INTERIM URGENT MEASURES IN ARBITRATION CASES

In order to minimize the damages in arbitration cases or they feel that their lawful rights and interests arc infringed or in a direct danger of infringement, the filing parties may file a request to apply one or more interim urgent measures to protect the disputed property. INTERIM URGENT MEASURES IN ARBITRATION CASES

Below is an analysis of some contents on the provisions on applying.interim urgent measures in arbitration cases that clients may pay attention.

1.    What is an interim urgent measure?

a. An interim urgent measure (IUM) is:

A measure adopted by a competent entity in the process of resolving.disputes in order to solve the urgent needs of the parties, preserve the status of property, protect evidence or ensure judgment enforcement.

Urgency is expressed in: The competent subject shall make a decision to apply immediately.and this decision is made as soon as the decision is made, otherwise it will lose all meaning and effect.

Interim is expressed in: the decision to apply the interim urgent measure is not yet the.final decision on the dispute settlement, if the reason for the application is no longer, it is still possible to cancel this decision.

b. The right to request the application of interim urgent measures of the parties

The disputing parties have the right to request the Arbitration Council and.Court to apply IUM in accordance with Article 48 of the Law on Commercial Arbitration 2010 and the provisions of relevant laws, unless otherwise agreed upon by the parties.

Requesting the Court to apply IUM shall not be considered as a.rejection of the arbitration agreement or the denial of the right to resolve disputes by Arbitration. INTERIM URGENT MEASURES IN ARBITRATION CASES

2.    Classification of interim urgent measures in the settlement of commercial disputes

a. Interim urgent measures shall take security measures:

The implementation of the security measure shall be applied by the requesting party, the security measure is applied for the purpose of compensating for losses or damages that may be.caused for property, material and economic benefits to the party subject to IUM application due to the improper application of IUM and preventing the abuse of.the right to request the application of IUM from the requester. According to the Law on Commercial Arbitration 2010, IUM specified in Article 49 shall take security measures before applying IUM, including: INTERIM URGENT MEASURES IN ARBITRATION CASES

• Prohibiting any change in the status of assets under dispute;
• Prohibiting or forcing any disputing party to commit one or more certain acts to prevent acts which adversely affect the process of arbitral proceedings;
• Distraining assets under dispute;
• Requesting preservation, storage, sale or disposal of any asset of one disputing party or all disputing parties;
• Requesting temporary money payment between the parties;
• Prohibiting transfer of the rights to assets under dispute.

b. Interim urgent measures have no security measures:

According to the Civil Procedure Code 2015, it is not necessary in all disputes to take security measures when applying IUM. According to the provisions of Clause 1, Article 136 of this Code, only when the requester applies one of the IUM in Clauses 6, 7, 8, 10, 11, 15, 16 Article 114 of this Code, the involved parties shall take security measures, the others which are of course applied without having to take security measures. INTERIM URGENT MEASURES IN ARBITRATION CASES

3.    The contents of the interim urgent measures applied in the arbitration cases:

At the request of one of the parties, the Arbitration Council or Court may apply one or several.interim.urgent measures to the disputing parties. Interim urgent measures include:

a. Prohibiting any change in the status of assets under dispute

Prohibiting any change in the status of assets under dispute is applied if in the.process of resolving the dispute there are grounds to show that the person who is possessing or holding the disputed property acts to disassemble, assemble, build more or other acts that change the status of such property.

When considering the written request submitted by the disputing party, the Arbitration Council or Court may.apply this urgent measure when sufficient conditions are met: INTERIM URGENT MEASURES IN ARBITRATION CASES

• The subject requested by the involved parties to apply interim urgent measures must be disputed property;

• Acts that change the status of property such as destroying, dismantling, assembling further construction or other acts that change the status of property;

• The person requesting the application of interim urgent measures has fulfilled his financial security obligations.

The involved parties requesting the application of this interim.urgent measure must provide.documents and evidences show that the party possessing or holding the property.that is acting to change the status of the property. The Arbitration Council or Court shall consider the requests and grounds given.by the involved parties in order to decide whether to apply such urgent measures.

b. Prohibiting or forcing any disputing party to commit one or more certain acts to prevent acts which adversely affect the process of arbitral proceedings

In the process of resolving the dispute, if it is found that the involved party is committing acts (acts or inactions) that will have a detrimental effect on the proceedings, the other party has the right to request the Arbitration Council or Court.to apply measures to prohibit or force any disputing party to commit one or more certain acts.

c. Distraining assets under dispute

As a measure that applies only to cases where the holder of the disputed property acts to.disperse or hide such assets causing difficulties in the consideration and settlement.of the Arbitration Council or the execution of judgments later, at the request of one of the involved parties to the Arbitration Council or Court has the right to apply this urgent measure.

