On December 20, 2011, PJICO Dong Nai Insurance Company (PJICO) sent to Huada Furniture Vietnam Company (Huada) a detailed quotation for insurance letter to fire and special risks including compulsory fire and explosion insurance and business interruption insurance through intermediary company. Right in the day, Huada agreed with the quotation. PJICO then issued the original insurance letter for Huada, which included compulsory fire and explosion insurance, business interruption insurance, and money insurance, and requested Huada to pay for the premium. The contract shows the insurance period which will take effect from January 6, 2013 to January 6, 2013.
It is worth mentioning that while the company Huada has not signed insurance contract, not paid premiums, but on 12 Jan. 2012 occurred fire in the factory, machinery and equipment at Huada damage value than 50 billion.
Right after the fire date, Huada paid all of the premiums to PJICO's account, and signed and stamped the insurance contract sent to PJICO. After that, Huada asked PJICO to fulfill the obligation of insurance compensation as agreed in the contract. However, PJICO has denied the validity of the contract and refuses to pay Huada. Huada has filed a lawsuit against PJICO at Bien Hoa City People's Court to demand compensation from PJICO for more than 67 billion dong.
At the trials, Huada shows that PJICO is the party who actively sends the quotation, details of insurance letter. Huada accepted by signing the quotation and returning it to PJICO, so the insurance contract between the two companies was signed.
Meanwhile, the PJICO said that until 6 Jan. 2012 (the effective date inscribed in the insurance letter), PJICO has not received the contract or any notice which is written by Huada regarding entering the contract and paying premiums. Therefore, the date of entry into force of the contract is no longer meaningful because Huada does not cooperate to confirm the validity of the contract.
Hearing of the first instance in September 2015, Bien Hoa City’s People’s Court has rejected Huada's lawsuit letter. According to the Court, Huada's claim to PJICO to indemnify the insurance contract is unfounded because the rights and obligations of the parties arise only when the parties have signed the contract. At the time of the fire, the contract was not signed by Huada. Huada's transfer of money and the insurance contract after the fire occurred to validate PJICO's insurance claims. Therefore, even if PJICO accepts the payment of fees from Huada, the fee will not be accepted by the parties unless otherwise agreed by the parties in accordance with the provisions of the Civil Code.
Disagreement with the ruling of the first instance, Huada appealed. At the Appeal Court in February 2016, Dong Nai Provincial People's Court cited the provisions of the Civil Code, "the contract legally entered into effect from the time of entering." According to the Court, the signing of the contract between the parties through fax and intermediary is the representative office to translate the documents, so the time of entering into the insurance contract between the two companies is determined at the time PJICO received Huada's reply that they had accepted the deal. Because of accepting the request of Huada, PJICO has issued insurance policies, deposit insurance for Huada. After receiving the PJICO documentation, Huada has fulfilled its commitment to pay the premium within 30 days of the effective date of the policy. Since the contract has come into effect, PJICO must compensate Huada.
The Court of Appeal has changed the first instance judgement, forcing PJICO to compensate Huada for more than 57 billion dong.
After the appellate judgement went into effect, PJICO sent several urgent petitions. In June 2016, the High-Level People’s Procuracy in Ho Chi Minh City has a cassation appeal to the High-Level People's Court in Ho Chi Minh City to request for cancel the appellate judgement of Dong Nai People's Court for re-trial.
According to the high-level People's Procuracy of Ho Chi Minh City that the Civil Code, Insurance Business Law amended in 2010 stipulated that the contract must be in writing, signed by agreement between the parties. The appeal verdict is not grounded because Huada is the customer while PJICO is the bidder. The two parties through the representative office to translate the documents on the offer and agree to buy insurance is not worth to the contract in accordance with the provisions of the two above laws.
However, in the trial of cassation, the High-level Court held that the time when Huada has paid premiums within the 30-day period under the contract between the parties in the insurance contract should be in accordance with the law. Then, the insurance contracts have been entered into, Huada has paid for the premiums, thus it makes the insurance liability. The Court of Appeals for Huada Furniture's lawsuit petition is well founded. Therefore, the High-level People's Courts in Ho Chi Minh City did not accept the protest of the High-level People's Procuracy in Ho Chi Minh City, uphold the verdict of the appellate court of Dong Nai People's Court.
Up to now, PJICO has made many applications for help. According to PJICO's representative, PJICO has not received an appeal verdict yet after the appellate hearing, but the civil judgment enforcement department of Dong Nai province has issued a judgment execution decision. On February 17, 2016, the judgment has issued a decision to freeze PJICO's account of more than 58 billion VND to prevent the dispersal of property and ensure the judgment enforcement.
