Vietnamese firms lose US$60 million for not understanding American law

At a workshop held by the Chamber of Commerce and Industry of Vietnam (VCCI) on July 21, Doctor of Law, David M. Block (USA) who is legal consultant for many Vietnamese businesses, said for Vietnamese enterprises, the management of costs and legal risks of doing business in Europe and the US was very difficult, especially understanding English in legal documents.

"Although the world uses English to solve trade disputes, this makes it more difficult than ever, especially in the US," said Dr. Block.

For example, in 2014 Vietnam’s Son Ha Group was sued in a dumping lawsuit in the US. Block said Son Ha Group exported more than 1,000 tonnes of stainless steel pipe to the US each year. The business was very good when Son Ha was sued under the Anti-Dumping Act. This lawsuit was quite costly for Son Ha. Fortunately, thanks to good lawyers, Son Ha has not been subject to high taxes.

Block also shared a story about a trade dispute between his firm and a Chinese company as an example. In 2010, his company was sued by a Chinese firm. At that time, his business imported some Chinese products and it held the exclusive distribution rights in the US as well as the distribution chain for WalMart and several other supermarkets. After being sued, his company sued the Chinese firm again.

Both parties owed each other money, and were in customer disputes. After a period of doing business with Block’s company, the Chinese company wanted to directly sell their goods at supermarket chains that were partners of Block’s company.

Block had to hire up to 11 lawyers to solve the case and to control costs.

The advantages American companies have include their understanding of US law, English as their native language, and knowledge of American culture and thinking, while the Chinese partner did not have these, Block said.

Another legal risk is that if Chinese enterprises follow lawsuits in the US, they must apply for a visa. Coming to the US, their visas would be retained.

In addition, the Chinese company was also tired of dealing with the English documents, which were long and complex.

Finally, the two sides discussed the matter, and everything was solved "internally", and it ended in "peace".

Block recommended that whenever Vietnamese enterprises receive complex legal documents in English, they should find a lawyer. The view of American businesses, according to Block, is that mutual understanding is the first requirement before doing business. Lawsuits are only necessary in unwilling cases.

Meanwhile, Dr. Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management, said that export turnover of Vietnam enterprises in the US market increased to more than US$30 billion in 2014. This is a major achievement but the cost of pursuing US trade disputes of Vietnamese enterprises has amounted to US$60 million.

"Earning more than US$30 billion but paying US$60 million of legal cost is not very high, but if Vietnamese enterprises understood US law, they would have had to pay only US$5 million," Dr. Thanh said.

He said many Vietnamese enterprises began to learn about the laws of foreign markets only when they became involved in lawsuits.