Judgment enforcement agencies may seize or store these assets or make a record to hand it over to an involved party or third person for management until a decision by the Arbitration Council or Court.

d. Requesting preservation, storage, sale or disposal of any asset of one disputing party or all disputing parties

In order to promptly limit the amount of disputed assets at risk of damage, loss of value, devaluation or deformation of assets, one of the disputing parties requests the application of IUM “preservation, storage, sale or disposal of any asset of one disputing party or all disputing parties”, The Arbitration Council or the Court shall apply this measure when the involved parties have produced documents and evidence to prove the need to apply this urgent measure. INTERIM URGENT MEASURES IN ARBITRATION CASES

e. Requesting temporary money payment between the parties

The Arbitration Council or the Court may apply the IUM on the payment between the disputing parties when the requesting party has proved that the request for the application of this measure is justified, necessary in order to promptly handle the urgent needs, even though the two parties are still in dispute over rights and obligations, on contracts for sale and sale of goods and services…  waiting for the Arbitration Council to rule. INTERIM URGENT MEASURES IN ARBITRATION CASES

f. Prohibiting transfer of the rights to assets under dispute.

Prohibiting transfer of the rights to assets under dispute applies if in the course of resolving the dispute there are grounds to show that the person who is possessing or holding the disputed assets acts to transfer the rights to assets under dispute to another person. This act threatens to cause damages to other litigants or makes it difficult to resolve disputes and handle disputed assets. Therefore, when requested by one of the disputing parties to apply this IUM, the Arbitration Council or the Court shall apply this measure. INTERIM URGENT MEASURES IN ARBITRATION CASES

4.    The subject has the right to issue decisions on application of interim urgent measures in arbitration cases

If in civil proceedings, the Court is the only agency with the right to apply IUM, in the arbitration proceedings, the Arbitration Council and the Court have the right to apply IUM when the arbitration proceedings begin to take place. In other words, when the Arbitrator has received the petition, one of the parties has the right to request the Arbitration.Council or the Court to apply IUM.

Note: Since the Court and the Arbitral Tribunal both have the right to apply IUM, there may be cases where the involved parties may request both jurisdictions to apply IUM. In order to avoid both the Court and the Arbitration Council issuing decisions on applying IUM on the same interim urgent measure, when receiving the petition of the involved parties, the Court and the Arbitration Council.must have a thorough review before issuing the application decision. INTERIM URGENT MEASURES IN ARBITRATION CASES

5.    Competence and procedures for the Arbitration Council to apply interim urgent measures

a. Competence

In Article 49 of the Law on Commercial Arbitration 2010, the Arbitral Tribunal has the authority to apply one or more interim urgent measures to the disputing parties at the request of one of the.parties without specifying the authority applicable to the third party. This differs from the competence of the Court, as the Court has the right to apply UIM to both.third parties if requested and considers that there are sufficient grounds under the law.

Before applying IUM, the Arbitration Council must ask the involved parties and examine whether one of.the parties has requested the Court and the Court has applied one or more IUM. If one of the parties has asked the Court to apply IUM, the Arbitration Council must reject to apply IUM. INTERIM URGENT MEASURES IN ARBITRATION CASES

b. Conditions for application of interim urgent measures

According to Article 49 of the Law on Commercial Arbitration 2010, the Arbitration Council may only apply IUM when there are 4 conditions:

• The litigants must request the application of one or more IUM;
• The requester must provide.documents and evidences proving the need to apply such IUM;
• The person requesting the application of IUM has fulfilled the financial security obligation to ensure the compensation for damages caused by the improper application of IUM causing damage to the applicable person.
• No litigants have asked the Court to apply IUM. INTERIM URGENT MEASURES IN ARBITRATION CASES

c. Procedures for applying interim urgent measures

At the article 50 of the Law on Commercial Arbitration 2010 provides for the following procedures for applying IUM:

• The requester for application of IUM shall send a written request to the Arbitration Council with full contents as prescribed.

• The requester for application of IUM has made the application and presented documents and evidences proving the need to apply IUM, the Arbitration Council shall issue a written statement specifying the amount of money and assets when fulfilling the guarantee obligations.

• As decided by the Arbitration Council, the requester shall deposit a sum of money, precious metal, gemstone or valuable papers of a value set by the Arbitration Council equivalent to the amount of the loss which could be caused by improper application of IUM in order to protect the requester’s interests. Such a sum of money, precious metal, gemstone or valuable papers.shall be deposited in a blocked account at a bank decided by the Arbitration Council.

• Within 3 working days after receiving a request, immediately after the requester has provided the security at the request of the Arbitration Council, the Arbitration Council shall consider and decide to apply IUM.

In case of refusal, the arbitration council shall issue a written notice clearly stating the reason to the requester. The enforcement of the arbitration council’s decision to apply interim urgent measures complies with the law on enforcement of civil judgments.

d. Responsibilities for the Arbitration Council to apply interim urgent measures

Before applying IUM, the Arbitration Council may force the party that requests such application to perform the financial security obligation. INTERIM URGENT MEASURES IN ARBITRATION CASES

The Arbitration Council which applies other interim urgent measures or those in excess of the requester’s request for application of interim urgent measures, thus causing damage to the requester, the party to which these measures are applied or a third person, the damage sufferer may sue for compensation.under the civil procedure law.

