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HANOI LAW UNIVERSITY TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW Edited by Professor Dr Surya P. Subedi DPhil (Oxford); Barrister (England) Professor of International Law School of Law, Univeristy of Leeds, UK THE PEOPLE’S PUBLIC SECURITY PUBLISHING HOUSE HANOI - 2012 2 This Textbook has been prep...

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HANOI LAW UNIVERSITY

TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW

Edited by Professor Dr Surya P. Subedi DPhil (Oxford); Barrister (England) Professor of International Law School of Law, Univeristy of Leeds, UK

THE PEOPLE’S PUBLIC SECURITY PUBLISHING HOUSE HANOI - 2012

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This Textbook has been prepared with financial assistance from the European Union. The views expressed herein are those of the authors and therefore in no way reflect the official opinion of the European Union nor the Ministry of Industry and Trade.

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LIST OF AUTHORS Nguyen Thanh Tam and Trinh Hai Yen

Chapter 1; and Chapter 3 - Section 1, Section 2; and Chapter 4 - Section 3

Nguyen Dang Thang

Chapter 2 - Section 1, Section 2

Nguyen Duc Kien

Chapter 2 - Section 3; and Chapter 5 - Section 4

Federico Lupo Pasini

Chapter 2 - Section 4, Section 7; and Chapter 4 - Section 1

Nguyen Nhu Quynh

Chapter 2 - Section 5

Nguyen Thi Thu Hien

Chapter 2 - Section 6

Nguyen Ngoc Ha

Chapter 2 - Section 8

Andrew Stephens

Chapter 3 - Section 3

Trinh Hai Yen

Chapter 3 - Section 4; and Chapter 4 - Section 2

Le Hoang Oanh

Chapter 3 - Section 5

Nguyen Minh Hang

Chapter 5 - Section 1

Ho Thuy Ngoc

Chapter 5 - Section 2, Section 3 (Items 4-5); and Chapter 7 - Section 6

Vo Sy Manh

Chapter 5 - Section 3 (Item 1, Item 3)

Marcel Fontaine

Chapter 5 - Section 3 (Item 2)

Nguyen Ba Binh

Chapter 6 - Section 1

Nguyen Thi Thanh Phuc

Chapter 6 - Section 2

Ha Cong Anh Bao

Chapter 6 - Section 3

Trinh Duc Hai

Chapter 7 - Sections 1-5

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TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW

FOREWORD This Textbook has been prepared with the support of the Multilateral Trade Assistance Project III (EU-Viet Nam MUTRAP III) funded by the European Union, and it is the result of the contribution of national and international academics and trade law experts. The cooperation between Vietnamese and international experts testifies the definitive integration of Vietnam in the international cultural system. The trade and economic world integration of Vietnam achieved with the accession to the WTO in 2007 contributed in a decisive manner to the full participation of Vietnamese experts and academics in the world scientific and cultural community. Indeed, a growing number of Vietnamese students and academics which are involved in international exchange programmes and this Textbook are the evidence of this phenomenon. With the support of EU-Viet Nam MUTRAP III Project and other development cooperation programmes, the curricula of the main universities in Vietnam have been updated to take into consideration the rapid evolutions of the trade and economic situation. This Textbook, mainly directed to bachelor students, provides a picture of the legal aspects of the most relevant international trade issues. While recognizing the differences between the international ‘public’ and the ‘private’ trade law, the editor and contributors of the Textbook recognized that the two different disciplines cannot be studied separately. Lawyers and legal experts must have a thorough knowledge of all the aspects involving an international transaction, from the competent jurisdiction to settle any pathologic aspect of an international contract to the market access’ rights protected by the WTO in a third country. Besides that, the Textbook is also a combination of global (WTO, Vienna Convention of the International Sales of Goods), regional

FOREWORD

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(EU, NAFTA and ASEAN), bilateral (the agreements between Vietnam and some trading partners) and Vietnamese relevant rules. The Textbook benefited from the contribution of experts and academics combining the technical to the geographical expertise: for example, an US contributor wrote the section on NAFTA while an European drafted the section dedicated to the EU, while Vietnamese authors focused on the domestic relevant trade aspects. The result is a Textbook which captures different views regarding the law regulating international trade. This Textbook is a good example of what the Vietnamese lawyers and legal experts will have to face once they will start their professional life: a world characterized by harmonized international rules, common rules of legal interpretation but different attitudes regarding the practical implementation of the day-by-day commercial operations. The need to improve the trade relations, particularly important for an open economy like Viet Nam, requires the ability to understand these different attitudes and, when possible, to identify the best international practices which could be reproduced into the domestic legal framework. The Textbook is also a good instrument for government officials daily confronted with a dynamic international arena and eager to know the basic information regarding various aspect of international trade law. This Textbook is really a small reproduction of the real world Vietnamese lawyers and legal experts will have to face and it is an excellent starting point for all those interested in having a basic knowledge of the complex set of rules dealing with international trade. Nguyen Thi Hoang Thuy

Project Director EU-Viet Nam MUTRAP III

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TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW

