Business legal disputes rise due to pandemic
Business legal disputes rise due to pandemic
When businesses resumed operation after a long period of social distancing, many faced legal disputes due to problems caused by the COVID-19 pandemic
The Vietnam International Arbitration Center (VIAC) said that it was common for many businesses to have to suspend or cancel contracts, delay or fail to perform their contractual obligations, and fulfil payments during the pandemic.
As of October 2021, the country had 215 disputes related to the purchase and sale of goods, business services, construction, leasing, insurance, finance and banking, and logistics.
Truong Trong Nghia, a representative of YKVN Law Firm and an arbitrator of the Vietnam International Arbitration Center, said the disputes were reported as supply chains were broken, while social distancing and the lack of raw materials and difficulties in the logistics system in the pandemic meant many businesses had no revenue and could not finish their orders and had to cancel contracts.
In other cases, some businesses cited force majeure or changes in circumstances to avoid liability and as reasons for not to continue to perform the contracts, which led to further conflicts.
Vo Quoc Thang, chairman of Dongtam Group and chairman of the Business Association of Long An Province, told local media: “Most businesses have resumed operations but are still in a state of labour shortage. Currently, about 10-20 per cent of enterprises face labour problems, and the productivity recovery of enterprises is only 70 to 80 per cent compared to before the pandemic.”
Thang added that importing raw materials and goods faced many difficulties, while operational costs were high due to problems related to pandemic prevention and control.
Lawyer Nghia said there were also some businesses which had been taking advantage of the disruption of domestic and foreign supply chains to make it difficult for other businesses, adding that they could buy businesses that were experiencing difficulties or losses, take advantage of opportunities in smart technology and online trading to negotiate, as well as amend contracts and restructure deals, projects and industries.
Customers and partners also faced difficulties in capital, loss and debt, while the market was reduced due to the pandemic amid pressure to implement epidemic prevention measures, the lawyer said.
In all cases when a dispute arose, the parties had many solutions such as negotiation, conciliation, arbitration or courts. Based on a spirit of goodwill, the parties would choose an appropriate method to settle the dispute.
Nghia told local media that the method of arbitration proceedings, especially in international relations, was appropriate and popular as it had certain conveniences in terms of time, place and method of settlement, especially in the current COVID-19 context.
Another option to resolve arising conflicts and handle disputes is through the Vietnam International Commercial Mediation Center (VICMC), Nghia said, adding the parties needed to work towards commercial mediation because it was an effective method and a fundamental option for disputes arising during the COVID-19 pandemic.
Mediators will help the parties find common ground and a satisfactory solution that is acceptable to both parties. However, before that, when signing a contract, businesses need an expert to anticipate situations that may arise.
The contract also needs to clearly stipulate the responsibilities of the parties when a force majeure event occurs in accordance with the law of the country or a third-country party, if the parties agree to choose the applicable law.
VIAC’s chairman Vu Tien Loc said: “The COVID-19 pandemic is really a 'painful screening' for the local business community.”
He said that though the State and businesses themselves had made great efforts to recover the economy, stronger supports from the State should be given to help businesses to recover quickly and develop products.
Loc said the pandemic would eventually be over, but difficulties arising from it including commercial disputes remained and needed to be solved, therefore, to develop sustainably, businesses needed to have a resilient governance model with the ability to manage risks, and prevent and handle disputes well.