The opinion of consulting firm specializing in debt recovery, Dragon Law in the dispute over this insurance contract.
(Mr. Nguyen Duc Nang, Lawyer from Dragon Law Firm in Corporate Debt Collection)
The Board of Directors of the professional debt recovery company, Dragon Law agrees with the verdict of the People's Court of Dong Nai Province and the cassation decision of the High Court in Ho Chi Minh City.
Under the provisions of Article 390 of the Civil Code2005, "A request to enter into a contract is a statement of intent to enter into a contract and to be bound by the offeror's request to the party that has been identified", and under the Article 391, the time when the offer to enter into the contract is valid: "valid when the offer fixs, if the offeror does not fix the offer, the offer to enter into the contract shall be effective from the date when the party is offered which received that offer.”
In this case, on December 20, 2011, PJICO sent to Huada a detailed quotation to insurance letter of fire and special risks include compulsory fire insurance, business interruption insurance through an translation intermediate company. Right in the day, Huada agreed with the quotation. This proves that Huada has agreed with PJICO's offer to enter into a PJICO contract. After that, PJICO issued to Huada the original insurance letter, including a compulsory fire insurance, money insurance, business interruption insurance and at the same time ask Huada to pay the premiums.
Thus, the PJICO does not make a change, withholding the offer to enter into a contract under the Article 392 of the Civil Code or to cancel the offer to enter into a contract under Article 393 of the Civil Code and in default Huada and PJICO are bound by the offer to enter into the contract, the two parties are required to enter into a contract if one of the two parties fails to sign the contract but damages the other, compensation must be made. Huada has shown goodwill to sign the contract and PJICO does not intend to cancel part or whole of the offer to enter into a contract, so the contract of the two parties is sure to be signed.
Insurance contract is defined in Article 12 of the Insurance Business Law, "Insurance contract is an agreement between the insurance buyer and the insurance enterprise whereby the insurance buyer pays the premium, the insurance company must be paid insurance to the beneficiary or indemnified to the insured upon occurrence of the insured event", and in accordance with the Article 14 of the Insurance Business Law: “Insurance contract must be in writing and evidence of insurance contracts are insurance certificates, insurance letter ... ", PJICO transferred insurance policy to Huada and issued insurance letter, deposit insurance for Huada. In the contract, Huada must pay the premium within 30 days and there is not any specific timelines for Huada to sign the contract and return it to PJICO.
Therefore, after receiving the PJICO’s documentation, Huada implies that it is only necessary to sign the contract and pay the fee within 30 days from the effective date of the contract. Huada has fulfilled its contractual commitment to pay the premium within 30 days of the effective date of the insurance letter and concurrently sign the contract with PJICO. On January 6, 2012 is the effective date and on January 12, 2012 Huada has fully paid the insurance fee, signed and stamped the insurance contract sent to PJICO. This is evidence for the conclusion of the insurance contract between PJICO and Huada and show binding on the contract of the two parties. Therefore, PJICO must fulfil its duties in the insurance contract signed with Huada.
Looking at the overview from the procedural bodies, the Dragon Law Firm specialized in Corporate Debt Collection found that:
The court of first instance and High-level People's Procuracy have applied Clause 1 of Article 401, Clause 4 of Article 404, Article 405 of the Civil Code to state that: “the time of entering into a written document is the time the last party signs into the written document" and “valid legally contract is effective from the time of entering into, unless otherwise agreed by the parties" to declare the contract null and void. However, the main point here is “unless otherwise agreed by the parties”.
Obviously, in the above case, the parties have a different agreement specifically agreed between the parties in this "contractual content", in which the contract is effective from January 6, 2012 and the payment period is 30 days. Therefore, the Article 401, 404, 405 cannot be applied to invalidate the contract. So the High-level People's Court in Ho Chi Minh City issued Decision No. 47/2016/KDTM-GĐT dated August 29, 2016 does not accept the Protest No. 63/2016/KNGDT-VC3-V3 dated June 13, 2016 of the Institute Head of the High-level People's Procuracy in Ho Chi Minh City, maintaining the business and commercial appeal verdict No.11/2016/KDTM-PT dated February 2, 2016 of the People's Court of Dong Nai province on the "insurance contract dispute" between the plaintiff Huada with the defendant PJICO is reasonable.
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