PREFACE International Trade and Business Law is about empowering states in some areas and facilitating their business or other transactions with other states and entities - while restraining their activities in other areas for the greater good of the individual and the society, both national and international. This body of law aims to lay down the rules of fair play in the conduct of international economic relations to ensure a fairer society for all. In other words, the role of International Trade and Business Law is to ensure a level playing field for all states in order to enable them to maximize their potential and/or to optimize their unique selling points. Each and every individual is gifted with some unique qualities or strengths; the legal system of any state should be designed to enable these individuals to fulfill their potential without harming or undermining the interests of others in the society. The objective is for individuals to pursue their dreams - whatever these may mean to them. Some people are happy to become millionaires or even billionaires, while some others are happy to become nuns or monks, or to work for charitable organizations. The same is true of nation-states: basically, a collection of individuals bound by certain common characteristics and objectives. Therefore, International Trade and Business Law, is designed to enable states to offer to the international community what they have; this is in return for what other states have to offer to them. Thus, the element of reciprocity and the promotion of national interests lie at the heart of human behaviour, and states are no exception. This is especially the case with International Trade and Business Law. Dissimilarly to other specific areas of international law, International Trade and Business Law is directly relevant to the economy and prosperity

PREFACE

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of a nation. In other words, it concerns directly the basic economic interests of a nation. Hence, each and every state is careful in accepting the rules governing international trade and business. Every state knows, however, that without accepting certain basic principles of international law of trade and business it would not be able to trade with other states or otherwise to engage in other business activities. The irony in the world of international trade is that every state wishes other states to open their doors as widely as possible by pursuing policies of trade and economic liberalization; conversely, states may also try to close their own doors as tightly as possible by pursuing protectionist policies. Here, indeed, is where the law is needed: to intervene to ensure fair play, and fairly to settle disputes in the case of foul play. The role of the law may be described as akin to that of a referee or an umpire in a sports match whose sole purpose is to ensure fair play. Associated with the idea of fair play is the creation of a level playing field for the business participants of the day. Trade is one of the early attributes of human activity. The very word ‘trade’ signifies an economic activity that is voluntary and is based on reciprocity. Starting with the barter system in antiquity, humans began, when forms of money were invented, to trade in goods for cash. In fact, it was trade that contributed to the invention of money. As this voluntary reciprocal economic activity began to grow both geographically and in volume, it was regulated, initially by the traders themselves and then by the authorities, such that trade was fair; that it was free from distortions. Much of human civilization has developed with and around the expansion of trade and the desire firstly, to survive and subsequently, to create wealth through trade. Early attempts to regulate trade were designed to facilitate trade by providing the basic code of conduct for those engaged in international trade. This code of conduct was developed in due course under both public and private international law to cater for the growth in trade and business activities. Accordingly, one of the visions of the new world order conceived towards the end of World War II was the liberalization of international trade to stimulate economic growth through the establishment of an International Trade Organization (‘ITO’).

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TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW

Although the ITO never came into existence, its fundamental concept of the liberalization of international trade was pursued through the GATT and some other international legal instruments; many of these eventually became part of the WTO law when this world trade organization was established in 1995, following the conclusion of the Uruguay Round of Multilateral Trade Negotiations between 1986 and 1994. There have been a number of developments within private international law, too, since the end of World War II. These were designed to facilitate as well as to regulate international trade and business. Consequently, there is now a considerable body of public and private international law dealing with international trade and business, and this Textbook entitled, International Trade and Business Law, is an attempt to provide a comprehensive yet succinct overview of this body of law. The Textbook covers a wide range of topics in International Trade and Business Law pertaining to both public and private international law. It is the result of an ambitious project designed to produce a comprehensive tool of study for Vietnamese students, government officials, lawyers and scholars. Vietnam adopted a new economic reform policy, known as ‘Doi Moi’, in order to usher the country along the road to economic liberalization and economic reform in 1986. As part of that drive, Vietnam made an application to join the WTO and was in 2007 duly admitted to this world trade organization. Since the introduction of ‘Doi Moi’ and membership of the WTO, in particular, Vietnam has witnessed a massive growth in international trade and business activity, requiring new laws, regulations and policies to regulate such activities. Vietnam’s membership of the WTO was a catalyst for a number of new developments in the legal system of the country, because Vietnam had to undertake a number of new commitments to join the WTO. Complying with these commitments required enacting new laws and adopting new policies. Vietnam’s membership of the WTO has transformed the legal landscape in the country. Consequently, Vietnam is now not only a fullyfledged member of the WTO; it is also a thriving market economy with a socialist political system. The country has in the recent past attracted a

