Yesterday, part I discussed the Chinese and Hong Kong perspectives on the global financial crisis and its effect on their business. Part II will talk about the Vietnamese perspective and the justice systems in China and Vietnam.

Peter asked Phan Nguyen Toan from LEADCO what he was seeing in Vietnam, saying that a number of US companies are looking to Vietnam as an alternative for production and manufacturing. Phan agreed that Vietnam is similar to China, in that they didn’t suffer much from the economic downturn. He cited their recent entry into the international community as one reason for this. He said they are struggling in some ways, saying that a company recently opened a big factory, where they were planning to recruit 10,000 workers. After two years, they had only been able to hire twenty percent of the qualified workers. He added that they were also facing additional issues of poor infrastructure, particularly the seaport, airport, and transportation systems. 

However, Phan noted that they have some distinct advantages in Vietnam as well, such as the lower costs for good resources. Secondly, he said that the Vietnamese people tend to be very hardworking and eager to learn. The country is rich in natural resources. Phan added that the population of Vietnam is very young, with about 50% being under 35.

See Kiat Toh from Goodwins Law Corporation in Singapore wondered about inflation in Vietnam, and Phan said that it was widely accepted that there are two parallel statistics systems, the official one and the actual one. He thinks the real inflation rate is 18%, while the official one was reported as 12%. For 2010, the government is saying it will be 8 or 9%, but the Vietnamese people don’t believe that. 

Samir Salloum from Salloum & Company in Abu Dhabi asked both the Chinese and Vietnamese delegates about the justice systems in their respective countries, whether justice was delivered swiftly and fairly.  

Scott Guan said that generally speaking, the Chinese legal system is improving, and has improved a lot over the past two decades.  He said that in China, legal cases are handled in a two instance procedure – the first instance starts from the official acceptance date of the case and has approximately a six-month timeline.  However, this can be extended for another six months for a difficult case. The second instance is the appeal proceeding, which takes another three months. 

Scott mentioned that an important factor in lawsuit cases in China is protectionism – when going into a remote area in China, to smaller cities or towns, the local companies involved in the suit may have a lot of local influence, because they are the taxpayer, know the officials, and know the judge. He said that the jury system is China is not independent, but is supervised by the government. So if a company has influence on the government, the government will, in turn, have influence on the judicial system. 

He suggested that firms try to avoid having their clients’ disputes resolved in these smaller places, because the courts are not transparent, the judges are not well-trained, and then tend to be relatives or friends of the companies that may be sued. 

Instead, Scott recommended going to larger cities or to CIETAC (China International Economic and Trade Arbitration Commission), which has a relatively good international reputation, with headquarters in Beijing and branches in Shanghai and Shenzhen. As a member to the 1958 New York Convention, CIETAC is a good choice for commercial arbitration. 

To illustrate China’s fair legal results, Scott offered a case that they handled successfully within the past two and a half years in the intellectual property area. The firm had an American client, a NJ-based manufacturer of computer parts with a fairly well-recognized trademark. The company failed to register their trademark early enough in China, and it was registered in bad faith by a Chinese company in 2004. In late 2007, early 2008, the Chinese company started to take legal action against the American company, making requests of the Chinese courts as well as the government authorities in charge of trademarks, asking them to forbid the US company from using the trademark in China. 

The company was in a crisis-type situation and came to Jade & Fountain, who managed to challenge the legitimacy of the registration of the trademark by the Chinese company in front of the trademark board in Beijing. Based on that, they were able to put the other cases filed by the Chinese company on hold. 

At the same time, they filed another case against the Chinese company in Beijing based on the merits of anti-competition law and trademark law, because the logo was first designed by their client. They won that case, and as a result, although the money awarded was only RMB 50,000, there were important effects established that were useful for the trademark review board proceedings.

They won that case as well and although both of the cases filed by them and the review board case were appealed, they received a final decision from the High Court in Beijing confirming that now the trademark belongs to their client. So they are now working to request that the courts around China dismiss the other lawsuits brought against their client.

Phan said that again, Vietnam is like China, though they do follow a Western management system. The legal system in Vietnam is still evolving, and the court system has three levels – district, city provincial, and Supreme Court. Phan said as with China, he could not say that the court system was independent from influence. In many cases, the jury, judge, and the proceedings are influenced by politics.

However, in the past ten years, Vietnam has started to work more in the international sector, particularly in the IP area. They recently joined the international treaty on the Rome Convention and the Madrid Protocol. A Vietnamese court also recently rendered a favorable verdict to a foreign trademark holder suing a Vietnamese company for infringement. But Phan admitted that there are some corruption cases happening in the court. 

Samir then offered his perspective from Abu Dhabi, saying that the UAE is a seven-emirate state, following the federal laws issued by the government. But in a surprising move, the capital of Abu Dhabi recently decided to handle their own court cases. So slowly, the federation courts are remaining only for issues at a federal level. Samir added that justice is beginning to become as quick, as Scott described in China, and commented that all documentation for cases tried in Abu Dhabi must be translated into Arabic.

A final comment came from Lorna Patajo-Kapunan, the delegate from Kapunan Lotilla Garcia & Castillo Law Offices in the Philippines. She emphasized that for firms doing business internationally, they cannot discount the effect that a particular culture will have on the law. She said that in the Philippines, everyone is related and it has a great impact on the way that they do business. When doing business with some Westerners, who are very exact, they sometimes discount the "paternalistic" way of doing business in Asia. She encouraged everyone to learn about each others’ cultures by developing relationships.