At a glance: automotive industry disputes in Vietnam

Disputes

What competition and antitrust issues are specific to, or particularly relevant for, the automotive industry? Is follow-on litigation significant in competition cases?

Vietnam’s Competition Law is aimed at preventing acts of unfair competition, acts in restraint of competition and economic concentrations that have or may have a competition-restraining impact on Vietnam’s market. Acts that can serve to restrict competition include those that reduce, distort or prevent competition in the market through economic concentration (eg, mergers, acquisitions or other types of business combination transactions), abuse of dominant market position or monopoly or agreements to restrict competition (eg, agreements to divide the market to minimise or eliminate competition). Acts of unfair competition are those that are contrary to general standards of business ethics and that cause or may cause damage to the interests of the state or to the legitimate rights and interests of other enterprises or consumers.

The authorities tasked with enforcing Vietnam's competition regulations have not historically taken an aggressive approach to enforcement, and we are not aware of any case in which the authorities have accused an automotive company of violating applicable Vietnamese competition or antitrust regulations. It is yet to be seen whether the authorities will take a more active approach to enforcement in the automotive industry.

What kind of disputes have been experienced in the automotive industry, and how are they usually resolved? Are there any quick solutions along the supply chain available?

Because Vietnam’s court system is relatively unsophisticated and is perceived as being both arbitrary and unpredictable, most disputes in Vietnam are resolved outside of the formal legal system through commercial negotiations or amicable settlement of claims. This is particularly true in the case of product manufacturers or distributors who may be concerned that adverse news coverage or other publicity could negatively impact their brand in the eyes of consumers. Because most claims are handled outside of formal legal channels, and because Vietnam does not have a system of binding case law or other legal precedents, it is difficult to say with any degree of certainty what kinds of disputes have been experienced in the automotive industry. One can speculate, however, that disputes would be likely to arise from issues such as product liability and warranty periods.

When a dispute arises, the aggrieved party may seek one or more remedies including not only damages for loss but also interim or equitable remedies such as specific performance, temporary cessation of contractual performance or termination or rescission of contract. Injunctive relief may also be available upon petition to the competent court.

What is the process for dealing with distressed suppliers in the automotive industry?

The process for dealing with a distressed supplier will depend on the terms of the contract between the supplier and the manufacturer or customer, including any remedy provisions included therein. However, where a supplier is, or is at risk of becoming, insolvent, a manufacturer or other customer of the supplier may also petition a court to initiate bankruptcy proceedings and join the list of creditors seeking recovery.

Are intellectual property disputes significant in the automotive industry? If so, how effectively is industrial intellectual property protected? Are intellectual property disputes easily resolved?

The most significant disputes in the automobile industry in Vietnam relate to counterfeiting of automobile parts and fittings and domain name disputes.

As a member of the World Trade Organization, Vietnam has established a relatively comprehensive legal framework to register and protect intellectual property rights. In the case of infringement or other violation of existing intellectual property rights in Vietnam, the owner of such rights may pursue relief through administrative, civil or, in some cases, criminal proceedings. In practice, administrative relief for infringement of intellectual property rights is more common (and easier to obtain) in Vietnam. However, although administrative relief is cost-effective to obtain and generally results in an immediate cessation of the infringement, it has proven to have a somewhat low deterrent effect overall. To date, civil and criminal causes of action have been limited to instances of deliberate counterfeiting.

Generally, intellectual property disputes are not easily resolved due to the intangible nature of the assets and, particularly in the case of patents or industrial designs, the highly technical knowledge that is often in question. This is especially the case in Vietnam, where courts and enforcement agencies are not experienced in handling highly complex or technical disputes.