PREFACE

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huge amount of foreign investment and has become one of the world’s fastest-growing economies. Parallel to such opportunities come the responsibilities to operate within agreed international rules. There has, for Vietnam’s success, to be a well-educated or-trained human resource capable of interacting with other global actors and promoting and protecting the national interests of the country. Vietnam’s interaction with the actors in the field of international trade and business has increased a great deal. The Vietnamese legal system has responded and is still responding to the challenges stimulated by these changes in the sphere of international economic and legal activity. Therefore, there is a need to prepare a new generation of Vietnamese lawyers and government officials who can understand and handle appropriately the matters raised by these phenomenal changes taking place nationally and internationally; they must help the people of the country to maximize the benefits resulting from these changes. For this, they need good academic material - and this Textbook on International Trade and Business Law is designed to meet that need and demand. It includes chapters authored by both Vietnamese and foreign authors dealing with both international legal and Vietnamese legal issues pertaining to both public and private international trade and business law. Such an inclusive approach provides the students with both international and Vietnamese perspectives into these areas of law. The various contributors provide a comprehensive treatment of the topics selected for inclusion in the Textbook. These range from WTO law, including the trade in goods and services, and intellectual property protection, to international commercial dispute resolution, including international commercial arbitration, regional trading arrangements or regional economic integration schemes such as NAFTA, EU and ASEAN, and e-commerce. The chapters are both informative and analytical and are contributed by academics, practitioners, government officials and researchers of both older and younger generation most of whom carry a wealth of expertise and experience in the areas concerned. Since this Textbook is designed primarily for law students, government

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TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW

officials, researchers and lawyers in Vietnam, the approach is obviously a legalistic one based on the analysis of national and international legal instruments, case law or jurisprudence and established customs and norms of behaviour. An attempt has been made to make it as reader- or studentfriendly as possible. All chapters end with a list of questions for reflection by students and other readers in order to stimulate their thinking and analysis. Similarly, all chapters provide a list of further reading for those willing to develop further their understanding of a given area of law. Although the length and the style of presentation vary from one chapter to another, as is quite natural for a collection of this nature, consisting as it does of contributions by many people with their own different legal, practical and scholarly backgrounds, an attempt has been made to achieve uniformity and consistency throughout the text in order to present it as a cohesive Textbook. All in all, it is hoped that this Textbook would prove to be a valuable academic material and source of reference for those interested in International Trade and Business Law and in its application and ramifications in Vietnam. It has been a pleasure for me to work with the Coordinating Committee of the Action of the Hanoi Law University (HLU) on this Textbook and I wish to thank them for their excellent cooperation. Professor Dr. Surya P. Subedi DPhil (Oxford); Barrister (England) Professor of International Law University of Leeds, UK Editor

TABLE OF ABBREVIATIONS

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TABLE OF ABBREVIATIONS AAA

American Arbitration Association

AANZFTA

ASEAN-Australia-New Zealand Free Trade Area

ABAC

APEC Business Advisory Council

ACFA

Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China

ACFTA

ASEAN-China Free Trade Area

ACIA

ASEAN Comprehensive Investment Agreement

ACP

African, Caribbean and Pacific Countries

AD

Anti-dumping

ADA

Anti-dumping Agreement

ADR

Alternative Dispute Resolution

AEC

ASEAN Economic Community

AFAS

ASEAN Framework Agreement on Services

AFT

ASEM Fund of Trust

AFTA

ASEAN Free Trade Area

AHTN

ASEAN Harmonized Tariff Nomenclature

AIA

ASEAN Investment Area

AITIG

ASEAN-India Trade in Goods

AJCEP

ASEAN-Japan Comprehensive Economic Partnership

AKAI

ASEAN-Korea Agreement on Investment

AKFA AKTIG

ASEAN-Korea Framework Agreement on Comprehensive Economic Cooperation ASEAN-Korea Trade in Goods Agreement

AKTIS

ASEAN-Korea Trade in Services Agreement

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TEXTBOOK INTERNATIONAL TRADE AND BUSINESS LAW

AMS

Aggregate Measurement of Support

APEC

Asia-Pacific Economic Cooperation

APEC-MRA

Mutual Recognition Agreement within the APEC

ASEAN

Association of South-east Asian Nations

ASEM

Asia-Europe Meetings

ATC

Agreement on Textiles and Clothing

ATIGA

ASEAN Trade in Goods Agreement

BC

Before Christ

BDC

Beneficiary Developing Country

BFTAs

Bilateral Free Trade Agreements

BIT

Bilateral Investment Treaty

BTA

Agreement between the United States of America and the Socialist Republic of Vietnam on Trade Relations

BTAs

Bilateral Trade Agreements

CAP

Common Agricultural Policy

CDB

Convention on Biodiversity

CEPEA

Comprehensive Economic Partnership in the East Asia

CEPT

Agreement on the Common Effective Preferential Tariff Scheme for the ASEAN Free Trade Area

CFI CFR

Court of First Instance Cost and Freight (formerly known as C&F)

CIETAC

Chinese International Economic and Trade Arbitration Commission

CIF

Cost, Insurance and Freight

CIP

Carriage and Insurance Paid to

CISG

United Nations Convention on Contracts for International Sales of Goods 1980; or Vienna Convention 1980

CJ

Court of Justice (formerly known as ECJ - European Court of Justice)

CJEU

Court of Justice of the European Union

CLMV

Cambodia, Laos, Myanmar and Vietnam

TABLE OF ABBREVIATIONS

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CM

Common Market

COMESA

Common Market of Eastern and Southern Africa

CPC

United Nations Central Product Classification

CPT

Carriage Paid to

CTG

Council ...