6.    The arbitration council’s jurisdiction and procedures for changing, supplementing or canceling interim urgent measures

After the Arbitration Council has issued a decision on the application of the IUM, at the request of one party, the arbitration council may change, supplement or cancel interim urgent.measures at any lime during the dispute settlement.

a. Procedures for changing and supplementing interim urgent measures

• The requester for changing, supplementing of IUM shall send a written request to the Arbitration Council with full contents as prescribed.
• In addition to the request, the requester shall provide the Arbitration Council with evidence to prove the necessity to change, supplement such IUM. INTERIM URGENT MEASURES IN ARBITRATION CASES
• As decided by the Arbitration Council, the requester shall deposit a sum of money, precious metal, gemstone or valuable papers of a value set by the Arbitration Council equivalent to the amount of the loss which could be caused by improper application of IUM in order to protect the requester’s interests. Such a sum of money, precious metal, gemstone or valuable papers shall be deposited in a blocked account at a bank decided by the Arbitration Council.
• Within 3 working days after receiving a request, immediately after the requester has provided the security, the Arbitration Council shall consider and decide to change, supplement IUM. In case of refusal, the Arbitration Council shall issue a written notice clearly stating the reason to the requester.

b. Procedures for cancellation of interim urgent measures

When there is one of the following grounds, the Arbitration Council shall issue a decision to cancel the interim urgent measures:

• The requester for application of interim urgent measures requests cancellation of such measures;

• The party subject to the enforcement of the decision to apply interim urgent measures has handed over its assets or another person has implemented the obligation security measure towards the requester;

• The obligation of the obliged party terminates under law. INTERIM URGENT MEASURES IN ARBITRATION CASES

Procedures for cancelling interim measures prescribed in Article 51 of the Law on Commercial Arbitration 2010 are as follows:

• The requester files a request for such cancellation with the Arbitration Council;

• The Arbitration Council shall consider and decide to cancel IUM.

When the Arbitration Council decides to cancel IUM, it must consider and decide for allow the requester to receive back the security assets.

If due to the improper request.for applying IUM causing damage to the party to which IUM are applied, or to a third person, the Arbitration Council shall not issue a decision to return the security assets to the person who has taken such security measures.

Immediately sending to the disputing parties and the civil judgment enforcement agency the decision to cancel IUM.

7.    The court’s jurisdiction, order and procedures for changing or canceling interim urgent measures

Accordingly, in Article 53 of the Law on Commercial Arbitration, the filing party may file a request with a competent court to apply one or more IUM after filing a petition, if its lawful rights and interests.are infringed or in a direct danger of infringement, especially when the Arbitration Council has not yet been established or for the IUM that the Arbitration Council does not have the authority to apply. The order and procedures for change and cancellation.of the Court will also comply with the provisions of the Civil Procedure Code. INTERIM URGENT MEASURES IN ARBITRATION CASES

Conditions for the Court to apply interim urgent measures

Like the Arbitration Council, the Court may only apply IUM when meeting the following 04 conditions:

• The involved party must request the application of one or more specific IUM;

• The requester for application of IUM must provide documents and evidence proving the need to apply IUM;

• The requester has fulfilled its financial security obligations and paid the applicable fee for IUM as prescribed;

• It has not yet requested the Arbitration Council to apply such IUM or has requested but this request is not under the jurisdiction of the Arbitration Counci. INTERIM URGENT MEASURES IN ARBITRATION CASES

8.    Convincing evidence of interim urgent measures

The Arbitration Council as well as the Court need evidence to see that IUM application is necessary, as follows:

• Firstly, the requesting party must have a minimum.legal basis for the request for the application of IUM, for example, if the dispute about trading, there must be a contract and related documents;
• Secondly, evidence, the disputed property is at risk of being destroyed due to its natural properties; In the midst of the requirement to apply IUM.must have definite connections with each other. INTERIM URGENT MEASURES IN ARBITRATION CASES

9.    Restrictions on applying interim urgent measures in Vietnam

• The jurisdiction to apply IUM of the Arbitration Council is limited

Because the Arbitration Council.may only apply IUM to the disputing parties without applying to any other third party. If the requested act must be performed by another third party or.the disputed asset is under the management of another third party, the Arbitration Council shall not have the authority to issue it in this case.

• Measures for prohibiting or forcing any disputing party.to commit one or more certain acts to prevent acts which adversely affect the process of arbitral proceedings are unclear.

Therefore, it is necessary to have more specific written guidance on IUMs in the future.

• The Law on Commercial Arbitration specifies the.measures that the Arbitration Council is permitted to issue and there are no open provisions for other measures suitable to each specific case

That the law cannot foreseen as prescribed in the Civil Procedure Code, this means that, at the request of the disputing party, the Arbitration Council may apply only one of the stated measures. If in the specific case it is necessary to apply another urgent. measure to best ensure the rights and interests of the involved parties, the Arbitration Council cannot apply such measures. INTERIM URGENT MEASURES IN ARBITRATION CASES

The request for the application of interim urgent measures helps the disputing parties temporarily preserve their existing status, overcome the consequences and damages caused by illegal acts. The above is a summary of interim urgent measures in arbitration cases that LawPlus wants to send to Clients. For detailed advice, please contact us at hotline +84 2862 779 399, +84 3939 30 522 or email info@lawplus.vn.

 

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