bóng trực tiếp Seller under L/C No. 1801, E Joint-Stock Commercial Bank has to follow đá bóng trực tiếp request of đá bóng trực tiếp Bank N. Although these outstanding matters remain unclear, đá bóng trực tiếp Court of First Instance indicated that L/C No. 1801 is an integral part of đá bóng trực tiếp sales contract dated June 7, 2011; therefore, when this contract is completely cancelled, contracting parties are not required to keep performing their obligations as mentioned in đá bóng trực tiếp contract; then L/C No. 1801 ceases to be valid and E Joint-Stock Commercial Bank has no obligation to pay đá bóng trực tiếp Bank N under đá bóng trực tiếp L/C; and E Joint-Stock Commercial Bank is forced to pay đá bóng trực tiếp Buyer đá bóng trực tiếp deposit of USD 1,313,308.85. This decision of đá bóng trực tiếp Court of First Instance is ungrounded and against UCP 600.

[37] After first-instance trial, E Joint-Stock Commercial Bank appealed against đá bóng trực tiếp entire First Instance Judgment. đá bóng trực tiếp Court of Appeal issued a Decision to Bring đá bóng trực tiếp Case to Trial and served đá bóng trực tiếp summonses to litigants to appear in đá bóng trực tiếp court hearing on September 25, 2014, October 27, 2014, October 31, 2014, April 16, 2015 but đá bóng trực tiếp court hearings were delayed for various reasons, such as: absence of litigants, absence of representative of đá bóng trực tiếp People’s Procuracy, judicial assistance requiring more time, etc.

[38] In đá bóng trực tiếp Decision No. 09/2015/QDPT-KDTM dated May 29, 2015, đá bóng trực tiếp Court of Appeal of đá bóng trực tiếp Supreme People’s Court of Ho Chi Minh City suspended appellate trial to request judicial assistance in order to summon Company B to appear in đá bóng trực tiếp appellate court hearing.

[39] In đá bóng trực tiếp Decision dated August 10, 2015, đá bóng trực tiếp Superior People’s Court in Ho Chi Minh City decided to bring đá bóng trực tiếp case to appellate trial on August 26, 2015.

[40] On August 19, 2015, E Joint-Stock Commercial Bank received đá bóng trực tiếp summons; on August 24, 2015, E Joint-Stock Commercial Bank submitted a request for court hearing delay on đá bóng trực tiếp ground that đá bóng trực tiếp authorized representative of E Joint-Stock Commercial Bank, who is Mr. Hua Anh K, who was being on business trip. At đá bóng trực tiếp court hearing on August 26, 2015, đá bóng trực tiếp Court of Appeal did not accept đá bóng trực tiếp request for court hearing delay of Mr. K and stated that E Joint-Stock Commercial Bank (appellant) was still absent although it was duly served with đá bóng trực tiếp second summons, and then issued a decision on suspension of appellate trial.

[41] đá bóng trực tiếp Superior People’s Court in Ho Chi Minh City made an error when issuing đá bóng trực tiếp decision on suspension of appellate trial, because pursuant to Clause 2 Article 13 of Resolution No. 06/2012/NQ-HDTP dated December 3, 2012 of Council of Justices of đá bóng trực tiếp Supreme People’s Court: “Where there is a decision on delay of appellate trial of a civil case, đá bóng trực tiếp trial preparation duration ends on đá bóng trực tiếp date of such decision. đá bóng trực tiếp appellate trial preparation duration will re-begin from đá bóng trực tiếp date on which đá bóng trực tiếp Court of Appeal keep conducting appellate trial when đá bóng trực tiếp delay reasons no longer exist”. Accordingly, because of đá bóng trực tiếp decision on court hearing delay, đá bóng trực tiếp appellate trial preparation re-begins from đá bóng trực tiếp date on which đá bóng trực tiếp Court of Appeal issued đá bóng trực tiếp decision to bring đá bóng trực tiếp case to trial (on August 10, 2015). Thus, đá bóng trực tiếp absence of đá bóng trực tiếp appellant (E Joint-Stock Commercial Bank) on đá bóng trực tiếp court hearing on August 26, 2015 should have been considered as absence despite being duly served with đá bóng trực tiếp first summons. In this case, whether such absence was proper or improper, đá bóng trực tiếp Court should have delayed đá bóng trực tiếp hearing as prescribed in Article 266 of đá bóng trực tiếp Civil Procedure Code, amended in 2011 and Article 16 of Resolution No. 06/2012/NQ-HDTP dated December 3, 2012 of Council of Justices of đá bóng trực tiếp Supreme People’s Court. However, đá bóng trực tiếp Court of Appeal stated that đá bóng trực tiếp representative of E Joint-Stock Commercial Bank was still absent without force majeure reason despite being duly served with đá bóng trực tiếp second summons and issued đá bóng trực tiếp decision suspension of appellate trial. This was such wrong decision; đá bóng trực tiếp Court of Appeal made a material procedural error which substantially affecting legitimate rights and interests of đá bóng trực tiếp litigants.

According to facts and matters, pursuant to Clause 2 Article 337, Clause 3 Article 343 and Article 345 of đá bóng trực tiếp Civil Procedure Code.

“[34] Therefore, according to đá bóng trực tiếp request for L/C of đá bóng trực tiếp Buyer and đá bóng trực tiếp content of L/C, L/C No. 1801 is a separate transaction from đá bóng trực tiếp sales contract dated June 7, 2011; governed by UCP 600. Under UCP 600, E Joint-Stock Commercial Bank, as đá bóng trực tiếp issuing bank, must honour if it determines that a presentation is complying…

[36]…đá bóng trực tiếp Court of First Instance indicated that L/C No. 1801 is an integral part of đá bóng trực tiếp sales contract dated June 7, 2011; therefore, when this contract is completely cancelled, contracting parties are not required to keep performing their obligations as mentioned in đá bóng trực tiếp contract; then L/C No. 1801 ceases to be valid and E Joint-Stock Commercial Bank has no obligation to pay đá bóng trực tiếp Bank N under đá bóng trực tiếp L/C; and E Joint-Stock Commercial Bank is forced to pay đá bóng trực tiếp Buyer đá bóng trực tiếp deposit of USD 1,313,308.85. This decision of đá bóng trực tiếp Court of First Instance is ungrounded and against UCP 600”.

1. Accept đá bóng trực tiếp Appeal No. 11/2016/KN-KDTM dated March 7, 2016 made by đá bóng trực tiếp Chief Justice of đá bóng trực tiếp Supreme People's Court.

2. Quash đá bóng trực tiếp decision on suspension of appellate trial No. 29/2015/QDPT-KDTM dated August 26, 2015 of đá bóng trực tiếp Superior People’s Court in Ho Chi Minh City and quash đá bóng trực tiếp First Instance Commercial Judgment No. 356/2014/KDTM-ST dated April 7, 2014 of People’s Court of Ho Chi Minh City.

3. Refer đá bóng trực tiếp case file to People’s Court of Ho Chi Minh City for re-conducting đá bóng trực tiếp first-instance trial as per đá bóng trực tiếp law.