PowerPoint Presentation

ArbitrationChapter 2: Courts and Alternative Dispute ResolutionGroup MembersGroup 3Nguyen Thi Thuy DiepNgo Thanh HaThan Thi Bich HangTran Minh Hoan

Presentation TargetsHaving knowledge of Arbitration Clause in both the world and VietnamAnalyzing specific dispute related to arbitration matter

OutlineWhat is Arbitration?PRM Energy Systems, Inc. v. Primenergy a. Dispute Context b. Analysis3. Precedent: Donaldson Co. v. Burroughs Diesel, Inc.4. Vietnam International Arbitration: Real Situation and Typical Judgment5. Conclusion

What is Arbitration?Alternative resolution instead of litigationRequire the third partys presence: Arbitrator.The right to make decision belongs to arbitrator.Power is strict and flexible.

Arbitration Clause:The agreement in a contract states that any disputes arising under the contract would be resolved through arbitration rather than court system.

PRM Energy Systems, Inc. v. Primenergy

a. Dispute Context Plaintiff: PRM Inc.Defendants: Primenergy and Kobe Steel.Court: Appellate Court. (2010)Dispute:PRM sued Primenergy for fraud and theft trade secretsPRM sued Kobe for using their own techno in Japan without permissionThe Trial Court declared that PRM had to take all the complaints to arbitration.Problem: Is PRM correct when appealed? Why or Why not?

Is PRM correct?PRM is absolutely correct that Kobe Steel should not be permitted to enforce the arbitrationReasonsPRM and Primenergy signed 5 contracts referred to as the 1999 Agreements which contains Arbitration ClausePursuant to the Arbitration Clause, various disputes sounding in contract between PRM and Primenergy were submitted to arbitration.- Kobe Steel was a non-signatory in the 1999 AgreementsReasons The PRM/Primenergy agreements do not mention Kobe Steel and perform no function whatsoever relating to the supposed Kobe Steel/Primenergy "exclusive collaboration" agreement. Kobe Steel was never a participant in the PRM/Primenergy deallacks sufficient allegations of pre-arranged collusive behavior, Kobe Steel's arbitration demand should be rejected.

ReasonsHowever, all matters between PRM and Primenergy should be gone to arbitration

ReasonsIn the context of the current case, both PRM and Primenergy breach the Agreement in regard to obligations concerning the territory of Japan. PRM granted a license to another company in Japan, while in the agreement, Primenergy have the right of first refusal for a license.Primenergy granted Kobe the license without PRM permissions

ReasonsThe PRMs claim that Kobes behavior was beyond the license agreement with Primenergy is not fully reasonable.The reason is that in Agreement, it states that all disputes would be settled by arbitration. This is a really board meaning.

Precedent Donaldson Co. v. Burroughs Diesel, Inc.

BackgroundPlaintiff: BURROUGHS DIESEL, INC. Defendant: Western Star Inc. and DONALDSON COMPANY, INC. The players in this dispute are:Western Star Truck Sales Inc.is a manufacturer and distributor of trucks.Burroughs Diesel Inc.is a dealer of Western Star.Donaldson Company Inc.supplied portions of the truck's air intake system.

BackgroundWestern Star manufactured trucks that it sold to Burroughs, and the parties signed an agreement containing an arbitration provision. Donaldson supplied parts for the trucks and was not a party to the agreement. When a problem arose with the trucks, Burroughs brought claims against Donaldson and Western Star in state court. Western Star filed suit against Burroughs in district court to compel arbitration between Western Star and Burroughs. Donaldson then moved to compel Burroughs to arbitrate with it.BackgroundThe district court granted Donaldson's motion to compel arbitration.On July 20 2009 the 8th Circuit reversed the district court.On September 16, 2009 the 8th Circuit vacated the July decision and substituted a new decision reaching substantially the same result.

ComparisonPRM v. PrimenergyPRMPrimenergyKobe Steel A non-signatory involved in a agreement between PRM and PrimenergyAlternative Estoppel

Donaldson v. Burroughs DieselBurroughs Diesel Inc.Western Star Truck.Donaldson Inc.A out-contractual supplier is sued by Burroughs Diesel.Equitable EstoppelBoth two case, Arbitration Clause involved.The court in the precedent declared that the third party ( non-signatory) have the right to compel arbitration.In the precedent, it is Donaldson. Meanwhile, in the other, it is Kobe.

Vietnam International Arbitration

Real Situation

Arbitration dispute resolution has been developing latelyeconomypolitical regime

cultureFactors influence on the development of ArbitrationImproving Effect of Arbitration in VietnamComplete legal system and procedures of arbitration to comply with international systemComplete legal system and procedures of arbitration to comply with international system.arbitration center have to make plan for improve quality of arbitrator.

Typical JudgmentDispute of Transferring Obligation in Rice Trading Contract

Plaintiff: Vietnamese SellerDefendant: Hong Kong Buyer and Macao BuyerBackground:Hong Kong signed a contract $1.7M with Vietnam buying rice and confided hiring freighters to Vietnam, paying by L/C (letter of credit)A Macao company- secondhand buyer of the defendant, opened L/C so that Vietnam get profits. After that, Vietnam hired freighters and deliveredGood didnt ensure the quality because of dampness. Macao didnt accept documents to receive good with the reason of invalid papers.Macao only paid $1.2M and would have paid $500k if they had claimed damages from insurance companyVietnam continued to claim payment from both of companies and asked arbitrator to resolveHong Kong claimed that Vietnam had received $1.2M from Macao meaning that HK had no obligation in this payment and it had been moved to third party- Macao

Judgment:Hong Kong was not freed in the duty of payment. The third party paid on behalf of HK that it was deligation of power. Macao paid $1.2M on behalf of HK, therefore, HK must pay $500k for VietnamConclusion

1. All the parties signed the Agreement related to Arbitration clause must go to arbitration when having disputes2. The third party, if not involving in the Agreement- a non-signatory, is not allowed to demand arbitration3. In the precedent, we can see that the difference between alternative estoppel and equitable estoppel4. Application of International Arbitration in Vietnam is still unpopular although it has many advantages

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